PART II AND III 2 tm2116043d1_partiiandiii.htm PART II AND III

 

EXPLANATORY NOTE

 

Explanatory Note: The following amendment is being submitted for the purposes of identifying that a new class of securities is being offered, reflecting an increase in the per share price for the securities in this offering for the new class of securities, and to identify that the new number of shares being offered is increased to 2,278,100. The minimum investment has already been reached in this offering.

 

AN OFFERING STATEMENT PURSUANT TO REGULATION A RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. INFORMATION CONTAINED IN THIS PRELIMINARY OFFERING CIRCULAR IS SUBJECT TO COMPLETION OR AMENDMENT. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED BEFORE THE OFFERING STATEMENT FILED WITH THE COMMISSION IS QUALIFIED. THIS PRELIMINARY OFFERING CIRCULAR SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR MAY THERE BE ANY SALES OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL BEFORE REGISTRATION OR QUALIFICATION UNDER THE LAWS OF SUCH STATE. THE COMPANY MAY ELECT TO SATISFY ITS OBLIGATION TO DELIVER A FINAL OFFERING CIRCULAR BY SENDING YOU A NOTICE WITHIN TWO BUSINESS DAYS AFTER THE COMPLETION OF THE COMPANY’S SALE TO YOU THAT CONTAINS THE URL WHERE THE FINAL OFFERING CIRCULAR OR THE OFFERING STATEMENT IN WHICH SUCH FINAL OFFERING CIRCULAR WAS FILED MAY BE OBTAINED.

 

OFFERING CIRCULAR

DATED MAY 13, 2021

 

Miso Robotics, Inc. 

561 E Green St,

Pasadena, CA 91101

 

up to

1,748,252 shares of Series C Preferred Stock

 

up to

1,748,252 shares of Common Stock into which the Series C Preferred Stock may convert*

 

up to

529,848 shares of Series D Preferred Stock

 

up to

529,848 shares of Common Stock into which the Series D Preferred Stock may convert*

 

*The Series C Preferred Stock and Series D Preferred Stock is convertible into Common Stock either at the discretion of the investor or automatically upon effectiveness of registration of the securities in an Initial Public Offering. The total number of shares of the Common Stock into which the Series C Preferred Stock or Series D Preferred Stock may be converted will be determined by dividing the Original Issue Price per share by the conversion price per share.

 

 

 

 

The Company is offering a minimum number of 87,413 shares of Series C Preferred Stock and a maximum number of 1,748,252 shares of Series C Preferred Stock on a “best efforts” basis. Sales of Series C Preferred Stock concluded on May 13, 2021.

 

Series C Preferred
Shares
  Price Per Share to
the Public
    Underwriting
Discounts and
Commissions, per
share**
    Total Number of
Shares Being
Offered
    Proceeds to Miso
Robotics
Before Expenses***
 
Total Minimum   $ 20.59     $ 0.2059       87,413     $ 1,485,007 (1)
Total Maximum   $ 20.59     $ 0.2059       1,748,252     $ 29,700,0012 (2)

 

(1) At the time of the change of the per share price of the securities as reflected in this offering circular supplement, the Company had surpassed its offering minimum.
(2) This figure includes the proceeds to Miso Robotics before expenses on the approximately 1,129,110  shares sold at the previous per share price of $17.16 as of April 20, 2021, the date of the filing of an offering circular supplement, along with the proceeds before expenses on the remaining shares available at the new per share price of $20.59.

 

The Company is offering a maximum number of 529,848 shares of Series D Preferred Stock on a “best efforts” basis. The per investor minimum investment is in this offering is $962.54, or 17 shares of Series D Preferred Stock.

 

Series D Preferred
Shares
  Price Per Share to
the Public
    Underwriting
Discounts and
Commissions, per
share**
    Total Number of
Shares Being
Offered
    Proceeds to Miso
Robotics
Before Expenses***
 
Total Maximum   $ 56.62     $ 0.5662       529,848     $ 29,699,994  
                                 

 

**The Company has engaged Dalmore Group, LLC to serve as the broker/dealer of record. The Company will pay Dalmore Group, LLC in accordance with the terms of the Broker-Dealer Agreement between the Company and Dalmore Group, LLC, attached as Exhibit 1.3 hereto. As compensation for the Services, the Company shall pay to Dalmore a fee equal to 1% of the aggregate amount raised by Dalmore Group. If the maximum amount of shares is sold, the maximum amount the Company would pay Dalmore Group, LLC is $433,282.

 

There will also be a one-time advance payment for out-of-pocket expenses of $5,000. The advance payment will cover expenses anticipated to be incurred by Dalmore Group, LLC. The firm will refund a portion of the payment related to the advance to the extent it was not used, incurred or provided to the Company. This is in addition to the one-time advance payment of $5,000 previously made to Dalmore Group by the Company.

 

The Company has also engaged Dalmore Group, LLC as a consultant to provide ongoing general consulting services relating to the Offering such as coordination with third party vendors and general guidance with respect to the Offering. The Company will pay a one-time fee of $20,000 for these services. This is in additional to the one-time fee of $20,000 previously paid to Dalmore Group for the services offered while the securities sold in the offering were Series C Preferred shares. See "Plan of Distribution and Selling Securityholders" for details of compensation and transaction fees to be paid to the placement agent.

 

***Miso Robotics, Inc. (the “Company”) expects that the amount of expenses of the offering that it will pay, including historical expenses and those going forward, will be approximately $100,000 , not including commissions or state filing fees.

 

The Company is selling shares of Series D Preferred Stock. The company previously sold shares of Series C Preferred Stock in this offering. Sales of Series C Preferred Stock commenced on January 18, 2021 and concluded on May 13, 2021.

 

**** The Company previously engaged SI Securities, LLC to serve as its placement agent to assist in the placement of its Series C Preferred Stock in this offering. During the time of the engagement with SI Securities, LLC, the Company received gross investment of approximately $16,687,877  in exchange for the issuance of 972,487  shares in this offering, meeting the minimum requirement to accept investors subscriptions. The Company has since engaged Dalmore Group, LLC. as its broker/dealer of record. See “Plan of Distribution and Selling Security Holders” on page 24 for details of compensation and transaction fees to be paid to the placement agent.

 

Investors in shares of Series D Preferred Stock in this offering will grant an irrevocable voting proxy to the company’s President that will limit their ability to vote their shares of Series D Preferred Stock purchased in this offering until the occurrence of certain events specified in the proxy, none of which may ever occur.

 

The Company previously engaged The Bryn Mawr Trust Company of Delaware as an escrow agent to hold funds tendered by investors during the course of the engagement with SI Securities, LLC. The Company will no longer utilize a third-party escrow account for this offering and all funds tendered by investors will be held in a segregated account until investor subscriptions are accepted by the Company and Dalmore Group. Once investor subscriptions are accepted by the Company and by Dalmore funds will be deposited into an account controlled by the Company.

 

The offering will terminate at the earlier of: (1) the date at which the maximum offering amount has been sold, (2) the date which is one year from this offering being qualified by the Commission, or (3) the date at which the offering is earlier terminated by the company in its sole discretion. As the Company has already met its minimum in this offering, the Company may accept investor subscriptions on a rolling basis. After each acceptance of subscriptions, funds tendered by investors will be available to the Company for its use. The offering is being conducted on a best-efforts basis.

 

THE   UNITED STATES SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS UPON THE MERITS OR GIVE ITS APPROVAL OF ANY SECURITIES OFFERED OR THE TERMS OF THE OFFERING, NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF ANY OFFERING CIRCULAR OR OTHER SOLICITATION MATERIALS. THESE SECURITIES ARE OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE COMMISSION; HOWEVER, THE COMMISSION HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES OFFERED ARE EXEMPT FROM REGISTRATION.

 

GENERALLY, NO SALE MAY BE MADE TO YOU IN THIS OFFERING IF THE AGGREGATE PURCHASE PRICE YOU PAY IS MORE THAN 10% OF THE GREATER OF YOUR ANNUAL INCOME OR NET WORTH. DIFFERENT RULES APPLY TO ACCREDITED INVESTORS AND NON-NATURAL PERSONS. BEFORE MAKING ANY REPRESENTATION THAT YOUR INVESTMENT DOES NOT EXCEED APPLICABLE THRESHOLDS, WE ENCOURAGE YOU TO REVIEW RULE 251(d)(2)(i)(C) OF REGULATION A. FOR GENERAL INFORMATION ON INVESTING, WE ENCOURAGE YOU TO REFER TO www.investor.gov.

 

This offering is inherently risky. See “Risk Factors” on page 7.

 

Sales of these securities commenced on January 22, 2021

 

The Company is following the “Offering Circular” format of disclosure under Regulation A.

 

 

 

SUMMARY 4
   
RISK FACTORS 7
   
DILUTION 9
   
USE OF PROCEEDS TO ISSUER 11
   
THE COMPANY’S BUSINESS 11
   
THE COMPANY’S PROPERTY 15
   
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 15
   
DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES 16
   
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS 18
   
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITY HOLDERS 19
   
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS 19
   
SECURITIES BEING OFFERED 19
   
PLAN OF DISTRIBUTION AND SELLING SECURITYHOLDERS 24
   
FINANCIAL STATEMENTS FOR THE PERIODS ENDED DECEMBER 31, 2019 AND 2018 F-1
   
INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2020 AND 2019 F-19

 

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Summary of the Offering

 

The following summary of certain information contained in this Offering Circular is not intended to be complete in itself. The summary does not provide all the information necessary for you to make an investment decision. You are encouraged to review the more detailed information in the remainder of the Offering Circular.

 

As used in this Offering Circular, unless the context otherwise requires, the terms "Corporation," “Company,” "Miso,", "we," "our" and "us" refer to Miso Robotics, Inc.

 

THIS OFFERING CIRCULAR MAY CONTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO, AMONG OTHER THINGS, THE COMPANY, ITS BUSINESS PLAN AND STRATEGY, AND ITS INDUSTRY. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON THE BELIEFS OF, ASSUMPTIONS MADE BY, AND INFORMATION CURRENTLY AVAILABLE TO THE COMPANY’S MANAGEMENT. WHEN USED IN THE OFFERING MATERIALS, THE WORDS “ESTIMATE,” “PROJECT,” “BELIEVE,” “ANTICIPATE,” “INTEND,” “EXPECT” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS, WHICH CONSTITUTE FORWARD LOOKING STATEMENTS. THESE STATEMENTS REFLECT MANAGEMENT’S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE THE COMPANY’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN THE FORWARD-LOOKING STATEMENTS. INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE ON WHICH THEY ARE MADE. THE COMPANY DOES NOT UNDERTAKE ANY OBLIGATION TO REVISE OR UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER SUCH DATE OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.

 

Miso Robotics Company Overview

 

Miso Robotics uses a cloud-connected AI Platform that enables the Company’s autonomous robotic kitchen assistants to perform tasks such as frying and grilling alongside chefs in a commercial kitchen. Miso Robotics is revolutionizing the restaurant and prepared food industries with innovative robotics and AI solutions.

 

Miso was founded with a mission to leverage AI technology to help chefs cook food perfectly and consistently. Since the Company’s founding in 2016, Miso’s robotic kitchen assistant, also known as “Flippy”, has been featured in numerous news and media outlets, including Forbes, TechCrunch, VentureBeat, among many others.

 

The Company employs a respected team of roboticists, engineers and industrial designers from Caltech, Cornell, MIT, Carnegie Mellon, UCLA, Olin, Harvey Mudd, Art Center, NASA, Tesla, and SpaceX.

 

In March 2018, Miso launched the first “Flippy” in CaliBurger’s Pasadena location, where the bot flips burgers on a flat top grill. After success with this pilot, CaliBurger has recently signed an $11 million commercial contract for two Flippy’s at each of its 50+ locations worldwide. In Q4, 2019, the first “CaliBurger 2.0” opened in Ft. Myers, Florida with its reinvented kitchen that includes two Flippy’s working alongside one chef.

 

Flippy is also operating the fryer at Dodgers Stadium in Los Angeles and Chase Field in Phoenix, Arizona, home of the Arizona Diamondbacks, under contract with the Compass Group/Levy Restaurants, which creates, owns, and operates restaurants in over 200 sports and entertainment venues, including Walt Disney Resorts.

 

The newest version of Flippy, the Robot on a Rail (ROAR), was piloted by White Castle at a restaurant in the Midwestern United States in 2020. In Q4 2020 Miso and White Castle announced plans to expand their relationship to a beta rollout, targeting up to ten new White Castle locations at which to deploy Flippy.

 

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Miso Robotics is currently building “Flippy 2.0”, which integrates the bot into a mounted rail system, allowing it to work on several tasks at once. This new system will require zero real estate footprint and is forecasted to reduce automation costs by an additional 50%.

 

Our Product

 

Miso Robotics was founded with the idea of giving eyes and a brain to a robotic arm so it could work in commercial kitchens with real-time situational awareness and real-time robotic controls. The Company’s robotic kitchen assistant was designed as a software platform that could automate the cooking of all manner of foods and recipes, with all equipment and restaurant brands, and all kitchen formats.

 

Miso’s autonomous robotic Kitchen Assistants are focused on helping with the most repetitive, dangerous and least desirable tasks in the kitchen. The first “Flippy” grilling burgers was our proof of concept. Flippy can now fry many different kinds of foods as well. These tasks can be improved and optimized for consistency, ensuring each meal is cooked to the perfect temperature with minimal food waste. Beyond frying, grilling, and other cooking, expect them over time to help with tasks like chopping onions, cutting other vegetables and even cleaning.

 

The Kitchen Assistant improves and learns over time based on the data available. Ultimately, this frees up kitchen staff to spend more time with customers. The Company believes the future of food is on-demand, accessible, personalized, and scalable. Miso is building the technology platform leveraging automation, machine learning, and robotics advancements to deliver this future.

 

Product Roadmap

 

Within the next six months, Miso Robotics plans to continue to develop the Flippy Overhead Robot on a Rail (OHROAR) system as the Company targets additional customers and locations for commercial deployment. Key focuses for the Company will include the automation of additional tasks in the cooking lifecycle and further reducing the size of Flippy. Subsequently, Miso will focus on continuing to improve the value provided by existing skills while building new skills continuing to create new modular components with the rail system.

 

Miso Robotics’ long-term vision is to expand with along multiple avenues: increasing robotic arm skills, increasing kitchen equipment that can be interacted with, and providing a platform that allows third parties to develop new skills. Miso Robotics will continue expanding our skills in the kitchen until it can make fully automated kitchen in which people and chefs can program their own recipes.

 

Market Opportunity

 

The biggest misconception about the use of technology in the kitchen is that it is about job replacement. There is a growing labor crisis in the restaurant industry. Local workforces are shrinking, and wages are increasing, making commercial cooking uneconomical. Meanwhile consumers have an increased desire for meals cooked for them, whether via delivery, take-out, dining out, or grocery deli meals, adding pressure on kitchen workers.

 

Restaurants already see a 150% turnover today from a dissatisfied workforce. Pair this with an aging workforce that cannot handle some of the physical demands that come with the job and commercial kitchens are struggling to recruit and retain talent. Intelligent automation not only creates an avenue for meaningful work for the next generation through the creation of new jobs like a Chef Tech (employees trained to manage the robot) but also takes the physical burden off more mature employees who want to contribute later in life.

 

The tasks that Miso’s technology can perform are some of the most dangerous tasks in the kitchen, not to mention messy and menial, ultimately improving the employee experience by freeing up time for them to focus on more meaningful work, like warm customer service that a robot can’t simply match.

 

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Selected Risks Associated With The Business

 

We have a limited operating history upon which you can evaluate our performance, and have not yet generated profits. Accordingly, our prospects must be considered in light of the risks that any new company encounters.
The auditor included a “going concern” note in its audit report.
We could be adversely affected by product liability, personal injury or other health and safety issues.
Our failure to attract and retain highly qualified personnel in the future could harm our business.
Our newest technology is not yet fully developed, and there is no guarantee that we will be able to develop and produce a fully working prototype of our core product.
We may need to raise additional capital, which might not be available or might be available only on terms unfavorable to us or our investors.

 

Offering Terms

 

Securities Offered

Minimum of 87,413 shares of Series C Preferred Stock and 87,413 shares of Common Stock into which they may convert. We have already achieved the minimum number of shares in this offering.

 

Maximum of 1,748,252 shares of Series C Preferred Stock and 1,748,252 shares of Common Stock into which they may convert.

 

Maximum of 529,848 shares of Series D Preferred Stock and 529,848 shares of Common Stock into which they may convert.

Minimum Investment

The minimum investment in this offering is $962.54, or 17 shares of Series D Preferred Stock.

 

During the time in which the Company was offering shares of Series C Preferred Stock, the minimum investment in this offering was $988.32, or 48 shares of Series C Preferred Stock. The minimum investment in this offering before the share price increase for Series C Preferred Stock, which is reflected in the Offering Circular Supplement dated April 20, 2021, was $995.28, or 58 shares of Series C Preferred Stock. Investors that participated in the SeedInvest Auto Invest program had a lower investment minimum in this offering of $188.76, or 11 shares.

Common Stock outstanding before the offering 1,732,085 shares
Preferred Stock outstanding before the offering 769,784 shares of Series A Preferred Stock and 997,616 shares of Series B Preferred Stock (excluding the 1,421,321   shares of Series C Preferred Stock previously sold in this offering)
Preferred Stock outstanding after the offering (assuming a fully subscribed offering) 4,045,500   shares (see “Dilution” for more information on conversion of outstanding convertible notes)
Common Stock outstanding after the offering (assuming a fully subscribed offering in which all holders of Preferred Stock convert to Common Stock) 5,777,585   shares
Irrevocable Proxy Investors in shares of Series D Preferred Stock in this offering will grant an irrevocable voting proxy to our President that will limit their ability to vote their shares until the occurrence of certain events specified in the proxy, none of which may ever occur.
Use of proceeds The proceeds of this offering will be used for product development, personnel, the repayment of debt, and general overhead.

 

Implications of Being an Emerging Growth Company

 

As an issuer with less than $1 billion in total annual gross revenues during our last fiscal year, we will qualify as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) and this status will be significant if and when we become subject to the ongoing reporting requirements of the Exchange Act upon filing a Form 8-A. An emerging growth company may take advantage of certain reduced reporting requirements and is relieved of certain other significant requirements that are otherwise generally applicable to public companies. In particular, as an emerging growth company we:

 

will not be required to obtain an auditor attestation on our internal controls over financial reporting pursuant to the Sarbanes-Oxley Act of 2002;

 

  will not be required to provide a detailed narrative disclosure discussing our compensation principles, objectives and elements and analyzing how those elements fit with our principles and objectives (commonly referred to as “compensation discussion and analysis”);

 

  will not be required to obtain a non-binding advisory vote from our shareholders on executive compensation or golden parachute arrangements (commonly referred to as the “say-on-pay,” “say-on-frequency” and “say-on-golden-parachute” votes);

 

  will be exempt from certain executive compensation disclosure provisions requiring a pay-for-performance graph and CEO pay ratio disclosure;

 

  may present only two years of audited financial statements and only two years of related Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A; and will be eligible to claim longer phase-in periods for the adoption of new or revised financial accounting standards.

 

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We intend to take advantage of all of these reduced reporting requirements and exemptions, including the longer phase-in periods for the adoption of new or revised financial accounting standards, and hereby elect to do so. Our election to use the phase-in periods may make it difficult to compare our financial statements to those of non-emerging growth companies and other emerging growth companies that have opted out of the phase-in periods under Section 107 of the JOBS Act.

 

Under the JOBS Act, we may take advantage of the above-described reduced reporting requirements and exemptions for up to five years after our initial sale of common equity pursuant to a registration statement declared effective under the Securities Act of 1933, as amended, or such earlier time that we no longer meet the definition of an emerging growth company. Note that this offering, while a public offering, is not a sale of common equity pursuant to a registration statement, since the offering is conducted pursuant to an exemption from the registration requirements. In this regard, the JOBS Act provides that we would cease to be an “emerging growth company” if we have more than $1 billion in annual revenues, have more than $700 million in market value of our Common Stock held by non-affiliates, or issue more than $1 billion in principal amount of non-convertible debt over a three-year period.

 

Certain of these reduced reporting requirements and exemptions are also available to us due to the fact that we may also qualify, once listed, as a “smaller reporting company” under the Commission’s rules. For instance, smaller reporting companies are not required to obtain an auditor attestation on their assessment of internal control over financial reporting; are not required to provide a compensation discussion and analysis; are not required to provide a pay-for-performance graph or CEO pay ratio disclosure; and may present only two years of audited financial statements and related MD&A disclosure.

 

Risk Factors

 

The SEC requires that we identify risks that are specific to our business and financial condition. We are still subject to all the same risks that all companies in our business, and all companies in the economy, are exposed to. These include risks relating to economic downturns, political and economic events and technological developments (such as hacking and the ability to prevent hacking). Additionally, early-stage companies are inherently riskier than more developed companies. You should consider general risks as well as specific risks when deciding whether to Invest.

 

Risks Related to Our Company

 

We have a limited operating history upon which you can evaluate our performance, and have not yet generated profits. Accordingly, our prospects must be considered in light of the risks that any new company encounters. Our company was incorporated under the laws of the State of Delaware on June 20, 2016, and we have not yet generated profits. The likelihood of our creation of a viable business must be considered in light of the problems, expenses, difficulties, complications, and delays frequently encountered in connection with the growth of a business, operation in a competitive industry, and the continued development of our technology and products. We anticipate that our operating expenses will increase for the near future, and there is no assurance that we will be profitable in the near future. You should consider our business, operations and prospects in light of the risks, expenses and challenges faced as an emerging growth company.

 

Any valuation at this stage is difficult to assess. The valuation for this Offering was established by the Company and is not based on the financial results of the Company. Instead, it is based on management’s best estimates of the investment value of the Company, which is a subjective measure. This differs significantly from listed companies, which are valued publicly through market-driven stock prices the valuation of private companies, especially early-stage companies, is difficult to assess and you may risk overpaying for your investment.

 

Our two existing customers are related parties. As of December 31, 2020, we had two customers that accounted for all of our revenue. These two customers, CaliBurger and Compass Group/Levy are also investors in our company. Until we are able to source outside customers who are not investors in our Company, we may be unable to reach profitability.

 

The auditor included a “going concern” note in its audit report. We may not have enough funds to sustain the business until it becomes profitable. The Company has not generated profits since inception, has sustained net losses of $10,684,792 and $6,990,832 for the years ended December 31, 2020 and 2019, respectively, and has incurred negative cash flows from operations for the years ended December 31, 2020 and 2019. As of December 31, 2020, the Company had an accumulated deficit of $26,341,232, current liabilities exceeding current assets by $1,746,922, and has collateralized debt with outstanding principal of $3,634,648 due in 2021. Even if we raise funds through this offering, we may not accurately anticipate how quickly we may use the funds and whether these funds are sufficient to bring the business to profitability.

 

We are currently dependent on a few key personnel. Our success depends, to a large degree, on our ability to retain the services of our executive management team, whose industry knowledge and leadership would be difficult to replace. We might not be able to execute on our business model if we were to lose the services of any of our key personnel.  If any of these individuals were to leave the Company unexpectedly, we could face substantial difficulty in hiring qualified successors and could experience a loss in productivity while any such successor develops the necessary training and experience.  Competition for hiring engineers, sales and marketing personnel and other qualified personnel may result in a shortfall in recruiting and competition for qualified individuals could require us to pay higher salaries, which could result in higher labor costs.  If we are unable to recruit and retain a sufficient number of qualified individuals, or if the individuals we employ do not meet our standards and expectations, we may not be able to successfully execute on our business strategy and our operations and revenues could be adversely affected.  

 

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We could be adversely affected by product liability, personal injury or other health and safety issues. We could be adversely impacted by the supply of defective products. Defective products or errors in our technology could lead to serious injury by restaurant and kitchen workers. Product liability or personal injury claims may be asserted against us with respect to any of the products we supply or services we provide. It is our responsibility to have a quality management system and training procedures in place and to audit our suppliers to ensure that products supplied to our company meet proper standards. Should a product or other liability issues arise, the coverage limits under insurance programs and the indemnification amounts available to us may not be adequate to protect us against claims and judgments. We also may not be able to maintain such insurance on acceptable terms in the future. We could suffer significant reputational damage and financial liability if we experience any of the foregoing health and safety issues or incidents, which could have a material adverse effect on our business operations, financial condition and results of operations.

 

Certain intellectual property rights of the Company may be abandoned or otherwise compromised if the Company does not obtain additional capital. The Company may be forced to allow certain deadlines relating to its patent portfolio to pass without taking any action because it lacks sufficient funds to pay for the required actions. Specifically, certain international filing deadlines are quickly approaching as of the date of this Offering Circular and the Company lacks sufficient funds to pay the government and legal fees associated with making such filings. Additionally, certain U.S. provisional patent applications are scheduled to expire and the Company could lose its priority date with regard to the subject matter of such provisional applications in the event the Company n lacks sufficient funds to pay the applicable government and legal fees

 

Our failure to attract and retain highly qualified personnel in the future could harm our business. As the Company grows, it will be required to hire and attract additional qualified professionals such as software engineers, robotics engineers, machine vision and machine learning experts, project managers, regulatory professionals, sales and marketing professionals, accounting, legal, and finance experts. The Company may not be able to locate or attract qualified individuals for such positions, which will affect the Company’s ability to grow and expand its business.

 

The Company’s business model is capital intensive. The amount of capital the Company is attempting to raise in this Offering is not enough to sustain the Company’s current business plan. In order to achieve near and long-term goals, the Company will need to procure funds in addition to the amount raised in the Offering. There is no guarantee the Company will be able to raise such funds on acceptable terms or at all. If the Company is not able to raise sufficient capital in the future, then it will not be able to execute its business plan, its continued operations will be in jeopardy and it may be forced to cease operations and sell or otherwise transfer all or substantially all of its remaining assets, which could cause a Purchaser to lose all or a portion of his or her investment.

 

Our newest technology is not yet fully developed. We are still developing our robot on a rail system  that will eventually go into mass production. We have delivered a working version of our product to our corporate partners, however, we may be unable to convert our prototype to a minimum viable product that can easily be replicated and put into mass production. Additionally, we may not be able to make a transition to mass production, either via in house manufacturing or contract manufacturers.

 

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We may need to raise additional capital, which might not be available or might be available only on terms unfavorable to us or our investors. In order to continue to operate and grow the business, we will likely need to raise additional capital beyond this current financing round by offering shares of our Common or Preferred Stock and/or other classes of equity. All of these would result in dilution to our existing investors, plus they may include additional rights or terms that may be unfavorable to our existing investor base. We cannot assure you that the necessary funds will be available on a timely basis, on favorable terms, or at all, or that such funds, if raised, would be sufficient. The level and timing of future expenditure will depend on a number of factors, many of which are outside our control. If we are not able to obtain additional capital on acceptable terms, or at all, we may be forced to curtail or abandon our growth plans, which could adversely impact the Company, its business, development, financial condition, operating results or prospects.

 

A significant portion of the Company’s voting securities are beneficially owned by Buck Jordan our President, whose interests may differ from those of the other stockholders. As of the date of this Offering Circular, Buck Jordan beneficially owns approximately 40.47 % of the shares of the Company’s issued and outstanding voting securities and, assuming all of the shares of Series C Preferred Stock and all of the shares of Series D Preferred Stock being offered are sold, he will beneficially own approximately 34.39% of the shares of the Company’s issued and outstanding voting securities.    This concentration of ownership may have the effect of delaying or preventing a change in control, which may not be in the best interest of the Company’s other stockholders.

 

Your rights as a holder of Series C Preferred Stock  may be limited by the number of shares held by entities affiliated with the Company's management and common shareholders. In April 2021, the Company converted principal of $2,422,148 and accrued interest of $272,709 of venture debt to Series C Preferred Stock at a per share price of $13.728, a 20% discount to the offering per share price of $17.16, into 196,300 shares of Series C Preferred Stock. Of this total, two convertible promissory notes, representing principal amounts of $1,062,500 and $782,167, were due to Rise of Miso, LLC and Future VC SPV, LLC.  Rise of Miso, LLC is controlled by John Miller who is an investor in the Company via direct holdings and via CaliBurger’s holdings and Future VC SPV, LLC is controlled by Buck Jordan, who is an investor in the Company as well as its current President.  In addition, Future VC SPV, LLC and Rise of Miso, LLC collectively hold 499,239 shares of Series A Preferred Stock and 508,785 shares of Series B Preferred Stock, and 133,505 shares of Series C Preferred Stock.  The Series C Preferred Stock are entitled to certain protective provisions, as described in herein under “Securities Being Offered - Series C and Series D Preferred Stock - Voting Rights” and the Company’s Sixth Amended and Restated Certificate of Incorporation. Any vote in regard to the approval or disapproval of those items listed under the protective provisions would be either controlled by or substantially influenced by such affiliates, potentially against the interests of the rest of the Series C Preferred Stockholders. In addition, such affiliates could substantially influence any vote required by a majority of Series C Preferred Stock to cause all shares of Series C Preferred Stock to be converted into shares of Common Stock. 

 

Your rights as a holder of Series D Preferred Stock  may be limited by the number of shares held by entities affiliated with the Company's management and common shareholders. Future VC SPV, LLC and Rise of Miso, LLC collectively hold 499,239 shares of Series A Preferred Stock, 508,785 shares of Series B Preferred Stock, and 133,505 shares of Series C Preferred Stock. Rise of Miso, LLC is controlled by John Miller who is an investor in the Company via direct holdings and via CaliBurger’s holdings and Future VC SPV, LLC is controlled by Buck Jordan, who is an investor in the Company as well as its current President. The Series D Preferred Stock are entitled to certain protective provisions, as described in herein under “Securities Being Offered - Series C and Series D Preferred Stock - Voting Rights” and the Company’s Sixth Amended and Restated Certificate of Incorporation. Any vote in regard to the approval or disapproval of those items listed under the protective provisions would be either controlled by or substantially influenced by such affiliates, potentially against the interests of the rest of the Series D Preferred Stockholders. In addition, such affiliates could substantially influence any vote required by a majority of Series D Preferred Stock to cause all shares of Series D Preferred Stock to be converted into shares of Common Stock. 

 

Risks Related to the Securities in this Offering  

 

There is no current market for any shares of the Company's stock. There is no formal marketplace for the resale of the Preferred stock or any of the Company’s Common Stock. Shares of Series C Preferred Stock and Series D Preferred Stock  may be traded on the over-the-counter market to the extent any demand exists. Investors should assume that they may not be able to liquidate their investment for some time, or be able to pledge their shares as collateral.

 

The proceeds of this offering will be used to repay certain venture debt taken on by the Company. Any proceeds used to repay outstanding debts will not provide us with additional working capital for future activities. Our use of the proceeds of this offering includes repayment of the debt owed to multiple parties. As of the date of this Offering Circular, the Company has converted principal of $2,422,148 and accrued interest of $272,709 of venture debt to Series C Preferred Stock at a per share price of $13.728, a 20% discount to the offering per share price of $17.16, into 196,300 shares of Series C Preferred Stock, and has repaid $1,222,465, comprised of principal of $1,062,500 and accrued interest of $159,965, of venture debt to Rise of Miso, LLC. The amount due includes a principal balance of $150,000 and interest of 10% per annum. Any proceeds used to repay our outstanding debt will not provide us with additional working capital for future activities, which may lead to the Company being required to take on additional debt in the future to finance its activities. Such debt financing may not be available at all when required, or not available on terms favorable to the Company.

 

Any portion of the Company’s venture debt that is not repaid is convertible at a discount into preferred equity. The Company’s venture debt, which as of December 31, 2020 has a principal balance of $3,634,648  and interest of 10% per annum, is in the form of convertible notes, which are convertible into preferred equity at a 20% discount. The equity into which the notes convert may be pari passu or senior to the Series C Preferred Stock. In addition, the shares issuable on conversion of the notes are excluded from the fully-diluted capitalization in determining the share price of the Series C Preferred Stock. As such, the share price of the Series C Preferred Stock does not account for the potential conversion of the notes, and any conversion of the notes will immediately dilute your investment. In April 2021, the Company converted principal of $2,422,148 and accrued interest of $272,709 of venture debt to Series C Preferred Stock at a per share price of $13.728, a 20% discount to the offering per share price of $17.16, into 196,300 shares of Series C Preferred Stock. In March 2021, the Company repaid $1,222,465, comprised of principal of $1,062,500 and accrued interest of $159,965, of venture debt to Rise of Miso, LLC. As of the date of this annual report, this total debt from a variety of existing investors and related parties is $150,000.

 

Our Sixth Amended and Restated Certificate of Incorporation   has a forum selection provision that requires certain disputes be resolved in the Court of Chancery of the State of Delaware, regardless of convenience or cost to interest holders. Under Article 12 of our Sixth Amended and Restated Certificate of Incorporation, stockholders are required to resolve disputes related to the governance of the Company in the Court of Chancery located in the State of Delaware. The forum selection provision applies to (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim against the Corporation, its directors, officers or employees arising pursuant to any provision of the Delaware General Corporation Law or the Corporation’s certificate of incorporation or bylaws or (iv) any action asserting a claim against the Corporation, its directors, officers or employees governed by the internal affairs doctrine.

 

Our Sixth Amended and Restated Certificate of Incorporation further provides that should the Court of Chancery in the State of Delaware not have subject matter jurisdiction over the matter, or there is an indispensable party not subject to the jurisdiction of the Court of Chancery, then the suit, action, or proceeding may be brought in the appropriate federal or state court. We intend for his forum selection provision to also apply to claims brought under federal securities law. The Company acknowledges that, for claims arising under the Exchange Act, Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder, requiring such matters to be heard in federal court. In contrast, Section 22 of the Securities Act provides for concurrent jurisdiction between federal and state courts for matters arising under the Securities Act.

 

The forum selection provision in our Sixth Amended and Restated Certificate of Incorporation may limit interest holders’ ability to obtain a favorable judicial forum for disputes with us or our officers, directors, employees or agents, which may discourage lawsuits against us and such persons. The requirement that action to which this provision applies be heard in the Court of Chancery in the State of Delaware may also create additional expense for any person contemplating an action against the Company, or limit the access to information to undertake such an action, further discouraging lawsuits.

 

It is also possible that, notwithstanding the forum selection clause included in our Sixth Amended and Restated Certificate of Incorporation, a court could rule that such a provision is inapplicable or unenforceable. Alternatively, if a court were to find the provision inapplicable to, or unenforceable in an action, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition or results of operations. 

 

We are and may continue to be significantly impacted by the worldwide economic downturn due to the COVID-19 pandemic. In December 2019, a novel strain of coronavirus, or COVID-19, was reported to have surfaced in Wuhan, China. COVID-19 has spread to many countries, including the United States, and was declared to be a pandemic by the World Health Organization. Efforts to contain the spread of COVID-19 have intensified and the U.S., Europe and Asia have implemented severe travel restrictions and social distancing. The impacts of the outbreak are unknown and rapidly evolving. A widespread health crisis has adversely affected and could continue to affect the global economy, resulting in an economic downturn that could negatively impact the value of the Company’s shares and investor demand for shares generally.

 

The continued spread of COVID-19 has also led to severe disruption and volatility in the global capital markets, which could increase our cost of capital and adversely affect our ability to access the capital markets in the future. It is possible that the continued spread of COVID-19 could cause a further economic slowdown or recession or cause other unpredictable events, each of which could adversely affect our business, results of operations or financial condition.

 

The extent to which COVID-19 affects our financial results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the COVID-19 outbreak and the actions to contain the outbreak or treat its impact, among others. Moreover, the COVID-19 outbreak has had and may continue to have indeterminable adverse effects on general commercial activity and the world economy, and our business and results of operations could be adversely affected to the extent that COVID-19 or any other pandemic harms the global economy generally.

 

Specifically, COVID -19 may impact the production and distribution of Miso Robotics. If we are unable to produce our products due to manufacturing strains, we may not be able to distribute our product quickly and scale our business. This impact would mean we’d need to raise additional capital in order to meet our revenue targets.

 

Investors in the company’s Common Stock have assigned their voting rights.

In order to subscribe to shares of Series D Preferred Stock in this offering, each investor will be required to grant an irrevocable proxy, giving the right to vote its shares of Series D Preferred Stock to the company’s President. This irrevocable proxy will limit investors’ ability to vote their shares of Series D Preferred Stock until the events specified in the proxy, which include the company’s IPO or acquisition by another entity, which may never happen.

 

Dilution

 

Dilution means a reduction in value, control or earnings of the shares the investor owns.

 

Immediate dilution

 

An early-stage company typically sells its shares (or grants options over its shares) to its founders and early employees at a very low cash cost, because they are, in effect, putting their “sweat equity” into the company. When the company seeks cash investments from outside investors, like you, the new investors typically pay a much larger sum for their shares than the founders or earlier investors, which means that the cash value of your stake is diluted because each share of the same type is worth the same amount, and you paid more for your shares than earlier investors did for theirs.

 

The following table compares the price that new investors are paying for their shares with the effective cash price paid by existing shareholders, giving effect to full conversion of all outstanding stock options, and assuming that the shares are sold at $56.62 per share. The schedule presents shares and pricing as issued and reflects all transactions since inception, which gives investors a better picture of what they will pay for their investment compared to the company’s insiders than just including such transactions for the last 12 months, which is what the SEC requires.

 

                            Effective Cash Price  
                      Total Issued     per Share at Issuance  
                Potential     and Potential     or Potential  
    Date Issued     Issued Shares     Shares     Shares     Conversion  
Common Stock     2016 - 2019       1,732,085               1,732,085     $ 0.90  
Series A Preferred Stock     2016       769,784 (2)             769,784     $ 3.90  
Series B Preferred Stock     2018       997,616 (2)             997,616     $ 10.02  
Series C Preferred Stock     2020-2021       1,421,321 (2)(5)             1,421,321     $ 16.60  
Convertible Notes Payable Outstanding                                        
2019 Convertible Note Payable     2019       -       - (3)     -     $ -  
                                         
Warrants (From Promissory Notes):                                        
Common     2019-2020               367,739       367,739 (1)   $ 10.02  
                                         
Options:                                        
$1.10 Options     2016               67,406       67,406 (1)   $ 1.10  
$3.40 Options     2017               97,000       97,000 (1)   $ 3.40  
$4.11 Options     2017 - 2018               113,848       113,848 (1)   $ 4.11  
$10.02 Options     2018 - 2019               100,401       100,401 (1)   $ 10.02  
$10.02 Options     2020               26,560       26,560 (1)   $ 10.02  
$5.47 Options     2020               238,219       238,219 (1)   $ 5.47  
6.13 Options     2021               79,000       79,000 (1)   $ 6.13  
                                         
Total Common Share Equivalents             4,920,806       1,090,173       6,010,979 (4)   $ 7.61  
Investors in Seried D Preffered Stock in this offering, assuming an incremental $30 Million raised             529,848               529,848     $ 56.62  
                                         
Total After Inclusion of this Offering             5,450,654       1,090,173       6,540,827     $ 11.58  

  

(1) Assumes conversion at exercise price of all outstanding warrants and options
(2) Assumes conversion of all issued preferred shares to common stock.
(3) Excludes potential shares from 2019 Promissory Notes as noteholders do not intend to force conversion in this offering. The terms of this note can be found as an exhibit in this Offering.
(4) Total Common Share equivalents does not include unallocated option pool
(5) 430,671 additional shares have been issued between December 31, 2020 and the date of this Offering Circular. 234,371 of these shares were new cash issuances and 196,300 shares were issued as a result of the conversion of venture debt principal and accured interest.

  

The following table demonstrates the dilution that new investors will experience upon investment in the company. This table uses the company's net tangible book value as of December 31, 2020 of -$1,544,113 which is derived from the net equity of the company in the December 31, 2020 financial statements. This tangible net book value is then adjusted to contemplate conversion all other convertible instruments outstanding at current that would provide proceeds to the company, which assumes exercise of all warrants and stock options outstanding. While, not every outstanding warrant or option may be exercised, we believe that it is important to identify the potential dilution that could occur upon the exercise of all existing securities issued by the company. To further illustrate the dilution that investors may experience, the second and third tables illustrate dilution including authorized, but unissued stock options, and solely on the basis of outstanding equity securities, respectively.

 

The offering costs assumed in the following table includes up to $2,325,000 in commissions to SI Securities, Inc., as well as legal and accounting fees incurred for this Offering. The table presents four scenarios for the convenience of the reader: a $30,000,000 raise from this offering, a $31,500,000 raise from this offering, a $45,000,000 raise from this offering, and a fully subscribed $60,000,000 raise from this offering (maximum offering). The column for a $30,000,000 raise from this offering represents the dilution that would be experienced by investors who purchased shares of Series C Preferred Stock and assumes the maximum number of shares of Series C Preferred Stock offered are purchased. The remaining columns are intended to show the dilution per share that investors purchasing Series D Preferred Stock would experience, which can be compared to the dilution per share experienced by investors who purchased Series C Preferred Stock.

 

On Basis of Full Conversion of Issued Instruments   $30 Million
Raise
    $31.5 Million
Raise
    $45 Million
Raise
    $60 Million
Raise
 
Price per Share   $ 17.16 (5)   $ 56.62     $ 56.62     $ 56.62  
Shares Issued     1,748,252       26,492 (8)     264,924 (8)     529,848 (8)
Capital Raised   $ 30,000,000     $ 1,500,000     $ 15,000,000     $ 30,000,000  
Less: Offering Costs   $ (2,385,000 )(6)   $ (75,000 )(4)   $ (210,000 )(4)   $ (360,000 )(4)
Net Offering Proceeds   $ 27,615,000     $ 1,425,000     $ 14,790,000     $ 29,640,000  
Net Tangible Book Value Pre-financing (as of December 31, 2020, audited)   $ 6,072,453 (2)   $ 6,072,453 (2)   $ 6,072,453 (2)   $ 6,072,453 (2)
Net Tangible Book Value Post-financing   $ 33,687,453     $ 35,112,453     $ 48,477,453     $ 63,327,453  
                                 
Shares issued and outstanding pre-financing, assuming full conversion and issued stock options     6,010,979 (1)     6,010,979 (1)     6,010,979 (1)     6,010,979 (1)
Post-Financing Shares Issued and Outstanding     7,759,231 (3)     7,785,723 (3)     8,024,155 (3)     8,289,079 (3)
                                 
Net tangible book value per share prior to offering   $ 1.010     $ 1.010     $ 1.010     $ 1.010  
Increase/(Decrease) per share attributable to new investors   $ 3.331     $ 3.500     $ 5.031     $ 6.630  
Net tangible book value per share after offering   $ 4.342     $ 4.510     $ 6.041     $ 7.640  
Dilution per share to new investors ($)   $ 12.818 (7)   $ 52.110     $ 50.579     $ 48.980  
Dilution per share to new investors (%)     74.70 %(7)     92.03 %     89.33 %     86.51 %

  

(1) Assumes conversion of all issued preferred shares to common stock, conversion of 367,739 outstanding stock warrants (providing proceeds of $3,684,745 to net tangible book value), and conversion of 722,434 outstanding stock options (providing proceeds of $3,931,822 to net tangible book value).
(2) Net Tangible Book Value is adjusted for conversion proceeds for the outstanding warrants and stock options discussed at (1). The Net Tangible Book Value without the adjustment is equal to -$1,544,113.
(3) 1,410,539 shares of Series C Preferred Stock have already been issued.
(4) This amount represents the commission paid to Dalmore Group, which is 1% of the aggregate amount raised by Dalmore Group on sales of Series D Preferred Stock.
(5) On April 20, 2021, the Company increased the per share price of its Series C Preferred Stock from $17.16 to $20.59.
(6) This amount represents the commission paid to SeedInvest. The per share placement agent commission on the first $15,000,000 raised in this offering was $1.46. The per share placement agent commission after the first $15,000,000 raised in this offering was $1.20. The new commission that will be paid to Dalmore Group is 1% of aggregate amount raised by Dalmore Group.
(7) Using the per share price of $20.59, the dilution per share to investors in a $30 million raise would be $16.242, or 78.88%.
(8) This amount represents the amount of Series D Preferred Stock that would be issued, and does not include shares of Series C Preferred Stock. This is intended to show the dilution per share that investors purchasing Series D Preferred Stock would experience, which can be compared to the dilution per share experienced by investors who purchased Series C Preferred Stock.

 

9

 

 

The next table is the same as the previous, but adds in consideration of authorized but unissued stock options, presenting the fully diluted basis. This adds 168,545 pre-financing shares outstanding and is not adjusted for potential conversion proceeds on the hypothetical exercise of these options.

 

On Basis of Full Conversion of Issued Instruments On Basis of Full Conversion of Issued Instruments and Authorized but Unissued Stock Options   $30 Million
Raise
    $31.5 Million
Raise
    $45 Million
Raise
    $60 Million
Raise
 
Price per Share   $ 17.16 (5)   $ 56.62     $ 56.62     $ 56.62  
Shares Issued     1,748,252       26,492 (8)     264,924 (8)     529,848 (8)
Capital Raised   $ 30,000,000     $ 1,500,000     $ 15,000,000     $ 30,000,000  
Less: Offering Costs   $ (2,385,000 )(6)   $ (75,000 )(4)   $ (210,000 )(4)   $ (360,000 )(4)
Net Offering Proceeds   $ 27,615,000     $ 1,425,000     $ 14,790,000     $ 29,640,000  
Net Tangible Book Value Pre-financing (as of December 31, 2020, audited)   $ 6,072,453 (2)   $ 6,072,453 (2)   $ 6,072,453 (2)   $ 6,072,453 (2)
Net Tangible Book Value Post-financing   $ 33,687,453     $ 35,112,453     $ 48,477,453     $ 63,327,453  
                                 
Shares issued and outstanding pre-financing,assuming full conversion and authorization but unissued stock options     6,179,524 (1)     6,179,524 (1)     6,179,524 (1)     6,179,524 (1)
Post-Financing Shares Issued and Outstanding     7,927,776 (3)     7,954,268 (3)     8,192,700 (3)     8,457,624 (3)
                                 
Net tangible book value per share prior to offering   $ 0.983     $ 0.983     $ 0.983     $ 0.983  
Increase/(Decrease) per share attributable to new investors   $ 3.267     $ 3.432     $ 4.934     $ 6.505  
Net tangible book value per share after offering   $ 4.249     $ 4.414     $ 5.917     $ 7.488  
Dilution per share to new investors ($)   $ 12.911 (7)   $ 52.206     $ 50.703     $ 49.132  
Dilution per share to new investors (%)     75.24 %(7)     92.20 %     89.55 %     86.78 %

  

(1) Assumes conversion of all issued preferred shares to common stock, conversion of conversion of 367,739 outstanding stock warrants (providing proceeds of $3,684,745 to net tangible book value), and conversion of 722,434 outstanding stock options (providing proceeds of $3,931,822 to net tangible book value) and conversion of authorized but unissued stock options of 168,545 shares (no adjustment for proceeds contemplated in the calculations).
(2) Net Tangible Book Value is adjusted for conversion proceeds for the outstanding warrants and stock options discussed at (1). The Net Tangible Book Value without the adjustment is equal to -$1,544,113.
(3) 1,423,361 shares have already been issued.
(4) This amount represents the commission paid to Dalmore Group, which is 1% of the aggregate amount raised by Dalmore Group on sales of Series D Preferred Stock.
(5) On April 20, 2021, the Company increased the per share price of its Series C Preferred Stock from $17.16 to $20.59.
(6) This amount represents the commission paid to SeedInvest. The per share placement agent commission on the first $15,000,000 raised in this offering was $1.46. The per share placement agent commission after the first $15,000,000 raised in this offering was $1.20. The new commission that will be paid to Dalmore Group is 1% of aggregate amount raised by Dalmore Group.
(7) Using the per share price of $20.59, the dilution per share to investors in a $30 million raise would be $16.335, or 79.33%.
(8) This amount represents the amount of Series D Preferred Stock that would be issued, and does not include shares of Series C Preferred Stock. This is intended to show the dilution per share that investors purchasing Series D Preferred Stock would experience, which can be compared to the dilution per share experienced by investors who purchased Series C Preferred Stock.

  

The final table is the same as the previous two, but removes the assumptions of conversion of options, and warrants and consideration of authorized but unissued stock options, instead only presenting issued shares (common shares, plus the assumption of conversion of all issued and outstanding preferred shares).

 

On Issued and Outstanding Basis:   $30.5 Million
Raise
    $31.5 Million
Raise
    $45 Million
Raise
    $60 Million
Raise
 
Price per Share   $ 17.16 (5)   $ 56.62     $ 56.62     $ 56.62  
Shares Issued     1,748,252       26,492 (6)     264,924 (6)     529,848 (6)
Capital Raised   $ 30,000,000     $ 1,500,000     $ 15,000,000     $ 30,000,000  
Less: Offering Costs   $ (2,385,000 )(3)   $ (75,000 )(2)   $ (210,000 )(2)   $ (360,000 )(2)
Net Offering Proceeds   $ 27,615,000     $ 1,425,000     $ 14,790,000     $ 29,640,000  
Net Tangible Book Value Pre-financing (as of December 31, 2020, audited)   $ (1,544,113 )   $ (1,544,113 )   $ (1,544,113 )   $ (1,544,113 )
Net Tangible Book Value Post-financing   $ 26,070,887     $ (119,113 )   $ 13,245,887     $ 28,095,887  
                                 
Shares Issued and Outstanding Pre-Financing     4,920,806 (1)     4,920,806 (1)     4,920,806 (1)     4,920,806 (1)
Post-Financing Shares Issued and Outstanding     6,669,058       6,695,550       6,933,982       7,198,906  
                                 
Net tangible book value per share prior to offering   $ (0.314 )   $ (0.314 )   $ (0.314 )   $ (0.314 )
Increase/(Decrease) per share attributable to new investors   $ 4.223     $ 0.296     $ 2.224     $ 4.217  
Net tangible book value per share after offering   $ 3.909     $ (0.018 )   $ 1.910     $ 3.903  
Dilution per share to new investors ($)   $ 13.251 (4)   $ 56.638     $ 54.710     $ 52.717  
Dilution per share to new investors (%)     77.22 %(4)     100.03 %     96.63 %     93.11 %

 

(1) Assumes conversion of all issued preferred shares to common stock
(2) This amount represents the commission paid to Dalmore Group, which is 1% of the aggregate amount raised by Dalmore Group on sales of Series D Preferred Stock.
(3) This amount represents the commission paid to SeedInvest. The per share placement agent commission on the first $15,000,000 raised in this offering was $1.46. The per share placement agent commission after the first $15,000,000 raised in this offering was $1.20. The new commission that will be paid to Dalmore Group is 1% of aggregate amount raised by Dalmore Group.
(4) Using the per share price of $20.59, the dilution per share to investors in a $30 million raise would be $16.674, or 80.98%.
(5) On April 20, 2021, the Company increased the per share price of its Series C Preferred Stock from $17.16 to $20.59.
(6) This amount represents the amount of Series D Preferred Stock that would be issued, and does not include shares of Series C Preferred Stock. This is intended to show the dilution per share that investors purchasing Series D Preferred Stock would experience, which can be compared to the dilution per share experienced by investors who purchased Series C Preferred Stock.

 

Future Dilution

 

Another important way of looking at dilution is the dilution that happens due to future actions by the company. The investor’s stake in a company could be diluted due to the company issuing additional shares, whether as part of a capital-raising event, or issued as compensation to the company’s employees or marketing partners. In other words, when the company issues more shares, the percentage of the company that you own will go down, even though the value of the company may go up. You will own a smaller piece of a larger company. This increase in number of shares outstanding could result from a stock offering (such as an initial public offering, another crowdfunding round, a venture capital round, angel investment), employees exercising stock options, or by conversion of certain instruments (e.g. convertible bonds, preferred shares or warrants) into stock.

  

If the company decides to issue more shares, an investor could experience value dilution, with each share being worth less than before, and control dilution, with the total percentage an investor owns being less than before. There may also be earnings dilution, with a reduction in the amount earned per share (though this typically occurs only if the company offers dividends, and most development stage companies do not pay dividends for some time).

 

The type of dilution that hurts early-stage investors most occurs when the company sells more shares in a “down round,” meaning at a lower valuation than in earlier offerings. An example of how this might occur is as follows (numbers are for illustrative purposes only):

 

In June 2014, Jane invests $20,000 for shares that represent 2% of a company valued at $1 million.

 

In December, the company is doing very well and sells $5 million in shares to venture capitalists on a valuation (before the new investment) of $10 million. Jane now owns only 1.3% of the company, but her stake is worth $200,000.

 

  In June 2015, the company has run into serious problems, and in order to stay afloat, it raises $1 million at a valuation of only $2 million (the “down round”). Jane now owns only 0.89% of the company, and her stake is worth only $26,660.

 

If you are making an investment expecting to own a certain percentage of the company or expecting each share to hold a certain amount of value, it’s important to realize how the value of those shares can decrease by actions taken by the company. Dilution can make drastic changes to the value of each share, ownership percentage, voting control, and earnings per share. In some cases, dilution can also completely wipe out the value of investments made by early investors, without any person being at fault.

 

Investors should understand how dilution works and the availability of anti-dilution protection.

 

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Use of Proceeds To The Issuer

 

Please see the table below for a summary of our intended use of proceeds from this offering:

 

                    Maximum Offering
Total Raise (2) $30,000,000       $45,000,000       $60,000,000
Commissions   $1,545,918 (1)     $1,695,918 (1)     $1,845,918(1)
Fixed Costs   $100,000       $100,000       $100,000
Net Proceeds   $28,354,082       $43,204,082       $58,054,082
                     
Percent                    
Allocation   Category   %   Category   %   Category
25%   Product Development   28%   Product Development   30%   Product Development
50%   Payroll   50%   Payroll   50%   Payroll
10%   General Administrative   10%   General Administrative   10%   General Administrative
5%   Marketing   5%   Marketing   5%   Marketing
10%   Repayment of Outstanding Loans*   7%   Repayment of Outstanding Loans*   5%   Repayment of Outstanding Loans*

 

(1) As of December 31, 2020, a commission of approximately $1,412,796.36 has already been paid to SI Securities, LLC and a syndicate member based on their $1.46 per share commission for the first $15,000,000.00 and $1.20 per share commission for the subsequent $1,552,853.12 raised through their efforts. The Company has also raised $135,014.88 through direct investments in this offering. The Company is continuing this offering with Dalmore Group, LLC as its Broker Dealer, which has a 1.00% fee on the aggregate amount raised by Dalmore Group, LLC. The amount reflects the combination of these fees.

 

(2) As of the time of filing of this Offering Circular, the Company has sold the minimum number of shares in this offering.

 

The company reserves the right to change the above use of proceeds if management believes it is in the best interests of the Company.

 

*In Q4 2019, the Company closed on $2,744,667 of debt from a variety of its existing investors and related parties. This debt is in the form of promissory notes that bear 10% interest per annum, have a two-year term, and include the issuance of 273,919 common warrants. A form of this note is included in Exhibit 3.3 to this Offering Statement.   With proceeds from the Regulation A+ offering, the Company paid back $1,222,465.28, comprised of principal of $1,062,500 and interest of $159,965.28, to Rise of Miso, LLC in March 2021. In April 2021, the Company converted principal of $2,422,148.28 and accrued interest of $272,709 of venture debt to Series C Preferred Stock at a per share price of $13.728, a 20% discount to the offering per share price of $17.16, into 196,300 shares of Series C Preferred Stock. As of the date of this Offering Circular, this total debt from a variety of existing investors and related parties is $150,000, which is due to be repaid by September 30, 2021.

 

Our Business

 

Company History

 

Miso Robotics launched in 2016 to create the world’s first autonomous robotic kitchen assistant for commercial kitchens. Automation is important for the restaurant and prepared food industries, which are struggling to make a meaningful profit due to the increase in labor cost.

 

The Company is named after the foundation of miso soup, fermented soybeans. Fermentation is one of the first disruptive food technologies, leveraging the work of tiny microbes to provide massive improvements in nourishment at scale - reducing food waste, improving flavors, and unlocking more nutrition with less effort.

 

Miso now employs a respected team of roboticists, engineers and industrial designers from Caltech, Cornell, MIT, Carnegie Mellon, UCLA, Olin, Harvey Mudd, Art Center, NASA, Tesla, and SpaceX.

 

Miso Robotics launched the first autonomous kitchen assistant, “Flippy”, in CaliBurger Pasadena in March 2018. Flippy’s first action in a commercial kitchen was to flip hamburgers. Burger patties are placed down by a human chef on the grill. Flippy uses AI to see the patties and flip them over at the proper time.

 

In the summer of 2018, Flippy was trained with a new skill: frying. Levy, a premium sports and entertainment hospitality company, piloted Flippy as a frying assistant from July 30, 2018, through the World Series of 2018 at the Chick ‘n Tots stand in Dodger Stadium, the home of the Los Angeles Dodgers. Levy, upgraded to Flippy in a mobile cart format at the start of the 2019 season. Flippy has helped stadium team members consistently cook and serve more than 50,000 pounds of fresh chicken tenders and tater tots to Dodger fans, producing up to 80 baskets of food per hour.

 

In the fall of 2018, Flippy was upgraded to a mobile cart that allowed commercial restaurants to roll Flippy into storage to clean equipment and floors according to their SOP.

 

In May of 2019, Flippy was upgraded once again with a smaller footprint and deployed to the home of Diamondbacks at Chase Field in Phoenix, Arizona.

 

Most recently, Miso has signed a commercial contract with CaliBurger worth $11,000,000. The contract is for the rollout of 100 Flippys across 50 CaliBurger locations in a new kitchen layout dubbed "CaliBurger 2.0", and is described in more detail below. In October 2019 as a part of this contract, Miso Robotics deployed two Flippys one at the grill and one at the fryer at CaliBurger's location in Ft. Myers, Florida.

 

In February of 2020 Miso Robotics unveiled “Flippy 2.0”, Robot on a Rail (ROAR). ROAR integrates Flippy into a mounted rail system, allowing it to work on several tasks at once. This new system requires zero real estate footprint and is forecasted to reduce automation costs by an additional 50%.

 

In April of 2020 Miso announced a new AI-powered kitchen assistant tool, CookRight. CookRight uses computer vision to track order accuracy and aid kitchen staff in ensuring that all food is cooked perfectly. Alongside CookRight, kitchen staff have access to an intuitive, gamified dashboard that enables them to supervise multiple workflows simultaneously.

 

In July of 2020 Miso entered into an agreement with White Castle to develop, pilot, and undertake a beta rollout of Miso Robotics' Flippy robot for the restaurant’s North American restaurants. White Castle piloted Miso’s Robot on a Rail (ROAR) system at a Chicago-area restaurant across Q3 and Q4 of 2020 and was the restaurant to utilize the ROAR system in a commercial environment. In October 2020 Miso and White Castle announced plans to expand their partnership, targeting up to ten new locations as part of a beta rollout of Flippy to the company’s North American restaurants.

 

In September 2020 Miso introduced a new software, ChefUI. ChefUI is run as a web-based application and displayed on a touchscreen monitor mounted on the ROAR system. It acts as the conduit between human and robot to work together and cook using the ROAR system. 

 

Miso also made notable additions to the team across the year. First, in October 2020 the Company welcomed Mike Bell as its new Chief Executive Officer. Prior to joining as CEO, Mike was the COO at Ordermark, a restaurant technology company, where he led the enterprise sales function and its top-down go-to-market strategy. He also served as the Chairman of the Board of Directors at Miso. Second, in November 2020 Miso named its first Chief Strategy Officer, Jake Brewer. Prior to joining Miso, Jake was VP of Restaurant Excellence at CKE Restaurants, the parent company for Carl’s Jr. restaurants, where he led customer experience, engineering, field training, and more.

 

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Miso Robotics has created valuable partnerships with key disruptors in the restaurant industry. Miso Robotics is positioned to work with customers in the Quick Service Restaurant system to integrate Flippy into an overhead rail system to reduce the footprint.

 

Product Overview

 

Miso Robotics uses a cloud-connected Miso AI platform that enables the Company’s autonomous robotic kitchen assistants to perform frying and grilling cooking tasks. The product is designed as a platform, with extensible skill sets that will enable the same robot to interact with new kitchen equipment over time (as those new skills are developed). In addition, Miso Robotics’ kitchen assistant product line has received full certification by NSF International for meeting sanitation standards for commercial kitchen equipment and secured an ETL Listed Mark by Intertek for meeting UL electrical safety standards.

 

Miso’s team of engineers has built proprietary algorithms in scheduling (action planning/optimization), trajectory planning (robotic movement), and computer vision. Each of these is crucial for the functionality of Flippy while also providing a barrier to entry against the competition. The accuracy of Flippy’s vision algorithms achieved 99.985% at Dodgers Stadium over the 3 months July-September 2019. More specifically, there was 1 vision error out of 6,625 baskets cooked.

 

To remain easy to use by chefs within an operating kitchen, Flippy uses modern usability research and design to create a touchless cooking workflow, allowing cooks to never press a single button on the robot during regular cooking. Finally, Flippy is cloud-connected. Over-the-air upgrades allow for continuous improvement of the software/brains within Flippy.

 

The Kitchen Assistant improves and learns over time based on the data available. Ultimately, this frees up kitchen staff to spend more time with customers. The Company believes the future of food is on-demand, accessible, personalized, and scalable. Miso is building the technology platform leveraging automation, machine learning, and robotics advancements to deliver this future.

 

Market

 

The United States Quick Service Restaurant (QSR) and fast-food industry experienced historic growth over the five years 2015 – 2019 and reached $273 billion in 2019, with the QSR market growing 4.1% annually during that period. Revenue in the industry is expected to drop to $239 billion in 2020 as a result of the COVID-19 pandemic, but the industry is expected to recover well as the United States economy improves and grow at a projected annual rate of 5.9% through 2025. While the amount of QSR establishments increased within the U.S to a total of 286,967 in 2019, the labor market for fast - food workers has tightened, creating a labor shortage for QSRs. This shortage can be attributed to multiple factors such as a low unemployment rate, fewer teenagers in the workforce, and a boom in restaurant openings. Miso Robotics is poised to help cure QSR owners and managers of this frustration and provide a solution to the lack of labor.

 

Labor expenses in a Quick Service Restaurant are currently greater than 25% of annual revenue, a number that has remained relatively steady over the past 10 years according to IBISWorld’s 2020 Industry Report. While a QSR consists of many different employee positions, cooks specifically account for 60% of the total wage expense for a restaurant. Miso Robotics’ automation solution can help increase the throughput and efficiency of these cooks, bringing down this majority expense and increasing their profitability in the kitchen.

 

Restaurants already see a 150% turnover today from a dissatisfied workforce. Pair this with an aging workforce that cannot handle some of the physical demands that come with the job and commercial kitchens are struggling to recruit and retain talent. Intelligent automation not only creates an avenue for meaningful work for the next generation through the creation of new jobs like a Chef Tech (employees trained to manage the robot) but also takes the physical burden off more mature employees who want to contribute later in life.

 

The tasks that Miso’s technology can perform are some of the most dangerous tasks in the kitchen, not to mention messy and menial, ultimately improving the employee experience by freeing up time for them to focus on more meaningful work, like warm customer service that a robot can’t simply match.

 

Design and Development

 

Miso Robotics has built an autonomous kitchen assistant platform. On this platform, the Company has built NSF and ETL certified systems that grill burgers and operate the fryer. The autonomous cooking platform allows Miso to quickly develop new cooking skills. The Company has deployed systems to CaliBurger, Levy Restaurants , and White Castle. Miso has 10 patents pending, with two having been granted.

 

Miso See - Miso’s platform can visually identify the food it is cooking and the cooking equipment it is operating. The Company uses the latest advancements in artificial intelligence to develop networks that learn the difference between food types and can identify and locate the equipment.

 

Miso Serve - The platform also has methods of scheduling cooking tasks that can update with new information as orders come in to optimize the cooking processes.

 

Miso Move - The platform can control several automation components, including a robot arm. We primarily work with existing manufacturers to use off-the-shelf robotics and adapt them to the commercial kitchen space. We do build custom manipulation components that are certified to work with food and have high levels of reliability in these dynamic environments.

 

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Miso Fleet - The platform has a secured infrastructure to regularly deploy over-the-air updates as the system improves and gets better over time.

 

Miso Robotics has worked with NSF and ETL to get its kitchen assistants certified for use in commercial kitchens. The Company has deployed systems to CaliBurger, Levy Restaurants, and White Castle that have cooked over 175,000 lbs of fried food and 12,000  burgers.

 

Miso continues to add new capabilities to the system, reduce its overall cost, and design easier ways to integrate it into more kitchen environments. Miso’s team of engineers is actively working on adding a 7th axis to a robot arm to increase the working area of the robot that will allow more end-to-end cooking.

 

Manufacturing

 

Miso currently manufactures the Miso Robotics Kitchen Assistants (1.0, 3.0, & 4.0) in our facility. The Company’s manufacturing workshop is listed with NSF (National Sanitation Foundation) and is also part of our ETL listing through Intertek. Both listings are regulatory requirements for utilizing the Miso Robotics Kitchen Assistants in a commercial kitchen.

 

The strategy for manufacturing will change over time dependent on production volumes and commitments. Miso’s pre-production Miso Robotics Kitchen Assistants will be produced at our manufacturing facility while the Company works on the cost and quality of the manufacturing process.

 

The Miso Robotics Kitchen Assistants currently uses a six-axis robotic arm. The Miso Robotic Kitchen Assistant is robotic arm agnostic and does not require a specific robotic arm manufacturer. The Miso Robotics Kitchen Assistant software platform enables the Miso Robotics Kitchen Assistant to work with any robotic arm. The components used to create the Miso Robotics Kitchen Assistant are sourced through licensed manufacturers. This allows Miso Robotics manufacturing to focus on software requirements and work closely with contract manufacturers to execute the production of Miso Robotics Kitchen Assistants. The Company is actively pursuing new vendors for the various products used to create the Kitchen Assistant.

 

Sales & Marketing

 

Miso Robotics has already acquired three large customers who have also been helpful during the design, development, and testing of Flippy (More information about those customers in the customer section below). Regarding further sales and marketing, Miso Robotics has obtained an enormous interest in the press. Since the Company’s founding in 2016, Miso’s robotic kitchen assistant, also known as “Flippy”, has been featured in numerous news and media outlets, including the Wall Street Journal, Forbes, VentureBeat, USA Today, CBS News, BBC News, TechCrunch, The Spoon, and many more.

 

After testing our product's performance and business impact, the Company received great feedback from its first customer. CaliBurger recently signed a commercial contract worth $11 million for Flippy, which validated Miso's value proposition for the industry after having tested the robot in their stores since March 2018.

 

After piloting Flippy for several months at a location in the Midwestern United States, White Castle decided to expand its relationship with Miso and target up to ten additional locations at which to deploy Flippy. This decision further validates Miso’s value proposition and led to increased interest from additional potential customers.

 

Miso is currently in deep discussions with several of the largest and most innovative quick service and fast food restaurant chains globally.

 

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Competition

 

Although there are several competitors who have built robotic machines for use in kitchens, none are as smart and versatile as Flippy from Miso Robotics. Flippy can essentially do anything a human arm can do, which allows us to market it to existing restaurants, creating a much larger market for our product. Our 10 patents pending (two approved) create an equally important barrier to entry against potential competition .

 

Creator

   Total funding to date: $18.4 million

   Creator has built a robotic burger maker that creates burgers in an assembly line fashion. The machine takes up a large footprint in a restaurant and it is not ideal to be sold to existing restaurants because it only makes one style of burger and is not versatile enough to make anything else.

Spyce

   Total funding to date: $25.9 million

   Spyce is a robotic restaurant that creates vegetable-centric bowls. This company is not currently selling products to existing restaurants, which makes them an indirect competitor to Miso while it further validates the need for automation in the Kitchen.

Chowbotics

   Total funding to date: $20.8 million

   Chowbotics uses robots to solve problems in food service including compromised cleanliness and inefficiency. It is targeting cafeterias, restaurants, and hotels. Its first robot, Sally, offers fully-customized, fresh and healthy salads. Similar to Creator, their current solutions are not versatile enough to compete with Miso.

Lab2Fab

   Owned by Middleby Corp.

   Restaurant and bar management platform uses robotics, artificial intelligence, machine learning, and augmented reality to improve both front-of-house and back-of-house operations.

Zume

   Total funding to date: $423 million

   Zume Pizza operates as a pizza delivery platform based in Mountain View, CA. The company uses robotics to make, bake, and deliver pizza. Much like Creator and Chowbotics, Zume is not a direct competitor because they do not sell their equipment to existing restaurants.

Dishcraft

   Total funding to date: $45.2 million

   Dishcraft is automating dish-washing for commercial kitchens. They pick up dirty dishes and take them back to their local facilities where they are washed by robotic systems.

 

Customers

 

CaliBurger - CaliBurger is an international burger chain with 36 current locations and another 14 in development. The restaurant chain employed its first Flippy robot in March of 2018 in its flagship location of Pasadena, California. John Miller, the owner of CaliBurger, says the product will be able to lower their labor expenses by 65%. They recently signed a commercial contract with a value of $11 million to fill the rest of their restaurant locations with two Flippy’s working alongside one chef. This rollout will include a complete restructuring of their kitchens to put the Flippy’s front and center. This contract, which is included as an exhibit in this Offering Circular, includes a guarantee that CaliBurger Franchisor USA, Inc. or its Franchisees will purchase a total of 100 Miso Robotics Kitchen Assistants and operate each of them for a minimum of 5 years. At $50,000 per Kitchen Assistant and a $1000 per month service fee, the value of this guarantee is up to $11,000,000.

 

Levy Restaurants - Levy is a disruptor in defining the premium sports and entertainment dining experience. The company is recognized as one of the fastest - growing and most critically acclaimed hospitality companies. Named one of the 10 companies in sports by Fast Company magazine, Levy’s diverse portfolio includes award-winning restaurants, iconic sports and entertainment venues, and convention centers as well as the Super Bowl, Grammy Awards, PGA Championship, US Open Tennis Tournament, Kentucky Derby, and NHL, MLB, NBA All-Star Games. “The big takeaway for us after using this for a half-season is that it worked, which is really no small thing,'' said Jamie Faulkner, E15 (a division of Levy) president. Faulkner and Miso Robotics led tours of Flippy for many visiting sports executives during the World Series games at Dodger Stadium. “There were a lot of questions about Flippy going into this, both internally and externally. But the gains we saw in volume and efficiency validated a lot of our expectations, and we still believe we’re on to something revolutionary.  

 

White Castle – White Castle is America’s first fast-food burger chain with 375 locations across the country. In June of 2020, the Company entered into an agreement with White Castle to develop, pilot, and undertake a beta rollout of Miso Robotics' Flippy robot for White Castle's North American restaurants. As part of the pilot, White Castle deployed the new version of Flippy, Robot-on-a-Rail (ROAR), into a Chicago-area kitchen for testing and future integration. The deployment put autonomous frying to work for enhanced production speeds, improved labor allocation, and an added layer of health and safety in the cooking process. In October 2020, White Castle and Miso Robotics announced plans to expand their relationship. Miso and White Castle will target up to 10 new locations as part of a beta rollout of Flippy to White Castle’s North American restaurants.

 

Additionally, Miso is in talks with several other QSR and fast-food chains about bringing Flippy to their kitchens.

 

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Employees

 

The Company currently has thirty-one full time employees and six hourly employees. Of the full-time employees, nineteen work in engineering, five work in operations, four work product development, two are executives, and one works in human resources. Of the hourly employees, three are field service techs, one is an R&D support assistant, one is in an engineering support role, and one is a facilities assistant.

 

The Company’s Property

 

The Company currently leases its main office at E. 561 Green Street, Pasadena, CA. This location is the Company's headquarters and also research and development center and test kitchen. The Company also leased a space at 24 N. Marengo Avenue, Pasadena, CA . The lease on this property ended as of June 1, 2020.

 

 

Management’s Discussion and Analysis on Financial Condition and Results of Operations

 

The following discussion of the Company’s financial condition and results of operations should be read in conjunction with our financial statements and the related notes included in this Offering Circular. The following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements.

 

Operating Results – Fiscal Years Ended December 31, 2019 and 2020

 

The Company generated minimal revenue through the period ending December 31, 2019 as it ramped up business development activities. For the period ended December 31, 2020 the Company generated revenue of $298,752, the majority of this revenue was from multiple one-time consulting engagements and the Company’s deployed Flippy units.

 

Miso’s costs and expenses primarily consist of salaries from employees related to engineering, research and development, and business development. For the twelve-month period ended December 31, 2020, the Company spent $922,086 on non-salary research and development related costs, $3,749,560 on salaries, which includes non-cash stock compensation costs, $4,274,587 in sales and marketing expenses primarily around marketing of its offering, and $2,690,096 on overhead, general & administrative, legal and non-engineering salaries.

 

Across 2020 the Company has continued to lower its operating expenses by cutting costs from legal & professional fees, contractors, marketing, rent, and office expenses. The Company saw its prototyping and research & development costs increase across 2020 as it continued to invest in its business development efforts and go-to-market strategy and expects those to continue to increase through the beginning of 2021. Since the period covered by our audited financial statements the company has maintained the lowered costs achieved across 2020 and continued to invest in business development efforts.

 

Operating Results – Fiscal Periods Ended June 30, 2019 and 2020

 

While the Company saw a growth in revenue during the first half of 2020, the company continued to produce minimal revenue as it ramped up product and business development activities. Our net revenue for this period was $75,500 (unaudited), compared to $6,000 in net revenue for the period ended June 30, 2019.

 

Since the period covered by our audited financial statements the Company has continued to lower its operating expenses by cutting costs from legal & professional fees, contractors, marketing, rent, and office expenses. In the six-month period ended June 30, 2020 (unaudited), the Company had $3,166,706 in operating expenses, with $1,199,480 from Research and Development related expenses, $743,981 from Sales and Marketing expenses, and $1,223,245 from General and Administrative expenses. This is compared to the six-month period ended June 30, 2019, which had overall higher expenses as compared to this year, with a total of $3,787,161, spread across $1,934,018 from Research and Development, $166,180 from Sales and Marketing, and $1,686,963 from General and Administrative.

 

Liquidity and Capital Resources – Fiscal Years Ended December 31, 2019 and 2020

 

As of December 31, 2020, the Company's cash on hand was $1,767,841, compared with $2,021,777 as of December 31, 2019. The Company also had an investment receivable from its Series C financing round of $7,469,164. These funds hit the Company’s main operating account in January 2021. As of December 31, 2020, the Company had closed on $16,687,877 from its Regulation A+ financing round, offering Series C Preferred Stock. This Regulation A+ offering is ongoing, and between January 1, 2021 and April 30, the Company received additional gross proceeds of $4,021,814.

 

In the last quarter of 2019, the Company closed on $2,744,667 of debt from a variety of its existing investors and related parties. This debt is in the form of promissory notes that bear 10% interest per annum, have a two-year term, and include the issuance of 273,919 common warrants. Details of this transaction can be found in the Interest of Management and Others in Certain Transactions section of this Form 1-K. With proceeds from the Regulation A+ offering, the Company paid back $1,222,465.28, comprised of principal of $1,062,500 and interest of $159,965.28, to Rise of Miso, LLC in March 2021. In April 2021, the Company converted principal of $2,422,148.28 and accrued interest of $272,709 of venture debt to Series C Preferred Stock at a per share price of $13.728, a 20% discount to the offering per share price of $17.16, into 196,300 shares of Series C Preferred Stock. As of the date of this annual report, this total debt from a variety of existing investors and related parties is $150,000, which is due to be repaid by September 30, 2021.

 

Revenue for the year ended December 31, 2020 was $298,752, compared with nearly $100,000 or the year ended December 31, 2019. As discussed above, the Company reduced operating expenses across 2019 and 2020 and had an infusion of capital in the form of promissory notes. In March 2020, the Company’s Offering Circular was qualified by the Securities and Exchange Commission (SEC). As of the date of this report, the Company has raised $20,709,593 in its current Regulation A+ round, issuing a total of 1,206,858 shares of Series C Preferred Stock. The Company is continuing to raise capital in its Regulation A+ round. The Company believes the capital raised in its Regulation A+ round will provide a sufficient cash runway for the Company to execute its go-to-market strategy over the next 12-18 months and reach profitability.

 

Liquidity and Capital Resources – Fiscal Periods Ended June 30, 2019 and 2020

 

As of June 30th, 2020, the company’s Cash and Cash Equivalents balance was $1,239,003, compared with $2,021,777  as of June 30th, 2019.

 

The Company filed a Form 1-A with the Securities and Exchange Commission for a Regulation A+ financing round in November 2019. The Company is seeking to raise a minimum of $1,500,000 and a maximum of $30,000,000 by offering its Series C Preferred Stock at a price of $17.16 per share. The Company engaged SI Securities, LLC to serve as its sole and exclusive placement agent to assist in the placements of its securities. This Offering was qualified by the SEC on March 26, 2020. As of June 30, 2020, the Company had closed on $1,316,295 in capital by issuing 103,811 shares of Series C Preferred Stock in its Regulation A+ financing round. As of the date of this Offering Circular the Company had closed on $20,709,683 in capital by issuing 1,206,858 shares of Series C Preferred Stock.  As of December 31, 2020, approximately $16,552,853  of this total amount was received through SI Securities and a syndicate member, and approximately $135,015 was received in direct investments. The Company is aware of the amount reflected on the SeedInvest website as $16,652,871 in gross receipts from its portion of the offering and is uncertain why the amount is inconsistent. Additionally, as of the date of this Offering Circular the Company closed its engagement with SI Securities, LLC and has engaged Dalmore Group, LLC to serve as its sole and exclusive placement agent to assist in the placements of its securities.

 

In the last quarter of 2019, the Company closed on $2,744,667 of debt from a variety of its existing investors and related parties. This debt is in the form of promissory notes that bear 10% interest per annum, have a two-year term, and include the issuance of 273,919 common warrants. The Company has also continued to close additional debt at the same terms. As of December 31, 2020, this total had increased to $3,634,648 of debt from a variety of existing investors and related parties, with a total of 362,739 common warrants.

 

Plan of Operations

 

To date, Miso has generated minimal revenues, though they are growing quickly, while still hiring a large team of engineers. Its engineering and product development teams have focused their time on building prototypes of our automated kitchen assistants, delivering production-ready models, and developing intellectual property. In 2020 these teams developed version 2 of our automated kitchen assistants, the Overhead Robot on a Rail (OHROAR), which was deployed commercially as part of a pilot at a White Castle location in the Midwestern United States .

 

During 2020, Miso hired a new Chief Executive Officer, new Chief Strategy Officer, and added three individuals to its engineering team. As Miso continues to raise capital in its current financing round, the Company will continue hiring additional engineering, business development, marketing, and support staff to assist in prototyping, research & development. These hires will help the Company to execute a go-to-market strategy with the goal of signing commercial agreements and generating additional revenue in 2021.

 

The Company believes the amount raised as of the date of this report from its current financing round will satisfy its cash requirements to implement its initial plan of operations. As the Company continues to raise beyond the minimum offering amount, it will continue to speed up research & development, production, and business development efforts to pursue multiple revenue streams simultaneously. If it raises the maximum amount of $30mm, the Company does not anticipate having to raise additional capital for the business for at least two years.

 

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Trend Information

 

The Company’s primary focus is to execute its go-to-market strategy with the goal of entering into one or more additional commercial agreements by the end of 2021. The Company is currently targeting quick service restaurants (QSRs), larger restaurant chains, systems integrators, and food and restaurant supply producers as potential customers. Miso has also entered into partnership agreements with complementary organizations in an effort to improve food safety an accessibility in robotics.

 

The Company saw a significant spike in commercial interest during the year ended December 31, 2020. The most notable result of this interest was the commercial agreement entered into with White Castle, America’s first fast-food burger chain, which is discussed further below.

 

In April of 2020, in partnership with PopID, Miso deployed a thermal-based screening device in CaliBurger’s Pasadena location. To address health concerns the device will measure the body temperature of people entering the restaurant. The technology will be tested in California with the goal of rolling it out to other locations.

 

In May of 2020 Miso Robotics signed a three-year partnership agreement with PathSpot Technologies to work on integrating PathSpot’s sanitizing scanning technology with Miso's kitchen automation assistants. The goal of the partnership is to help enforce proper hand washing etiquette and ensure effective hand sanitation amongst the human employees that work alongside Flippy.

 

In June of 2020 Miso Robotics became an approved vendor of TimePayment, a provider of equipment leasing and financing services, to offer low to zero-interest financing to its customers.

 

In June of 2020, the Company entered into an agreement with White Castle to develop, pilot, and undertake a beta rollout of Miso Robotics' Flippy robot for White Castle's North American restaurants.

 

In October of 2020, Miso Robotics announced global commercial availability of the Flippy Overhead Robot-on-a-Rail (OHROAR).

 

In October of 2020, Miso Robotics and White Castle announced plans to expand implementations of Miso’s autonomous kitchen assistant, Flippy. Miso and White Castle will target up to 10 new locations as part of a beta rollout of Flippy to White Castle’s North American restaurants.

 

The Company is already generating revenue via agreements currently in place with Levy Restaurants and CaliBurger and expects to enter into similar agreements with other partners in 2021. The Company expects future agreements to be a mix of revenue generated from upfront purchase of equipment as well as monthly recurring revenue in the form of service and subscription agreements. The Company also expects revenue in the form of consulting and pilot deployments.

 

The restaurant and food services industry is ripe for disruption, especially as labor costs increase and the overall pool of labor in the industry because scarce. The Company believes it is in a unique position to take advantage of changes in the industry by helping future customers increase labor utilization, decrease labor costs, and improve overall throughput and profitability.

 

Directors, Executive Officers, and Significant Employees

 

Name   Position   Age   Term in Office
Executive Officers            
Mike Bell   Chief Executive Officer   56   Indefinite, appointed August 2020
Ryan Sinnet   CTO   35   Indefinite, appointed October 2016
Kevin Morris   Chief Financial Officer   38   Indefinite, appointed September 2019
             
Directors            
Buck Jordan   Chairman   40   Indefinite, appointed August 2020
Joseph Essas   Director   49   Indefinite, appointed December 2019
Massimo Noja De Marco   Director   58   Indefinite, appointed November 2019
Nick Degnan   Director   38   Indefinite, appointed September 2019
Thomas Bruderman   Director   52   Indefinite, appointed March 2020
             
Significant Employees            
Rob Anderson   Head of Mechanical Engineering   27   Indefinite, appointed September 2016

 

Mike Bell, Chief Executive Officer

Mike Bell was appointed CEO of Miso Robotics in August 2020 after serving as the Chairman of the Board of Directors for nearly one year. For the past twenty-five years, Mike has served as CEO/President/COO in early-stage tech startups and public company roles. Most recently, Michael served as Chief Operating Officer at Ordermark, a leading restaurant technology company. Prior to Ordermark, Mike was President at Bridg, a venture-backed software company providing a B2C CRM for some of the nation’s leading restaurant brands. He also served as CEO/President of Infrascale, SOS Online Backup, 3PL Central, and Software.com. Early in his career, Mike co-founded Encore Software and served as its CEO for fourteen years. During this time Mike and his team grew Encore to become one of the largest consumer software publishers in North America and one of the fastest-growing – having twice been named to Inc. Magazine’s Inc 500 list.

 

Ryan Sinnet, CTO

Ryan is a Co-Founder and CTO of Miso Robotics, a position he has held since 2016. Ryan has spent his career developing novel control methods for robotic systems and has contributed over 15 refereed publications to the field. As a PhD student, he was awarded an NSF Graduate Research Fellowship based on his proposal to bridge some of the gaps between human and robotic walking. During his studies, he spent half a year at NASA Johnson Space Center teaching the Valkyrie robot to walk. After graduate school, Dr. Sinnet joined eSolar in 2015 where he was responsible for many of the control algorithms and software systems that ensure safe operation of utility-scale solar power plants. Ryan received his PhD in Mechanical Engineering from Texas A&M University in 2015 and his B.S. in Electrical Engineering from the California Institute of Technology in 2007.

 

16

 

 

Kevin Morris, Chief Financial Officer

Kevin is the CFO of Miso of Robotics and manages the company’s finances and accounting. He was appointed to this role in September 2019. Prior to this, from July 2014 to April 2019, he was the CFO and COO of Denim.LA, Inc., and managed the company’s finances, operations, and customer service. He was formerly (from July 2014 to January 2016) a consultant to the company and became an employee in February 2016. Kevin is originally from Huntington Beach, California and received his bachelors in Applied Mathematics and Computer Science from the University of California, Berkeley. Upon graduation, he worked at Deloitte Consulting where he specialized in technical integrations and strategy. After attending the UCLA Anderson Graduate School of Management where he received his MBA, he worked for American Airlines as the head of pricing strategy for ancillary products and for the airline’s Asia-Pacific network. With a strong desire to work in the apparel industry, Kevin worked as the Vice-President of Sales for an Adidas licensee from February 2013 to June 2014, overseeing the global sales and marketing strategy for multiple Adidas sports categories.

 

Rob Anderson, Head of Mechanical

Rob Anderson is a Co-Founder and the Head of Mechanical Engineering at Miso Robotics. He leads the hardware development of Miso's autonomous cooking platform. Rob is driven to build teams around technology to elevate the way people eat and live their daily lives. Prior to founding Miso Robotics, Rob worked at Microsoft in 2015 where he supported the international development of the Surface manufacturing lines. At SpaceX ibn 2016, Rob also helped develop internal tools to understand component lifetime after multiple rocket launches. He earned his degree in Mechanical Engineering from the California Institute of Technology in 2016, where he founded an interdisciplinary program to evaluate the next generation of energy storage for vehicles.

 

James “Buck” Jordan, Chairman

James (“Buck”) Jordan founded Miso Robotics in 2016 and was a Director of the company from 2017 through March 2019. Buck is currently the acting President and Chairman of the Board of Directors of Miso Robotics. In addition to his roles at Miso, Buck has been a Partner at Wavemaker Partners since 2018 and founded Wavemaker Labs, a corporate venture studio in 2016. Prior to that, Buck was Managing Partner at an early-stage venture fund, Canyon Creek Capital, a position he has held since 2010. Buck is a technologist and early-stage venture investor with a successful track record of building businesses at the leading edge of technology and in transformative high growth markets such as robotics, digital media, and consumer products. He has led investments in successful startups such as Relativity Space, Gyft, Winc, Miso Robotics, ChowNow, Jukin Media, and several others. His operating expertise was honed during his time as a management consultant, working on Capitol Hill in Senator Arlen Spector's office, and as an Army Blackhawk Pilot.

 

Joseph Essas, Director

Joseph Essas has been serving as Chief Technology Officer at Opentable (part of Booking Holdings) since 2012. In his role, Joseph oversees all Product Development and Engineering initiatives at the Company as well as Data Science and Operations. Prior to joining OpenTable, Joseph served as the Chief Technology Officer for eHarmony where he was responsible for overseeing and guiding the technical development, operation and growth of the Company. Previously, Mr. Essas served as Vice President of Engineering of Yahoo! where he managed engineering teams for the search marketing division. Mr. Essas attended Jerusalem College of Technology.

 

Massimo Noja De Marco, Director

Massimo Noja De Marco serves as Kitchen United’s Chief Culinary Officer. Prior to joining the Company, Massimo owned and operated PH+E, a boutique consulting firm focusing on opening restaurants, hotels and bars across the US, Mexico and Europe, a role he held starting in 2014. He served as Vice President of Operations for SBE Entertainment, controlling all operational aspects for the Restaurants and Nightlife division. Previously he covered the same role at Wolfgang Puck Catering and Events, overseeing operations for all venues in S. California, including major events and awards shows, such as the Academy Awards. Formerly, Massimo owned and operated restaurants in NYC and Los Angeles and ran the Food and Beverage Department for The Ritz Carlton Marina Del Rey and Hillcrest Country Club in Beverly Hills. Massimo was raised in a seven-generation family in Hospitality in the Lake District outside of Milan, Italy, where he graduated with a degree in Hospitality Management and a Bachelors in Public Relations from IULM University in Milan. For three years he ran the family business composed of boutique hotels and restaurants in Italy.

 

Nick Degnan, Director

Nick Degnan is a Principal of Wavemaker Labs and VP, Product & Operations. His career in product development began as a mechanical design engineer, forming the foundation for later helping grow a startup towards acquisition and more recently, product development consulting. Before joining Wavemaker Labs, Nick was the Head of Product at the Motivo Engineering, a product development consulting firm, where he was responsible for continuous improvement of their consulting process and client experience, as well as guiding engineering teams in the development of agriculture technologies, autonomous vehicle systems, manufacturing automation, and drone related products, among other intelligent electrical-mechanical system technologies. Nick worked at Motivo from April 2016 through May 2019.

 

17

 

 

Before Motivo, from 2010 through 2016, Nick worked for Equipois Inc., a venture-backed and later acquired startup that designs and manufactures human exoskeleton technologies. He initially held the position of Engineering Manager focused on expanding the range of applications supported by the technology. As the Company grew his role shifted towards mass market adoption as Director of Product Management and ultimately headed the corporate office as VP of Operations. Post acquisition, he supported new ownership as Regional Manager with western US and international business operations oversight. Before joining Equipois, Nick worked for Lockheed Martin Space System leading a design team in the development of classified technologies.

 

Nick joins Miso Robotics to help accelerate their product development vision while ensuring there is a product-market fit, and also to provide organizational process improvement guidance as the Company grows. He holds an MBA from the UCLA Anderson School of Management, and an MS in Mechanical & Aeronautical Engineering and dual BS in Mechanical and Materials Engineering from UC Davis.

 

Thomas Bruderman, Director

 

Thomas Bruderman is a founder and Managing Partner of MAG Ventures, an early to mid-stage venture fund. Mr. Bruderman founded MAG Ventures in 2007. Prior to founding MAG, he was Senior Equity Trader and responsible for the entire healthcare group at Fidelity Investments (FMR) in Boston, Massachusetts. During his seven-plus years at Fidelity, from 1998 to 2005, Mr. Bruderman’s responsibilities included trading, personnel management and investment research and analysis. Before being recruited to Fidelity Investments, Mr. Bruderman was Managing Director and Head of Equities at Merit Capital, a Connecticut-based boutique Investment Bank.

 

Additionally, Mr. Bruderman is Chairman of AI based cybersecurity company DarkLight and Vice-Chairman and Corporate Secretary of emerging media company, Allyance Media Group. Mr. Bruderman has over twenty-five years of experience in the finance and asset management industry, spanning both financial structuring and operational experience. He earned a BS in Finance from Providence College.

 

Compensation of Directors and Executive Officers

 

For the year ended December 31, 2020, the Company compensated its four highest paid executive officers as follows:

 

Name   Capacity in which
compensation
was received
  Cash
Compensation
    Other
Compensation
    Total
Compensation
 
Michael Bell   CEO   $ 101,566     $ 0     $ 101,566  
Buck Jordan   CEO, President   $ 120,000     $ 0     $ 120,000  
Ryan Sinnet   CTO   $ 200,000     $ 0     $ 200,000  
Kevin Morris   CFO   $ 0     $ 0     $ 0  

 

Buck Jordan served in his capacity as Chief Executive Officer from September 2019 to August 2020. During that time, he received an annual salary of $120,000 for the role.

 

The Company appointed Buck Jordan as President and appointed Mike Bell as Chief Executive Officer in August 2020. Mike Bell currently receives an annual salary of $250,000 for this role.

 

The Company appointed Thomas Bruderman as Director in March 2020. He does not currently receive any cash compensation for this role.

 

In May 2020, the board authorized the following restricted stock grants for our directors and officers, with the options being exercisable at the fair market value of the shares as of that date:

 

Name   Capacity in which
compensation was received
  Options Granted  
Buck Jordan   Chief Executive Officer     5,145  

 

18

 

 

Security Ownership of Management and Certain Security Holders

 

Title of Class   Name and
address of
beneficial owner
        Amount and
nature of
beneficial
ownership
    Amount and
nature of
beneficial
ownership
acquirable
    Percent
of class
    Total voting
power per
beneficial
owner (5)
 
Officers and Directors                                            
                                             
Common Stock   Ryan Sinnet
141 N Parkwood Ave Apt 11,
Pasadena, CA 91107
            N/A       263,131       13.19 %     N/A  
Common Stock   Buck Jordan
1134 11th Street Suite 101,
Santa Monica, CA 90403
            202,483       N/A       11.69 %     40.47 %
Common Stock  

Michael Bell

1028 9th Street

Manhattan Beach, CA 90266

            25,000       233,219       13.14 %     0.51 %
Common Stock   All directors and officers as a group     (1)       292,483       499,350       35.49 %     5.96 %
                                             
Other Significant Holders                                            
                                             
Common Stock   John Miller     (2)(3)       63,000       N/A       3.64 %     11.66 %
Common Stock   Avista Investments. LLC     (2)(6)       200,000       N/A       11.55 %     4.07 %
Common Stock   CCC HelloTech, LP     (2)(4)       205,000       N/A       11.84 %     40.47 %
Common Stock   Match Robotics VC, LLC     (2)       176,400       N/A       10.18 %     40.47 %
Common Stock   Future VC, LLC     (2)(4)       200,000       N/A       11.55 %     40.47 %
Common Stock   Canyon Creek Capital     (2)(4)       150,000       N/A       8.55 %     40.47 %
Common Stock   CaliBurger     (2)(3)       160,000       N/A       9.24 %     11.66 %
Series A Preferred Stock   Rise of Miso, LLC     (2)(3)       104,012       N/A       13.51 %     11.66 %
Series A Preferred Stock   Match Robotics VC, LLC     (2)       121,630       N/A       15.80 %     40.47 %
Series A Preferred Stock   Future VC SPV, LLC     (2)(4)       395,227       N/A       51.34 %     40.47 %
Series A Preferred Stock   Grazadio Family Trust     (2)       80,539       N/A       10.46 %     5.37 %
Series B Preferred Stock   Rise of Miso, LLC     (2)(3)       105,995       N/A       10.62 %     11.66 %
Series B Preferred Stock   Future VC SPV, LLC     (2)(4)       402,790       N/A       40.38 %     40.47 %
Series B Preferred Stock   Grazadio Family Trust     (2)       145,154       N/A       14.55 %     5.37 %
Series B Preferred Stock   CaliBurger     (2)(3)       139,666       N/A       14.00 %     11.66 %
Series B Preferred Stock   Levy Premium Food ServiceLimited Partnership     (2)       25,000       N/A       2.51 %     0.51 %
Series C Preferred Stock  

New Direction Trust Company

1070 West Century Drive

Louisville, CO 80027

    (7)       896,517       N/A       93.53 %     18.69 %
Series C Preferred Stock   Future VC SPV, LLC     (2)(4)       133,505       N/A       11.33 %     40.47 %
Series C Preferred Stock   Graziado Family Trust     (2)       37,741       N/A       3.20 %     5.37 %

 

Title of Class   Name and
address of
beneficial owner
        Amount and
nature of
beneficial
ownership
    Amount and
nature of
beneficial
ownership
acquirable
    Percent
of class
    Total voting
power per
beneficial
owner (5)
 
Officers and Directors                                            
                                             
Common Stock   Ryan Sinnet
141 N Parkwood Ave Apt 11,
Pasadena, CA 91107
            N/A       263,131       13.32 %     N/A  
Common Stock   Buck Jordan
1134 11th Street Suite 101,
Santa Monica, CA 90403
            202,483       N/A       11.83 %     41.76 %
Common Stock  

Michael Bell

1028 9th Street

Manhattan Beach, CA 90266

            5,208       233,219       12.26 %     0.12 %
Common Stock   All directors and officers as a group     (1)       272,691       499,350       34.91 %     6.14 %
                                             
Other Significant Holders                                            
                                             
Common Stock   John Miller     (2)(3)       63,000       N/A       3.68 %     12.90 %
Common Stock   Avista Investments. LLC     (2)(6)       200,000       N/A       11.68 %     4.51 %
Common Stock   CCC HelloTech, LP     (2)(4)       205,000       N/A       11.97 %     41.76 %
Common Stock   Match Robotics VC, LLC     (2)       176,400       N/A       10.30 %     41.76 %
Common Stock   Future VC, LLC     (2)(4)       200,000       N/A       11.68 %     41.76 %
Common Stock   Canyon Creek Capital     (2)(4)       150,000       N/A       8.76 %     41.76 %
Common Stock   CaliBurger     (2)(3)       160,000       N/A       9.34 %     12.90 %
Series A Preferred Stock   Rise of Miso, LLC     (2)(3)       104,012       N/A       13.51 %     12.90 %
Series A Preferred Stock   Match Robotics VC, LLC     (2)       121,630       N/A       15.80 %     41.76 %
Series A Preferred Stock   Future VC SPV, LLC     (2)(4)       395,227       N/A       51.34 %     41.76 %
Series A Preferred Stock   Grazadio Family Trust     (2)       80,539       N/A       10.46 %     5.09 %
Series B Preferred Stock   Rise of Miso, LLC     (2)(3)       105,995       N/A       10.62 %     12.90 %
Series B Preferred Stock   Future VC SPV, LLC     (2)(4)       402,790       N/A       40.38 %     41.76 %
Series B Preferred Stock   Grazadio Family Trust     (2)       145,154       N/A       14.55 %     5.09 %
Series B Preferred Stock   CaliBurger     (2)(3)       139,666       N/A       14.00 %     12.90 %
Series B Preferred Stock   Levy Premium Food ServiceLimited Partnership     (2)       25,000       N/A       2.51 %     0.56 %
Series C Preferred Stock  

New Direction Trust Company

1070 West Century Drive

Louisville, CO 80027

    (7)       896,517       N/A       93.53 %     20.20 %

 

(1) No executive officers or directors, other than those named above, beneficially own more than 10% of any class of the Company’s voting securities.

(2) The following address may be used for each significant holder: C/O Miso Robotics, Inc., 561 E Green St., Pasadena, CA 91101

(3) Rise of Miso, LLC and CaliBurger are controlled by John Miller who is an investor in the Company

(4) Future VC SPV, LLC, Match Robotics VC, LLC, Canyon Creek Capital, and CCC HelloTech, LP are all controlled by Buck Jordan, who is an investor in the Company as well as its current President.

(5) Indicates the total voting power of each holder’s security ownership across all three classes of voting securities. This column excludes any acquirable ownership.

(6) Avista Investments, LLC is controlled by Harry Tsao

(7) Holding securities for the benefit of certain investors in the Regulation A+ offering.

 

Amounts are as of December 31, 2020. The fifth column (Percent of Class) includes a calculation of the amount the person owns now, plus the amount that person is entitled to acquire, such as the result of options issued under the Company’s 2017 Stock Plan. That amount is then shown as a percentage of the outstanding amount of securities in that class if no other people exercised their rights to acquire those securities. The result is a calculation of the maximum amount that person could ever own based on their current and acquirable ownership, which is why the amounts in this column will not add up to 100%.

  

Interest of Management and Others in Certain Transactions

 

In July 2018, the Company entered into a pilot agreement with Compass Group to provide a robotic kitchen assistant to assist in food preparation at a facility operated by Compass. This agreement calls for Miso Robotics to operate a Kitchen Assistant at one of Compass Group’s restaurants at Dodger Stadium. The agreement includes a $60,000 upfront purchase price and a $6,000 per year cost for providing services. In January 2019, the Company entered into a separate agreement with Compass Group to provide a robotic kitchen assistant at a separate facility operated by Compass. This agreement calls for Miso Robotics to operate a Kitchen Assistant at one of Compass Group’s restaurants at Chase Field in Phoenix, Arizona. The agreements outlines a $17,500 per Kitchen Assistant set up fee and a per usage/event fee of $75. Both of these agreements are still in effect as of December 2019.

 

Levy Premium Food Service Limited Partnership, which has an ownership stake in the Company, is a 100% wholly owned subsidiary of Compass Group.

 

In November 2019, the Company entered into a commercial agreement with CaliBurger to sell and provide ongoing support and services for 100 robotic kitchen assistants. This contract, which is included as an exhibit in this Offering Circular, includes a guarantee that CaliBurger Franchisor USA, Inc. or its Franchisees will purchase a total of 100 Miso Robotics Kitchen Assistants and operate each of them for a minimum of 5 years. At $50,000 per Kitchen Assistant and a $1,000 per month service fee, the value of this guarantee is up to $11,000,000. CaliBurger has an ownership stake in Miso Robotics, Inc.

 

In the last quarter of 2019, the Company closed on $2,744,667 of debt from a variety of its existing investors and related parties. This debt is in the form of promissory notes that bear 10% interest per annum, have a two-year term, and include the issuance of 273,919 common warrants. Two of these promissory notes, representing principal amounts of $1,062,500 and $782,167, are due to Rise of Miso, LLC and Future VC SPV, LLC. Rise of Miso, LLC is controlled by John Miller who is an investor in the Company via direct holdings and via CaliBurger’s holdings and Future VC SPV, LLC is controlled by Buck Jordan, who is an investor in the Company as well as its current President and Chairman of the Board of Directos. In 2020, the Company closed an additional $889,981.61 of debt at the same terms and issued warrants to purchase 88,821 shares of common stock. 

 

During the year ended December 31, 2019, the Company recognized $86,154 in revenue with an entity owned by an investor in the Company pursuant to a hardware and software agreement.

 

As of December 31, 2020, the Company had accounts payable of $128,716 to Wavemaker Labs, Inc., an entity with common management , for consulting services rendered across the fourth quarter of 2020. Payment terms were Net 30, and as of the date of this Offering Circular these accounts payable have been paid in full.

 

During the year ended December 31, 2019, the Company issued 200,000 shares to an entity with common management for services performed. The fair value of $82,000 is included in general and administrative expenses in the statements of operations.

 

Securities Being Offered

 

General

 

The Company is offering Series D Preferred Stock to investors in this offering. The company previously offered shares of Series C Preferred Stock in this offering. Sales of Series C Preferred Stock commenced on January 18, 2021 and concluded on May 13, 2021. The Series C Preferred Stock and Series D Preferred Stock may be converted into the Common Stock of the Company at the discretion of each investor, or automatically upon the occurrence of certain events, like an Initial Public Offering. As such, under this Offering Statement, of which this Offering Circular is part, the Company is qualifying up to 1,748,252 shares of Series C Preferred Stock, up to 529,848 shares of Series D Preferred Stock, and up to 2,278,100 shares of Common Stock.

 

The following description summarizes important terms of our capital stock. This summary does not purport to be complete and is qualified in its entirety by the provisions of our Sixth Amended and Restated Certificate of Incorporation and our Bylaws, copies of which have been filed as Exhibits to the Offering Statement of which this Offering Circular is a part. For a complete description of our capital stock, you should refer to our Sixth Amended and Restated Certificate of Incorporation, and our Bylaws, and applicable provisions of the Delaware General Corporation Law.

 

19

 

 

Immediately following the completion of this offering, our authorized capital stock will consist of

 

  7,000,000 shares of Common Stock, $0.0001 par value per share and
  4,222,116 shares of Preferred Stock, $0.0001 par value per share

  769,784 shares will be designated Series A Preferred Stock

  997,616 shares will be designated Series B Preferred Stock

  1,748,252 shares will be designated Series C Preferred Stock
  706,464 shares will be designated Series D Preferred Stock

 

Series C and Series D Preferred Stock

 

General

The company has authorized the issuance of Series C Preferred Stock (the “Series C Preferred Stock”) and Series D Preferred Stock (the “Series D Preferred Stock”), which both contain substantially similar rights, preferences, and privileges, as other series of Preferred Stock as further described below.

 

Dividend Rights

The Corporation shall not declare, pay or set aside any dividends on shares of any other class or series of capital stock of the Corporation (other than dividends on shares of Common Stock payable in shares of Common Stock) unless (in addition to the obtaining of any consents required elsewhere in the Certificate of Incorporation) the holders of the Preferred Stock, including holders of the Series C Preferred Stock and Series D Preferred Stock, then outstanding shall first receive, or simultaneously receive, on a pari passu basis, a dividend on each outstanding share of Preferred Stock in an amount at least equal to:

 

i) in the case of a dividend on Common Stock or any class or series that is convertible into Common Stock, that dividend per share of Preferred Stock as would equal the product of:

(A) the dividend payable on each share of such class or series determined, if applicable, as if all shares of such class or series had been converted into Common Stock and

(B) the number of shares of Common Stock issuable upon conversion of a share of such series of Preferred Stock, in each case calculated on the record date for determination of holders entitled to receive such dividend or

 

ii) in the case of a dividend on any class or series that is not convertible into Common Stock, at a rate per share of Preferred Stock determined by

(A) dividing the amount of the dividend payable on each share of such class or series of capital stock by the original issuance price of such class or series of capital stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to such class or series) and

(B) multiplying such fraction by an amount equal to the original issuance price of such class or series of capital stock; provided that, if the Corporation declares, pays or sets aside, on the same date, a dividend on shares of more than one class or series of capital stock of the Corporation, the dividend payable to the holders of a series of Preferred Stock shall be calculated based upon the dividend on the class or series of capital stock that would result in the highest dividend on such series of Preferred Stock.

 

Conversion Rights

Voluntary Conversion. Each share of Series C Preferred Stock and each share of Series D Preferred Stock shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into such number of fully paid and non-assessable shares of Common Stock as is determined by dividing the applicable original issue price by the applicable conversion price in effect at the time of conversion.

 

Mandatory Conversion. Additionally, each share of Series C Preferred Stock and each share of Series D Preferred Stock will automatically convert into shares of Common Stock

 

  - immediately prior to the closing at a price of at least $68.64 per share (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Common Stock) of a firm commitment underwritten public offering, registered under the Securities Act of 1933, as amended (the “Securities Act”), resulting in at least $80,000,000 of gross proceeds to the Company or

 

-upon the receipt by the Company of a written request for such conversion from the holders of a majority of the Preferred Stock then outstanding voting as a single class and on an as-converted basis.

 

20

 

 

Voting Rights and Proxy 

Each holder of the Company’s Preferred Stock is entitled to cast the number of votes equal to the number of whole shares of Common Stock into which the shares of Preferred Stock held by such holder are convertible on all matters submitted to a vote of the stockholders. The subscription agreement that investors will execute in connection with this offering grants an irrevocable proxy to the Company’s President to (i) vote all securities held of record by the investor (including any shares of the Company’s capital stock that the investor may acquire in the future), (ii) give and receive notices and communications, (iii) execute any written consent, instrument or document that the President determines is necessary or appropriate at the President’s complete discretion, and (iv) take all actions necessary or appropriate in the judgment of the President for the accomplishment of the foregoing. The proxy will survive the death, incompetency and disability of an individual investor and, if an investor is an entity, will survive the merger or reorganization of the investor or any other entity holding the shares of Series D Preferred Stock. The proxy will also be binding upon the heirs, estate, executors, personal representatives, successors and assigns of an investor (including any transferee of the investor). Any transferee of the investor becomes party to the subscription agreement and must agree to be bound by the terms of the proxy. The proxy will terminate upon the earlier of the closing of a firm-commitment underwritten public offering pursuant to an effective registration statement under the Securities Act covering the offer and sale of Common Stock, the effectiveness of a registration statement under the Exchange Act covering the Common Stock or five years from the date of execution of the subscription agreement. The full subscription agreement appears as Exhibit 4 to the Offering Statement of which this Offering Circular forms a part.

 

As long as any shares of Preferred Stock are issued and outstanding, the Company or any of its subsidiaries shall not, without first obtaining the approval (by vote or written consent as provided by law) of the holders of a majority of the outstanding shares of Series D Preferred Stock, Series C Preferred Stock, Series B Preferred Stock, and Series A Preferred Stock, whether directly or indirectly by amendment, merger, consolidation, reorganization, recapitalization or otherwise: 

 

-liquidate, dissolve or wind-up the business and affairs of the Corporation, effect any merger or consolidation or any other Deemed Liquidation Event, effect any other recapitalization or reclassification of any of the Corporation’s capital stock, or consent to any of the foregoing;

 

-amend, alter or repeal any provision of the Certificate of Incorporation or Bylaws of the Corporation in a manner that adversely affects the powers, preferences or rights of the Preferred Stock or any series thereof;

 

  - create, or authorize the creation of, or issue or obligate itself to issue shares of, any additional class or series of capital stock unless the same ranks junior to each series of Preferred Stock with respect to the distribution of assets on the liquidation, dissolution or winding up of the Corporation, the payment of dividends and rights of redemption, or increase the authorized number of shares of Preferred Stock or increase the authorized number of shares of any additional class or series of capital stock;

 

-(i) reclassify, alter or amend any existing security of the Corporation that is pari passu with any series of Preferred Stock in respect of the distribution of assets on the liquidation, dissolution or winding up of the Corporation, the payment of dividends or rights of redemption, if such reclassification, alteration or amendment would render such other security senior to any series of Preferred Stock in respect of any such right, preference, or privilege or (ii) reclassify, alter or amend any existing security of the Corporation that is junior to any series of Preferred Stock in respect of the distribution of assets on the liquidation, dissolution or winding up of the Corporation, the payment of dividends or rights of redemption, if such reclassification, alteration or amendment would render such other security senior to or pari passu with any series of Preferred Stock in respect of any such right, preference or privilege;

 

  - purchase or redeem (or permit any subsidiary to purchase or redeem) or pay or declare any dividend or make any distribution on, any shares of capital stock of the Corporation other than (i) redemptions of or dividends or distributions on the Preferred Stock as expressly authorized, (ii) dividends or other distributions payable on the Common Stock solely in the form of additional shares of Common Stock, (iii) repurchases of stock from former employees, officers, directors, consultants or other persons who performed services for the Corporation or any subsidiary in connection with the cessation of such employment or service at the lower of the original purchase price or the then-current fair market value thereof;

 

21

 

 

-increase the number of shares of Common Stock (or options to purchase such shares of Common Stock) issued or issuable to employees or directors of, or consultants to, the Corporation pursuant to any plan, agreement or arrangement or otherwise adopt or alter any equity incentive plan, agreement or arrangement for any employees or directors of, or consultants to, the Corporation;

 

-create, or hold capital stock in, any subsidiary that is not wholly owned (either directly or through one or more other subsidiaries) by the Corporation, or sell, transfer or otherwise dispose of any capital stock of any direct or indirect subsidiary of the Corporation, or permit any direct or indirect subsidiary to sell, lease, transfer, exclusively license or otherwise dispose (in a single transaction or series of related transactions) of all or substantially all of the assets of such subsidiary; or

 

-increase or decrease the authorized number of directors constituting the Board of Directors.

 

Right to Receive Liquidation Preferences

In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event, the holders of shares of Series D Preferred Stock and Series C Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders before any payment shall be made to the holders of Common Stock and Series A Preferred Stock and on a pari passu basis with the Series B Preferred Stock , an amount per share equal to the greater of (i) the Series D Original Issue Price or Series C Original Issue Price, respectively, plus any dividends declared but unpaid thereon, or (ii) such amount per share as would have been payable had all shares of Series D Preferred Stock or Series C Preferred Stock, respectively been converted into Common Stock immediately prior to such liquidation, dissolution, winding up or Deemed Liquidation Event (the amount payable pursuant to this sentence is hereinafter referred to as the “Series D Liquidation Amount” or “Series C Liquidation Amount”, respectively). If upon any such liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event, the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of shares of Series D Preferred Stock and Series C Preferred Stock the full amount to which they shall be entitled, the holders of shares of Series D Preferred Stock and Series C Preferred Stock shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

 

Anti-Dilution Rights

Holders of Series D Preferred Stock and Series C Preferred Stock have the benefit of anti-dilution protective provisions that will be applied to adjust the number of shares of Common Stock issuable upon conversion of the shares of the Preferred Stock. If equity securities are subsequently issued by the Company at a price per share less than the Conversion Price of a series of Preferred Stock then in effect, the Conversion Price of the affected series of Preferred Stock will be adjusted using a broad-based, weighted-average adjustment formula as set out in the Restated Certificate.

 

Series A and Series B Preferred Stock

 

General

The company has authorized the issuance of two other series of Preferred Stock. The series are designated Series A Preferred Stock and Series B Preferred Stock. Each such series of Preferred Stock contains substantially similar rights, preferences, and privileges, except as described below.

 

Dividend Rights

Holders of Series A Preferred Stock and Series B Preferred Stock have the same dividend rights as holders of Series C Preferred Stock as outlined above.

 

Conversion Rights

Holders of Series A Preferred Stock and Series B Preferred Stock have the same conversion rights as holders of Series C Preferred Stock as outlined above.

 

22

 

 

Voting Rights

Holders of Series A Preferred Stock and Series B Preferred Stock have the same voting rights as holders of Series C Preferred Stock as outlined above, except that the holders of the shares of Series A Preferred Stock and Series B Preferred Stock, each exclusively and as a separate class, are entitled to elect one (1) director to represent their respective series.

 

Right to Receive Liquidation Preferences

Series B Preferred Stock. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event, the holders of shares of Series B Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders before any payment shall be made to the holders of Common Stock and the Series A Preferred Stock and on a pari passu basis with the Series C Preferred Stock, an amount per share equal to the greater of (i) the Series B Original Issue Price, plus any dividends declared but unpaid thereon, or (ii) such amount per share as would have been payable had all shares of Series B Preferred Stock been converted into Common Stock immediately prior to such liquidation, dissolution, winding up or Deemed Liquidation Event (the amount payable pursuant to this sentence is hereinafter referred to as the “Series B Liquidation Amount”). If upon any such liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event, the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of shares of Series B Preferred Stock the full amount to which they shall be entitled, the holders of shares of Series B Preferred Stock shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

 

Series A Preferred Stock. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event, upon the completion of the distribution to holders of Series B Preferred Stock and Series C Preferred Stock, the holders of shares of Series A Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders before any payment shall be made to the holders of Common Stock by reason of their ownership thereof, an amount per share equal to the greater of (i) the Series A Original Issue Price, plus any dividends declared but unpaid thereon, or (ii) such amount per share as would have been payable had all shares of Series A Preferred Stock been converted into Common Stock immediately prior to such liquidation, dissolution, winding up or Deemed Liquidation Event. If upon any such liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event, the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of shares of Series A Preferred Stock the full amount to which they shall be entitled, the holders of shares of Series A Preferred Stock shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

 

Anti-Dilution Rights

Holders of Series A Preferred Stock and Series B Preferred Stock have the benefit of anti-dilution protective provisions that will be applied to adjust the number of shares of Common Stock issuable upon conversion of the shares of the Preferred Stock. If equity securities are subsequently issued by the Company at a price per share less than the Conversion Price of a series of Preferred Stock then in effect, the Conversion Price of the affected series of Preferred Stock will be adjusted using a broad-based, weighted-average adjustment formula as set out in the Restated Certificate.

  

Common Stock

 

General

The dividend and liquidation rights of the holders of the Common Stock are subject to and qualified by the rights, powers, and preferences of the holders of the Preferred Stock.

 

Voting Rights

Each holder of the Company’s Common Stock is entitled to one vote for each share on all matters submitted to a vote of the shareholder, except as provided by law or by the other provisions of the Certificate of Incorporation as outlined above. The holders of record of the shares of Common Stock, exclusively and as a separate class, shall be entitled to elect one (1) director of the Corporation.

 

Dividend Rights

The company will not declare, pay or set aside any dividends on shares of any other class or series of capital stock unless the holders of the Preferred Stock simultaneously receive along with all holders of outstanding shares of stock, a dividend on each outstanding share of Preferred Stock, as detailed in the Restated Certificate of Incorporation. The company has never declared or paid cash dividends on any of its capital stock and currently does not anticipate paying any cash dividends after this offering or in the foreseeable future.

 

23

 

 

Liquidation Rights

In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event, after the payment of all preferential amounts required to be paid to the holders of shares of Series C Preferred Stock, Series B Preferred Stock and Series A Preferred Stock, the remaining assets of the Corporation available for distribution to its stockholders shall be distributed among the holders of shares of Common Stock, pro rata based on the number of shares held by each such holder.

 

Exclusive Jurisdiction

 

Under Article 12 of our Sixth Amended and Restated Certificate of Incorporation, the sole and exclusive judicial forum for the following actions will be the Court of Chancery of the State of Delaware:

 

(1) Any derivative action or proceeding brought on behalf of the Company;

 

(2) Any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Company to the Company or the Company’s stockholders;

 

(3) Any action asserting a claim against the Company arising pursuant to any provision of the Delaware General Corporation Law or certificate of incorporation, or bylaws; or

 

(4) Any action asserting a claim against the Company governed by the internal affairs doctrine.

 

Notwithstanding the foregoing, if, for any reason, the Delaware Chancery Court does not have jurisdiction over an action, then the action may be brought in other federal or state courts with appropriate personal or subject matter jurisdiction.

 

We believe the provision benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies and in limiting our litigation costs, the forum selection provision may limit investors’ ability to bring claims in judicial forums that they find favorable to such disputes and may discourage lawsuits with respect to such claims. The company has adopted the provision to limit the time and expense incurred by its management to challenge any such claims. As a company with a small management team, this provision allows its officers to not lose a significant amount of time travelling to any particular forum so they may continue to focus on operations of the company.

 

Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. We believe that the exclusive forum provision applies to claims arising under the Securities Act, but there is uncertainty as to whether a court would enforce such a provision in this context. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. As a result, the exclusive forum provision will not apply to suits brought to enforce any duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. Investors will not be deemed to have waived the company’s compliance with the federal securities laws and the rules and regulations thereunder.

 

Plan of Distribution and Selling Security Holders

 

Plan of Distribution

 

The Company is offering up to 529,848 shares of Series D Preferred Stock on a “best efforts” basis at a price of $56.62 per share. The Series D Preferred Stock may be converted into the Common Stock of the Company at the discretion of each investor, or automatically upon the occurrence of certain events, like an Initial Public Offering. As such, the Company is qualifying up to 529,848 shares of Series D Preferred Stock and up to 529,848 shares of Common Stock under this Offering Statement, of which this Offering Circular is part.

 

The Company previously offered a minimum of 87,413 and up to 1,748,252 shares of Series C Preferred Stock on a “best efforts” basis at a price of $17.16 per share. On April 20, 2021, the Company increased the per share price of the Series C Preferred Stock in this offering to $20.59. The Series C Preferred Stock may be converted into the Common Stock of the Company at the discretion of each investor, or automatically upon the occurrence of certain events, like an Initial Public Offering. As such, the Company is qualifying up to 1,748,252 shares of Series C Preferred Stock and up to 1,748,252 shares of Common Stock under this Offering Statement, of which this Offering Circular is part.

 

The Company has engaged Dalmore Group, LLC as its broker/dealer of record. Dalmore Group, LLC is under no obligation to purchase any securities or arrange for the sale of any specific number or dollar amount of securities. As of the time of filing of this offering circular, the Company has sold the minimum number of shares in this offering.

 

Commissions and Discounts

 

The following table shows the total discounts and commissions payable to the placement agents in connection with the Series D Preferred Stock offered in this offering

 

    Per Share  
Public Offering Price   $ 56.62  
Commission   $ 0.5662  
Proceeds, before expenses, to us   $ 56.04  

 

The following table shows the total discounts and commissions payable to the placement agents in connection with the Series C Preferred Stock offered in this offering

 

    Per Share  
Public Offering Price   $ 20.59  
Commission   $ 0.2059  
Proceeds, before expenses, to us   $ 20.38  

 

The Company previously engaged SI Securities, LLC as its placement agent to assist in the placement of its securities. During the course of that engagement, the Company sold approximately $16,687,877 worth of its Series C Preferred Stock.

 

The following table shows the total discounts and commissions payable to the placement agents in connection with its previous participation in the offering:

 

Public Offering Price $17.16
Placement Agent Commission per share for the first $15,000,000 of investments in the offering* $1.46
Placement Agent Commission per share after the first $15,000,000 of investments in the offering* $1.20
Proceeds, before expenses, to us* $15.83

 

*Assuming the placement agent identifies all investors and the maximum amount of shares is sold

 

24

 

 

Other Terms

 

Dalmore Group, LLC has also agreed to perform the following services in exchange for the compensation discussed above:

 

·Review investor information, including KYC (Know Your Customer) data, perform AML (Anti-Money Laundering) and other compliance background checks, and provide a recommendation to the Company whether or not to accept investor as a customer of the Company;

 

·Review each investors subscription agreement to confirm such Investors participation in the offering, and provide a determination to the Company whether or not to accept the use of the subscription agreement for the Investors participation;

 

·Contact and/or notify the issuer, if needed, to gather additional information or clarification on an investor;

 

·Not provide any investment advice nor any investment recommendations to any investor;

 

·Keep investor details and data confidential and not disclose to any third-party except as required by regulators or in our performance under this Agreement (e.g. as needed for AML and background checks);

 

·Coordinate with third party providers to ensure adequate review and compliance.

 

In addition to the commission described above, the Company will also pay a one-time advance payment for out-of-pocket expenses of $5,000. This is in addition to the one-time advance payment of $5,000 previously made to Dalmore Group by the Company. The advance payment will cover expenses anticipated to be incurred by the firm such a preparing the FINRA filing, due diligence expenses, working with the Company’s SEC counsel in providing information to the extent necessary, and any other services necessary and required prior to the approval of the offering. Dalmore Group will refund a portion of the payment related to the advance to the extent it was not used, incurred or provided to the Company.

 

The Company has also engaged Dalmore as a consultant to provide ongoing general consulting services relating to the Offering such as coordination with third party vendors and general guidance with respect to the Offering. The Company will pay a one-time Consulting Fee of $20,000 for these services. This is in additional to the one-time fee of $20,000 previously paid to Dalmore Group for the services offered while the securities sold in the offering were Series C Preferred shares.

 

Assuming the full amount of the offering is raised, we estimate that the total fees and expenses of the offering payable by the Company to Dalmore Group, LLC will be approximately $433,796,36 in cash.

 

Selling Security holders

 

No securities are being sold for the account of security holders; all net proceeds of this offering will go to the Company.

 

Transfer Agent and Registrar 

 

Carta, Inc. will serve as transfer agent to maintain shareholder information on a book-entry basis. The Company will not issue shares in physical or paper form. Instead, our shares will be recorded and maintained on our shareholder register.

 

Investor’s Tender of Funds

 

After the Offering Statement has been qualified by the Commission, the Company will accept tenders of funds to purchase the Series D Preferred Stock. The Company may close on investments on a “rolling” basis (so not all investors will receive their shares on the same date), and these closings may occur anytime because the minimum offering amount has already been met. Investors may subscribe by tendering funds via wire, debit, credit, ACH, or physical check. Upon acceptance of the investors’ subscriptions, funds tendered by investors will be made available to the Company for its use.

 

The minimum investment in this offering is $962.54, or 17 shares of Series D Preferred Stock.

 

During the time in which the Company was offering shares of Series C Preferred Stock, the minimum investment in this offering was $988.32, or 48 shares of Series C Preferred Stock. The minimum investment in this offering before the share price increase for Series C Preferred Stock, which is reflected in the Offering Circular Supplement dated April 20, 2021, was $995.28, or 58 shares of Series C Preferred Stock. Investors that participated in the SeedInvest Auto Invest program had a lower investment minimum in this offering of $188.76, or 11 shares.

 

25

 

 

Investors will be required to subscribe to the Offering via the third party platform managed by DealMaker Solutions, Inc., and agree to the terms of the Offering, the subscription agreement, and any other relevant exhibit attached thereto. The subscription agreement includes a representation by the investor to the effect that, if you are not an “accredited investor” as defined under securities law, you are investing an amount that does not exceed the greater of 10% of your annual income or 10% of your net worth (excluding your principal residence).

 

26

 

 

Exhibits

 

1.1 Placement Agreement with SI Securities, LLC*

 

1.2 Amendment to Placement Agreement with SI Securities, LLC*

 

1.3 Broker-Dealer Agreement with Dalmore Group, LLC

 

2.1 Fourth Amended and Restated Certificate of Incorporation*

 

2.2 Fifth Amended and Restated Certificate of Incorporation*

 

2.3 Bylaws*

 

2.4 Sixth Amended and Restated Certificate of Incorporation

 

3.3 Form of Promissory Note*

 

3.4 Form of Warrant*

 

4.1 Form of Series C Subscription Agreement*

 

4.2 Form of Series D Subscription Agreement

 

6.1 Note Purchase Agreement*

 

6.2 Promotion & Pricing Agreement with CaliBurger*

 

6.3 Rise of Miso, LLC Promissory Note*

 

6.4 Future VC SPV, LLC Promissory Note*

 

8 Form of escrow agreement with The Bryn Mawr Trust Company*

 

11.1 Consent of Independent Auditor

 

11.2 Consent of Levy Restaurants*

 

11.3 Consent of CaliBurger*

 

12.1 Opinion of counsel as to the legality of the securities*

 

12.2 Opinion of counsel as to the legality of the securities Series D

 

13 Testing the Waters Materials*

 

*Previously filed

 

 27 

 

 

SIGNATURES

 

Pursuant to the requirements of Regulation A, the issuer certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form 1-A and has duly caused this Offering Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Pasadena, California, on, May 13, 2021.

 

Miso Robotics, Inc.

 

By /s/ Michael Bell  
Michael Bell, Chief Executive Officer
Miso Robotics, Inc.
Date: May 13, 2021

 

The following persons in the capacities and on the dates indicated have signed this Offering Statement.

 

By /s/ Michael Bell  
Michael Bell, Chief Executive Officer
Miso Robotics, Inc.
Date: May 13, 2021

 

By /s/ Kevin Morris  
Kevin Morris, Chief Financial Officer, Principal Accounting Officer
Miso Robotics, Inc.  
Date: May 13, 2021  

 

By /s/ James Jordan  
James Jordan, Director
Miso Robotics, Inc.  
Date: May 13, 2021

 

By. /s/ Nick Degnan  
Nick Degnan, Director  
Miso Robotics, Inc.  
Date: May 13, 2021  

 

By. /s/ Joseph Essas  
Joseph Essas, Director  
Miso Robotics, Inc.  
Date: May 13, 2021  
   
By. /s/ Massimo Noja De Marco  
Massimo Noja De Marco, Director  
Miso Robotics, Inc.  
Date: May 13, 2021  
   
By. /s/ Thomas Bruderman  
Thomas Bruderman, Director  
Miso Robotics, Inc.  
Date: May 13, 2021  

 

 

 

INDEX TO FINANCIAL STATEMENTS

 

  Page
Independent Auditor’s Report F-1
   
FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020 AND 2019 AND FOR THE YEARS THEN ENDED:  
   
Balance Sheets F-3
Statements of Operations F-4
Statements of Stockholders’ Equity F-5
Statements of Cash Flows F-6
Notes to Financial Statements F-7
   

UNAUDITED FINANCIAL STATEMENTS AS OF JUNE 30, 2020 AND DECEMBER 31, 2019 AND FOR THE SIX-MONTHS PERIODS ENDED JUNE 30, 2020 AND 2019

 
   
Balance Sheets F-20
Statements of Operations F-21
Statements of Stockholders’ Equity F-22
Statements of Cash Flows F-23
Notes to Financial Statements F-24

 

 

 

 

 

To the Board of Directors of

Miso Robotics, Inc.

Pasadena, California

INDEPENDENT AUDITOR’S REPORT

 

Opinion

 

We have audited the accompanying financial statements of Miso Robotics, Inc. (the “Company”), which comprise the balance sheets as of December 31, 2020 and 2019, and the related statements of operations, stockholders’ equity/(deficit), and cash flows for the years then ended, and the related notes to the financial statements.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

 

Basis for Opinion

 

We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

 

Substantial Doubt About the Company’s Ability to Continue as a Going Concern

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 2 to the financial statements, the Company has not generated profits since inception, has sustained net losses of $10,684,792 and $6,990,832 for the years ended December 31, 2020 and 2019, respectively, and has incurred negative cash flows from operations for the years ended December 31, 2020 and 2019. As of December 31, 2020, the Company had an accumulated deficit of $26,341,232, current liabilities exceeding current assets by $1,746,922, and has collateralized debt with outstanding principal of $3,634,648 due in 2021. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to this matter.

 

Responsibilities of Management for the Financial Statements

 

Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

 

Artesian CPA, LLC

 

1624 Market Street, Suite 202 | Denver, CO 80202

p: 877.968.3330 f: 720.634.0905

info@ArtesianCPA.com | www.ArtesianCPA.com

 

F-1

 

 

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are available to be issued.

 

Auditor’s Responsibilities for the Audit of the Financial Statements

 

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements, including omissions, are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with generally accepted auditing standards, we:

 

  · Exercise professional judgment and maintain professional skepticism throughout the audit.

 

  · Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

 

  · Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, no such opinion is expressed.

 

  · Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.

 

  · Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time.

 

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.

 

/s/ Artesian CPA, LLC

 

Denver, Colorado

May 6, 2021

 

Artesian CPA, LLC

 

1624 Market Street, Suite 202 | Denver, CO 80202

p: 877.968.3330 f: 720.634.0905

info@ArtesianCPA.com | www.ArtesianCPA.com

 

F-2

 

 

MISO ROBOTICS, INC.

 

BALANCE SHEETS

 

    December 31,  
    2020     2019  
ASSETS                
Current assets:                
Cash and cash equivalents   $ 1,767,841     $ 2,021,777  
Accounts receivable - related party, net     -       72,620  
Accounts receivable, net     95,285       -  
Inventory     418,032       330,445  
Prepaid expenses and other current assets     86,054       39,404  
Deferred offering costs     -       129,791  
Total current assets     2,367,212       2,594,037  
Property and equipment, net     205,160       245,670  
Deposits     150,000       227,636  
Total assets   $ 2,722,372     $ 3,067,343  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                
Current liabilities:                
Accounts payable   $ 86,330     $ 227,089  
Accounts payable, related party     128,716       -  
Accrued expenses and other current liabilities     625,014       172,769  
Deferred revenue     -       467  
Deferred rent     12,720       10,207  
Loan payable, current portion     297,649       -  
Venture debt, net of discount     2,963,705       -  
Total current liabilities     4,114,134       410,532  
Venture debt, net of discount     -       2,106,763  
Loan payable, net of current portion     152,351       -  
Total liabilities     4,266,485       2,517,295  
                 
Commitments and contingencies (Note 11)                
                 
Stockholders' equity (deficit):                
Series C convertible preferred stock, $0.0001 par value, 1,748,252 shares authorized, 979,868 shares issued and outstanding as of December 31, 2020 and 2019; liquidation preference of $16,814,535 and $0 as of December 31, 2020 and 2019, respectively     98       -  
Series B convertible preferred stock, $0.0001 par value, 997,616 shares authorized, issued and outstanding as of December 31, 2020 and 2019; liquidation preference of $10,050,083 as of both December 31, 2020 and 2019     100       100  
Series A convertible preferred stock, $0.0001 par value, 769,784 shares authorized, issued and outstanding as of December 31, 2020 and 2019; liquidation preference of $3,164,433 as of both December 31, 2020 and 2019     77       77  
Common stock, $0.0001 par value, 7,000,000 and 6,000,000 shares authorized as of December 31, 2020 and 2019, respectively; 1,732,085 shares issued and outstanding as of both December 31, 2020 and 2019, 43,028 and 277,988 shares unvested as of December 31, 2020 and 2019, respectively     173       173  
Additional paid-in capital     32,265,835       16,206,138  
Subscription receivable     (7,469,164 )     -  
Accumulated deficit     (26,341,232 )     (15,656,440 )
Total stockholders' equity (deficit)     (1,544,113 )     550,048  
Total liabilities and stockholders' equity (deficit)   $ 2,722,372     $ 3,067,343  

 

See Independent Auditor’s Report and accompany notes, which are an integral part of these financial statements.

 

F-3

 

 

MISO ROBOTICS, INC.

 

STATEMENTS OF OPERATIONS

 

    Year Ended  
    December 31,  
    2020     2019  
Net revenue   $ 298,752     $ 99,029  
Cost of net revenue     531,064       245,490  
Gross profit (loss)     (232,312 )     (146,461 )
                 
Operating expenses:                
Research and development     2,828,334       3,381,454  
Sales and marketing     4,274,587       208,557  
General and administrative     2,690,096       3,129,273  
Total operating expenses     9,793,017       6,719,284  
                 
Loss from operations     (10,025,329 )     (6,865,745 )
                 
Other income (expense):                
Interest expense     (696,081 )     (148,270 )
Interest income     198       2,183  
Other income     36,420       21,000  
Total other income (expense), net     (659,463 )     (125,087 )
                 
Provision for income taxes     -       -  
Net loss   $ (10,684,792 )   $ (6,990,832 )
                 
Weighted average common shares outstanding -                
basic and diluted     1,689,057       1,105,790  
Net loss per common share - basic and diluted   $ (6.33 )   $ (6.32 )

 

See Independent Auditor’s Report and accompany notes, which are an integral part of these financial statements.

 

F-4

 

 

MISO ROBOTICS, INC.

 

STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICT)

 

    Series C Convertible     Series B Convertible     Series A Convertible                 Additional                 Total  
    Preferred Stock     Preferred Stock     Preferred Stock     Common Stock     Paid-in     Subscription     Accumulated     Stockholders'  
    Shares     Amount     Shares     Amount     Shares     Amount     Shares     Amount     Capital     Receivable     Deficit     Equity (Deficit)  
Balances at December 31, 2018     -     $ -       997,616     $ 100       769,784     $ 77       1,272,810     $ 127     $ 15,043,929     $ -     $ (8,665,608 )   $ 6,378,625  
Issuance of common stock for services     -       -       -       -       -       -       200,000       20       81,980       -       -       82,000  
Issuance of restricted common stock     -       -       -       -       -       -       265,000       27       59,674       -       -       59,700  
Forfeited restricted common stock     -       -       -       -       -       -       (7,855 )     (1 )     1       -       -       -  
Exercise of stock options     -       -       -       -       -       -       2,130       1       10,264       -       -       10,265  
Stock-based compensation expense     -       -       -       -       -       -       -       -       300,959       -       -       300,959  
Issuance of debt discount     -       -       -       -       -       -       -       -       709,331       -       -       709,331  
Net loss     -       -       -       -       -       -       -       -       -       -       (6,990,832 )     (6,990,832 )
Balances at December 31, 2019     -       -       997,616       100       769,784       77       1,732,085       173       16,206,138       -       (15,656,440 )     550,048  
Issuance of Series C preferred stock     972,487       97       -       -       -       -       -       -       16,687,779       (7,469,164 )     -       9,218,713  
Issuance of preferred stock for services     7,381       1       -       -       -       -       -       -       126,665       -       -       126,666  
Stock-based compensation expense     -       -       -       -       -       -       -       -       455,875       -       -       455,875  
Issuance of debt discount     -       -       -       -       -       -       -       -       470,431       -       -       470,431  
Offering costs     -       -       -       -       -       -       -       -       (1,681,054 )     -               (1,681,054 )
Net loss     -       -       -       -       -       -       -       -       -       -       (10,684,792 )     (10,684,792 )
Balances at December 31, 2020     979,868     $ 98       997,616     $ 100       769,784     $ 77       1,732,085     $ 173     $ 32,265,835     $ (7,469,164 )   $ (26,341,232 )   $ (1,544,113 )

 

See Independent Auditor’s Report and accompanying notes, which are an integral part of these financial statements.

 

F-5

 

 

MISO ROBOTICS, INC.

 

STATEMENTS OF CASH FLOWS

 

    Year Ended  
    December 31,  
    2020     2019  
Cash flows from operating activities:                
Net loss   $ (10,684,792 )   $ (6,990,832 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Stock-based compensation expense     455,875       360,659  
Stock issued for services     126,666       82,000  
Amortization of debt discount     437,392       78,129  
Bad debt expense     36,616       26,875  
Depreciation and amortization expense     102,201       97,429  
Changes in operating assets and liabilities:                
Accounts receivable     (59,281 )     (99,495 )
Inventory     (87,587 )     145,778  
Prepaid expenses and other current assets     (46,650 )     20,799  
Accounts payable     (12,043 )     162,361  
Accrued expenses and other current liabilities     452,245       (64,893 )
Deferred revenue     (467 )     467  
Deferred rent     2,513       4,441  
Net cash used in operating activities     (9,277,314 )     (6,176,282 )
Cash flows from investing activities:                
Purchases of property and equipment     (61,691 )     (27,227 )
Deposits returned     77,636       -  
Net cash provided by (used in) investing activities     15,945       (27,227 )
Cash flows from financing activities:                
Proceeds from issuance of preferred stock     9,218,713       -  
Proceeds from issuance of venture debt, net of fees     889,982       2,737,964  
Proceeds from loan payable     450,000          
Exercise of stock options     -       10,265  
Offering costs     (1,551,263 )     (129,791 )
Net cash provided by financing activities     9,007,432       2,618,438  
Net decrease in cash and cash equivalents     (253,936 )     (3,585,071 )
Cash and cash equivalents at beginning of year     2,021,777       5,606,848  
Cash and cash equivalents at end of year   $ 1,767,841     $ 2,021,777  
                 
Supplemental disclosure of cash flow information:                
Cash paid for income taxes   $ -     $ -  
Cash paid for interest   $ -     $ -  
                 
Supplemental disclosure of non-cash investing and financing activities:                
Warrants issued with venture debt   $ 123,968     $ 11,582  
Beneficial conversion feature on venture debt   $ 346,463     $ 697,749  
Subscription receivable on Series C preferred stock   $ 7,469,164     $ -  

 

See Independent Auditor’s Report and accompany notes, which are an integral part of these financial statements.

 

F-6

 

 

MISO ROBOTICS, INC.

 

NOTES TO FINANCIAL STATEMENTS

 

1. NATURE OF OPERATIONS

 

Miso Robotics, Inc. (the “Company”) was incorporated on June 20, 2016 as Super Volcano, Inc. under the laws of the State of Delaware. The Company changed its name to Miso Robotics, Inc. on October 3, 2016. The Company develops and manufactures artificial intelligence-driven robots that assist chefs to make food at restaurants. The Company is headquartered in Pasadena, California.

 

2. GOING CONCERN

 

The Company has evaluated whether there are certain conditions and events, considered in the aggregate, that raise substantial doubt and the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued.

 

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has not generated profits since inception, has sustained net losses of $10,684,792 and $6,990,832 for the years ended December 31, 2020 and 2019, respectively, and has incurred negative cash flows from operations for the years ended December 31, 2020 and 2019. As of December 31, 2020, the Company had an accumulated deficit of $26,341,232, current liabilities exceeding current assets by $1,746,922, and has collateralized debt with outstanding principal of $3,634,648 due in 2021. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern for the next twelve months is dependent upon its ability to generate sufficient cash flows from operations to meet its obligations, which it has not been able to accomplish to date, and/or to obtain additional capital financing. No assurance can be given that the Company will be successful in these efforts.

 

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America ("GAAP"). The Company’s fiscal year is December 31.

 

Use of Estimates

 

The preparation of the Company’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions reflected in these financial statements include, but are not limited to, the valuations of common stock and stock options. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates when there are changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates.

 

Concentrations of Credit Risk

 

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. The Company generally maintains balances in various operating accounts at financial institutions that management believes to be of high credit quality, in amounts that may exceed federally insured limits. The Company has not experienced any losses related to its cash and cash equivalents and does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. At December 31, 2020 and 2019, all of the Company's cash and cash equivalents were held at one accredited financial institution. As of December 31, 2020 and 2019, the Company had cash of $1,517,841 and $1,771,777, respectively, in excess of federally insured limits.

 

Cash and Cash Equivalents

 

The Company considers all highly liquid investments with maturities of three months or less at the date of purchase to be cash equivalents.

 

F-7

 

 

MISO ROBOTICS, INC.

 

NOTES TO FINANCIAL STATEMENTS

 

Fair Value Measurements

 

Certain assets and liabilities of the Company are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

 

  · Level 1—Quoted prices in active markets for identical assets or liabilities.

 

  · Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.

 

  · Level 3—Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

 

The carrying values of the Company’s assets and liabilities approximate their fair values.

 

Accounts Receivable

 

Accounts receivable are derived from products and services delivered to customers and are stated at their net realizable value. Each month, the Company reviews its receivables on a customer-by-customer basis and evaluates whether an allowance for doubtful accounts is necessary based on any known or perceived collection issues. Any balances that are eventually deemed uncollectible are written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. As of December 31, 2020 and 2019, the Company had an allowance for doubtful accounts of $63,491 and $26,875, respectively.

 

Inventory

 

Inventory is stated at the lower of cost or market and accounted for using the specific identification cost method. As of December 31, 2020 and 2019, inventory consisted of robotic raw materials purchased from the Company’s suppliers. Management reviews its inventory for obsolescence and impairment as it is determined necessary.

 

Property and Equipment

 

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization expense is recognized using the straight-line method over the estimated useful life of each asset, as follows:

 

    Estimated Useful Life
Computer equipment and software   2 - 3 years
Kitchen equipment   5 years
Furniture and fixtures   5 years
Leasehold improvements   Shorter of lease term or 5 years

 

Estimated useful lives are periodically assessed to determine if changes are appropriate. Maintenance and repairs are charged to expense as incurred. When assets are retired or otherwise disposed of, the cost of these assets and related accumulated depreciation or amortization are eliminated from the balance sheet and any resulting gains or losses are included in the statement of operations loss in the period of disposal.

 

Impairment of Long-Lived Assets

 

The Company continually monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell. The Company did not record any impairment losses on long-lived assets during the years ended December 31, 2020 or 2019.

 

F-8

 

 

MISO ROBOTICS, INC.

 

NOTES TO FINANCIAL STATEMENTS

 

Revenue Recognition

 

The Company adopted ASU 2014-09, Revenue from Contracts with Customers, and its related amendments (collectively known as “ASC 606”), effective January 1, 2019 using the modified retrospective transition approach applied to all contracts. Therefore, the reported results for the years ended December 31, 2020 and 2019 reflect the application of ASC 606. Management determined that there were no retroactive adjustments necessary to revenue recognition upon the adoption of the ASU 2014-09. The Company determines revenue recognition through the following steps:

 

  · Identification of a contract with a customer;

 

  · Identification of the performance obligations in the contract;

 

  · Determination of the transaction price;

 

  · Allocation of the transaction price to the performance obligations in the contract; and

 

  · Recognition of revenue when or as the performance obligations are satisfied.

 

Revenue is recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. As a practical expedient, the Company does not adjust the transaction price for the effects of a significant financing component if, at contract inception, the period between customer payment and the transfer of goods or services is expected to be one year or less.

 

The Company derives its revenue from hardware and software usage of its installed units as well as consulting services. Sales tax is collected on sales in California and these taxes are recorded as a liability until remitted.

 

Hardware

 

Each product sold to a customer typically represents a distinct performance obligation. The Company satisfies its performance obligation and revenue is recorded at the point in time when products are installed as the Company has determined that this is the point that control transfers to the customer. The Company invoices customers upon delivery of the products, and payments from such customers are due upon invoicing. Orders or set-up fees that have been paid but performance obligations have not been met are recorded to deferred revenue.

 

Software

 

Software as a service (SaaS) and usage fees are recognized as revenue as the performance obligation is satisfied over time. Revenue is recognized monthly over the life of the contract. Service fees that have been invoiced or paid but performance obligations have not been met are recorded to deferred revenue.

 

Consulting

 

Consulting services are recognized at the point in time when the performance obligation has been completed.

 

Disaggregation of Revenue

 

The following table presents the Company's revenue disaggregated by revenue source:

 

    Year Ended  
    December 31,  
    2020     2019  
Hardware and installations   $ 56,385     $ 88,120  
Software and usage fees     67,367       10,909  
Consulting services     175,000       -  
    $ 298,752     $ 99,029  

 

Significant Judgements

 

The Company estimates warranty claims reserves based on historical results and research and determined that a warranty reserve was not necessary as of December 31, 2020 and 2019.

 

F-9

 

 

MISO ROBOTICS, INC.

 

NOTES TO FINANCIAL STATEMENTS

 

Contract Balances

 

The Company invoices customers based upon contractual billing schedules, and accounts receivable are recorded when the right to consideration becomes unconditional. Contract liabilities represent a set-up fee prepayment received from a customer in advance of performance obligations met.

 

As of December 31, 2020 and 2019, accounts receivable included $45,285 and $14,004 in unbilled receivables, respectively.

 

Cost of Sales

 

Cost of sales consists primarily of inventory sold, parts used in building machines for sale, tooling and supplies, depreciation of certain equipment, allocations of facility costs, and allocations of personnel time in assembly, installation, and servicing.

 

Advertising and Promotion

 

Advertising and promotional costs are expensed as incurred. Advertising and promotional expense for the years ended December 31, 2020 and 2019 amounted to approximately $3,715,000 and $3,000, respectively, which is included in sales and marketing expense.

 

Research and Development Costs

 

Costs incurred in the research and development of the Company’s products are expensed as incurred.

 

Concentrations

 

During the year ended December 31, 2020, two customers accounted for 75% and 17% of the Company’s revenues, respectively. As of December 31, 2020, two customers accounted for 52% and 48% of the Company’s accounts receivable.  During the year ended December 31, 2019, two related party customers accounted for 87% and 13% of the Company’s revenues, respectively. As of December 31, 2019, two related party customers accounted for 90% and 10% of the Company’s accounts receivable.

 

The Company is dependent on third-party vendors to supply inventory and products for research and development activities and parts for building products. In particular, the Company relies and expects to continue to rely on a small number of vendors. The loss of one of these vendors may have a negative short-term impact on the Company’s operations; however, the Company believes there are acceptable substitute vendors that can be utilized longer-term.

 

Convertible Instruments

 

U.S. GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. An exception to this rule is when the host instrument is deemed to be conventional as that term is described under applicable U.S. GAAP.

 

When the Company has determined that the embedded conversion options should not be bifurcated from their host instruments, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption. The Company also records, when necessary, deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying common stock at the commitment date of the transaction and the effective conversion price embedded in the preferred shares.

 

Accounting for Preferred Stock

 

ASC 480, Distinguishing Liabilities from Equity, includes standards for how an issuer of equity (including equity shares issued by consolidated entities) classifies and measures on its balance sheet certain financial instruments with characteristics of both liabilities and equity.

 

F-10

 

 

MISO ROBOTICS, INC.

 

NOTES TO FINANCIAL STATEMENTS

 

Management is required to determine the presentation for the preferred stock as a result of the redemption and conversion provisions, among other provisions in the agreement. Specifically, management is required to determine whether the embedded conversion feature in the preferred stock is clearly and closely related to the host instrument, and whether the bifurcation of the conversion feature is required and whether the conversion feature should be accounted for as a derivative instrument. If the host instrument and conversion feature are determined to be clearly and closely related (both more akin to equity), derivative liability accounting under ASC 815, Derivatives and Hedging, is not required. Management determined that the host contract of the preferred stock is more akin to equity, and accordingly, liability accounting is not required by the Company. The Company has presented preferred stock within stockholders' equity.

 

Costs incurred directly for the issuance of the preferred stock are recorded as a reduction of gross proceeds received by the Company, resulting in a discount to the preferred stock. The discount is not amortized.

 

Deferred Offering Costs

 

The Company complies with the requirements of FASB ASC 340-10-S99-1 with regards to offering costs. Prior to the completion of an offering, offering costs are capitalized. The deferred offering costs are charged to additional paid-in capital or as a discount to debt, as applicable, upon the completion of an offering or to expense if the offering is not completed. As of December 31, 2019, the Company had $129,791 in deferred offering costs, which were charged to additional paid-in capital in 2020 upon the completion of the Regulation A+ offering (note 7).

 

Stock-Based Compensation

 

The Company measures all stock-based awards granted to employees and directors based on the fair value on the date of the grant and recognizes compensation expense for those awards, net of estimated forfeitures, over the requisite service period, which is generally the vesting period of the respective award. The Company issues stock-based awards with only service-based vesting conditions and records the expense for these awards using the straight-line method. The Company has not issued any stock-based awards with performance-based vesting conditions.

 

For stock-based awards granted to non-employee consultants, compensation expense is recognized over the period during which services are rendered by such non-employee consultants until completed.

 

The Company classifies stock-based compensation expense in its statement of operations in the same manner in which the award recipient’s payroll costs are classified or in which the award recipient’s service payments are classified.

 

The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The Company historically has been a private company and lacks company-specific historical and implied volatility information for its stock. Therefore, it estimates its expected stock price volatility based on the historical volatility of publicly traded peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded stock price. The expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends on common stock and does not expect to pay any cash dividends in the foreseeable future. Determining the appropriate fair value of stock-based awards requires the input of subjective assumptions. The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and management uses different assumptions, stock-based compensation expense could be materially different for future awards.

 

Income Taxes

 

The Company uses the liability method of accounting for income taxes as set forth in ASC 740, Income Taxes. Under the liability method, deferred taxes are determined based on the temporary differences between the financial statement and tax basis of assets and liabilities using tax rates expected to be in effect during the years in which the basis differences reverse. A valuation allowance is recorded when it is unlikely that the deferred tax assets will not be realized. We assess our income tax positions and record tax benefits for all years subject to examination based upon our evaluation of the facts, circumstances and information available at the reporting date. In accordance with ASC 740-10, for those tax positions where there is a greater than 50% likelihood that a tax benefit will be sustained, our policy will be to record the largest amount of tax benefit that is more likely than not to be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where there is less than 50% likelihood that a tax benefit will be sustained, no tax benefit will be recognized in the financial statements.

 

F-11

 

 

MISO ROBOTICS, INC.

 

NOTES TO FINANCIAL STATEMENTS

 

Net Loss per Share

 

Net earnings or loss per share is computed by dividing net income or loss by the weighted-average number of common shares outstanding during the period, excluding shares subject to redemption or forfeiture. The Company presents basic and diluted net earnings or loss per share. Diluted net earnings or loss per share reflect the actual weighted average of common shares issued and outstanding during the period, adjusted for potentially dilutive securities outstanding. Potentially dilutive securities are excluded from the computation of the diluted net loss per share if their inclusion would be anti-dilutive. As all potentially dilutive securities are anti-dilutive as of December 31, 2020 and 2019, diluted net loss per share is the same as basic net loss per share for each year. Potentially dilutive items outstanding as of December 31, 2020 and 2019 are as follows:

 

    Year Ended  
    December 31,  
    2020     2019  
Series A Preferred Stock (convertible to common stock)     769,784       769,784  
Series B Preferred Stock (convertible to common stock)     997,616       997,616  
Series C Preferred Stock (convertible to common stock)     979,868       -  
Venture debt*     288,715       350,959  
Common stock warrants     367,739       273,919  
Options to purchase common stock     678,673       419,570  
Total potentially dilutive shares     4,082,395       2,811,847  

 

*The outstanding notes are convertible into either shares of common or preferred stock. The convertible notes' potential shares were calculated based on principal and accrued interest and the 20% discount per the note agreements. The Company utilized the Series C Preferred price.

 

Recently Adopted Accounting Pronouncements

 

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842). This ASU requires a lessee to recognize a right-of-use asset and a lease liability under most operating leases in its balance sheet. The ASU is effective for annual and interim periods beginning after December 15, 2021. Early adoption is permitted. The Company is currently evaluating the impact on its financial statements.

 

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) and has issued subsequent amendments to this guidance. This new standard will replace all current guidance on this topic and eliminate all industry-specific guidance. The new revenue recognition standard provides a unified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. The guidance is effective for interim and annual periods beginning after December 31, 2018. The standard may be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. The Company has adopted this standard effective January 1, 2019.

 

Management does not believe that any other recently issued, but not yet effective, accounting standards could have a material effect on the accompanying financial statements. As new accounting pronouncements are issued, the Company will adopt those that are applicable under the circumstances.

 

F-12

 

 

MISO ROBOTICS, INC.

 

NOTES TO FINANCIAL STATEMENTS

 

4. PROPERTY AND EQUIPMENT, NET

 

Property and equipment, net consists of the following:

 

    December 31,  
    2020     2019  
Computer equipment and software   $ 137,914     $ 120,842  
Kitchen and lab equipment     120,533       120,533  
Furniture and fixtures     34,962       34,962  
Leasehold improvements     184,536       139,918  
      477,945       416,255  
Less: Accumulated depreciation     (272,785 )     (170,585 )
    $ 205,160     $ 245,670  

 

Depreciation and amortization expense of $102,201 and $97,429 for the years ended December 31, 2020 and 2019, respectively, were included in general and administrative expenses in the statements of operations.

 

5. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

 

Accrued expenses and other current liabilities consist of the following:

 

    December 31,  
    2020     2019  
Accrued personnel costs   $ 129,497     $ 98,027  
Accrued legal and professional fees     166,687       1,000  
Accrued interest payable     328,830       70,141  
Other     -       3,600  
    $ 625,014     $ 172,769  

 

6. DEBT

 

Venture Debt

 

In September 2019, the Company issued six senior secured promissory notes (the “2019 Notes”)  for an aggregate principal amount of $2,744,667. In 2020, the Company received an additional $889,982 (the “2020 Notes”, collectively with the 2019 Notes, the “Notes”) in proceeds from three additional notes with the same terms. Upon a vote of the majority in principal amount, the Notes are subject to automatic conversion upon an equity financing of common or preferred stock of proceeds of $2,000,000. Upon the future equity financing, the outstanding principal and any unpaid accrued interest shall automatically convert at a conversion price of 80% of the lowest price per share of the equity securities sold in the future equity financing. The noteholders may elect to convert the principal and any unpaid accrued interest at any time into the type of equity securities issued in the Company’s most recently completed equity financing of proceeds of $2,000,000. The noteholders may convert the principal and unpaid accrued interest at a conversion price of 80% of the price per share of the equity securities sold in the completed equity financing. Prepayments are allowed, subject to various provisions, including an initial minimum payment amount of $500,000 and additional increments of $100,000. Upon the occurrence of an event of default, the Notes shall accrue interest at 13% per annum. The Notes are senior to all other debts and obligations of the Company, is collateralized by all assets of the Company. In conjunction with the Notes, the Company incurred fees of $6,703, which were recorded as a discount to the Notes and are amortized under the effective interest method to interest expense over the life of the Notes. During the years ended December 31, 2020 and 2019, $3,219 and $737 was amortized to interest expense, respectively.

 

The Notes have a 2-year term maturing on September 30, 2021. The notes bear interest at 10% per annum and incurred interest expense of $258,689 and $70,141 in 2020 and 2019, respectively,  all of which was accrued and unpaid as of December 31, 2020.

 

The Company recognized a beneficial conversion feature with respect to the voluntary conversion rights of the noteholders. The beneficial conversion feature was initially valued at a fair value of $697,749 for the 2019 Notes and $346,463 for the 2020 Notes, and is recorded as a discount to the note payable balance that is being amortized under the effective interest method over the life of the notes.

 

In connection with the Notes, the Company also granted to the holders warrants to purchase common stock equal to the principal amount of the Notes divided by the warrant exercise price. As of December 31, 2020  and 2019, warrants for an aggregate of 362,739 and 273,919 shares of common stock, respectively, were issued to the noteholders with an exercise price of $10.02 per share, expiring after 10 years. As discussed in Note 8, these warrants were valued at $11,582 for the 2019 Notes and $123,968 for the 2020 Notes, and is recorded as a discount to the note payable balance that are being amortized under the effective interest method over the life of the notes.

 

F-13

 

 

MISO ROBOTICS, INC.

 

NOTES TO FINANCIAL STATEMENTS

 

During the years ended December 31, 2020 and 2019, $434,173 and $77,392 of the debt discount was amortized to interest expense, respectively.

 

The following is a summary of the Notes as of December 31, 2020 and 2019:

 

    December 31,  
    2020     2019  
Outstanding principal   $ 3,634,648     $ 2,744,667  
Less: unamortized discounts     (670,943 )     (637,904 )
Venture debt, net of discount   $ 2,963,705     $ 2,106,763  

 

PPP Loan

 

In April 2020, the Company entered into a loan with a lender in an aggregate principal amount of $450,000 pursuant to the Paycheck Protection Program (“PPP”) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The PPP Loan is evidenced by a promissory note (“ PPP Loan”). Subject to the terms of the Note, the PPP Loan bears interest at a fixed rate of one percent (1%) per annum, with the first six months of interest deferred, has an initial term of two years, and is unsecured and guaranteed by the Small Business Administration. The Company may apply to the Lender for forgiveness of the PPP Loan, with the amount which may be forgiven equal to the sum of payroll costs, covered rent, and covered utility payments incurred by the Company during the applicable forgiveness period, calculated in accordance with the terms of the CARES Act. The Note provides for customary events of default including, among other things, cross-defaults on any other loan with the lender. The PPP Loan may be accelerated upon the occurrence of an event of default. The loan proceeds were used for payroll and other covered payments and is expected to be forgiven based on current information available; however, formal forgiveness has not yet occurred as of the date of these financial statements.

 

7. STOCKHOLDERS’ EQUITY  (DEFICIT)

 

Convertible Preferred Stock

 

The Company has issued Series A, Series B and Series C convertible preferred stock (collectively referred to as “Preferred Stock”). As of December 31, 2020, the Company's certificate of incorporation, as amended and restated, authorized the Company to issue a total of 3,515,652 shares of Preferred Stock, of which 769,784 shares were designated as Series A preferred stock, 997,616 shares were designated as Series B preferred stock and 1,748,252 shares were designated as Series C preferred stock. The Preferred Stock have a par value of $0.0001 per share.

 

In 2020, the Company executed a Regulation A+ offering and issued 972,487  shares of Series C preferred stock at a price of $17.16 per share (“Series C Original Issue Price”) for gross proceeds of $16,687,877, including a subscription receivable of $7,469,164 as of December 31, 2020.

 

In 2020, the Company issued 7,381 shares of Series C preferred stock for services performed. The fair value of $126,666  was included as sales and marketing expenses in the statements of operations.

 

As of both December 31, 2020 and 2019, 769,784 shares of Series A preferred stock were issued and outstanding. As of both December 31, 2020 and 2019, 997,616 shares of Series B preferred stock were issued and outstanding. As of December 31, 2020, 979,868  shares of Series C preferred stock were issued and outstanding.

 

The holders of the Preferred Stock have the following rights and preferences:

 

F-14

 

 

MISO ROBOTICS, INC.

 

NOTES TO FINANCIAL STATEMENTS

 

Voting

 

The holders of Preferred Stock are entitled to vote, together with the holders of common stock as a single class, on all matters submitted to stockholders for a vote and have the right to vote the number of shares equal to the number of shares of common stock into which each share of Preferred Stock could convert on the record date for determination of stockholders entitled to vote.

 

The holders of Series B preferred stock, voting exclusively and as a separate class, are entitled to elect one director of the Company. The holders of Series A preferred stock, voting exclusively and as a separate class, are entitled to elect one director of the Company.

 

Dividends

 

The Company shall not declare, pay or set aside any dividends on shares of other classes of capital stock unless the holders of Preferred Stock then outstanding shall first receive, or simultaneously receive, on a pari passu basis, a dividend on each outstanding share of Preferred Stock.

 

Liquidation 

 

In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company or deemed liquidation event, the Series C and Series B stockholders shall be entitled to a liquidation preference equal to the greater of (i) the Original Issue Price, plus any dividends declared but unpaid, or (ii) such amount per share as would have been payable had all shares of preferred stock been converted into common stock. Upon this completion, the Series A  stockholders will then be entitled to a liquidation preference in the same manner. After the payment of all preferential amounts to preferred stockholders, the remaining assets available for distribution shall be distributed among common stockholders on a pro-rata basis. The liquidation preference per share for Series A, Series B, and Series C preferred stock are $4.1108, $10.0744, and $17.16, respectively.

 

The total liquidation preferences as of December 31, 2020 and 2019 amounted to $30,029,051 and $13,164,433, respectively.

 

Conversion

 

Each share of Preferred Stock is convertible into common stock, at the option of the holder, at any time after the date of issuance. In addition, each share of Preferred Stock will be automatically converted into shares of common stock at the applicable conversion ratio then in effect (i) upon the closing of a firm-commitment public offering resulting in at least $30,000,000 of gross proceeds to the Company at a price of at least $68.64 per share of common stock, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization, or (ii) upon the written consent of the holders of a majority of the then-outstanding shares of Preferred Stock, voting together as a single class.

 

The conversion ratio of each series of Preferred Stock is determined by dividing the Original Issue Price of each series by the Conversion Price of each series. The Conversion Price per share is $4.1108 for Series A preferred stock, $10.0744 for Series B preferred stock and $17.16 for Series C preferred stock, each subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization. Accordingly, as of December 31, 2020 and 2019, each share of each series of Preferred Stock was convertible into shares of common stock on a one-for-one basis.

 

Common Stock

 

The Company authorized 7,000,000 and 6,000,000 shares of common stock at $0.0001 par value as of December 31, 2020 and 2019, respectively. As of both December 31, 2020 and 2019, there were 1,732,085 shares of common stock issued and outstanding.

 

Common stockholders have voting rights of one vote per share and are entitled to elect one director of the Company. The voting, dividend, and liquidation rights of the holders of common stock are subject to and qualified by the rights, powers, and preferences of preferred stockholders.

 

During the year ended December 31, 2019, the Company issued 200,000 shares of common stock to a related party for services performed. The fair value of $82,000, or $0.41 per share, is included in general and administrative expenses in the statements of operations.

 

During the year ended December 31, 2019, the Company issued 2,130 shares of common stock pursuant to exercises of stock options for proceeds of $10,265.

 

F-15

 

 

 

8. STOCK-BASED PAYMENTS

 

Common Stock Warrants

 

In connection with the Notes (see Note 6), the Company granted to the holders warrants to purchase common stock equal to the principal amount of the Notes divided by the warrant exercise price. As of December 31, 2020 and 2019, warrants for an aggregate of 362,739 and 273,919 shares of common stock were issued to the noteholders with an exercise price of $10.02 per share, expiring after 10 years. The fair value of the warrants was calculated under the Black-Scholes method, which was recorded as a discount to the Notes and is being recognized under the effective interest method over the life of the Notes.

 

In September 2020, the Company granted 5,000 warrants to purchase common stock for services. The fair value of $14,150 was included in general and administrative expenses in the statements of operations.

 

The following table presents, on a weighted average basis, the assumptions used in the Black-Scholes option-pricing model to determine the grant-date fair value of warrants granted:

 

    Year Ended  
    December 31,  
    2020     2019  
Risk-free interest rate     0.14%-0.47 %       1.55 %
Expected term (in years)     4.95       5.00  
Expected volatility     72.70 %     80.00 %
Expected dividend yield     0 %     0 %

 

Super Volcano, Inc. 2016 Stock Plan

 

The Company has adopted the Super Volcano, Inc. 2016 Stock Plan (“2016 Plan”), as amended and restated, which provides for the grant of shares of stock options and restricted stock awards to employees, non-employee directors, and non-employee consultants. The number of shares authorized by the 2016 Plan was 466,406 shares as of both December 31, 2020 and 2019. The option exercise price generally may not be less than the underlying stock’s fair market value at the date of the grant and generally have a term of ten years. The amounts granted each calendar year to an employee or non-employee is limited depending on the type of award. Stock options comprise all of the awards granted since the 2016 Plan’s inception. As of both December 31, 2020 and 2019, there were 151,000 shares available for grant under the 2016 Plan. Stock options granted under the 2016 Plan typically vest over a four-year period.

 

Miso Robotics, Inc. 2017 Stock Plan

 

The Company has adopted the Miso Robotics, Inc. 2017 Stock Plan (“2017 Plan”), as amended and restated, which provides for the grant of shares of stock options and restricted stock awards to employees, non-employee directors, and non-employee consultants. The number of shares authorized by the 2017 Plan was 735,848 shares as of both December 31, 2020 and 2019. The option exercise price generally may not be less than the underlying stock’s fair market value at the date of the grant and generally have a term of ten years. The amounts granted each calendar year to an employee or non-employee is limited depending on the type of award. Stock options and restricted common stock comprise all of the awards granted since the 2017 Plan’s inception. As of 2020 and 2019, there were 61,306 and 320,409 shares available for grant under the 2017 Plan. Stock options granted under the 2017 Plan typically vest over a four-year period.

 

F-16

 

 

MISO ROBOTICS, INC.

 

NOTES TO FINANCIAL STATEMENTS

 

A summary of information related to stock options for the years ended December 31, 2020 and 2019 is as follows:

 

    Options     Weighted Average Exercise Price     Instrinsic Value  
Outstanding as of December 31, 2018     801,668     $ 4.81     $ 2,790,432  
Granted     3,990       10.02          
Exercised     (2,130 )     4.82          
Forfeited     (383,958 )     4.27          
Outstanding as of December 31, 2019     419,570     $ 5.35     $ -  
Granted     271,041       5.92          
Exercised     -       -          
Forfeited     (11,938 )     10.02          
Outstanding as of December 31, 2020     678,673     $ 5.54     $ 659,781  
                         
Exerciseable as of December 31, 2019     242,303     $ 4.49          
Exerciseable as of December 31, 2020     371,626     $ 3.92          

 

    December 31,  
    2020     2019  
Weighted average grant-date fair value of options granted during year   $ 3.35     $ 3.18  
Weighted average duration (years) to expiration of outstanding options at year-end     7.82       7.70  

 

The following table presents, on a weighted average basis, the assumptions used in the Black-Scholes option-pricing model to determine the grant-date fair value of stock options granted to employees and directors:

 

    Year Ended  
    December 31,  
    2020     2019  
Risk-free interest rate     0.37%-1.44     2.58 %
Expected term (in years)     6.08       5.52  
Expected volatility     66.90 %     44.43 %
Expected dividend yield     0 %     0 %

 

The total grant-date fair value of the options granted during the years ended December 31, 2020 and 2019 was $907,828 and $12,688, respectively. Stock-based compensation expense for stock options of $305,352 and $300,959 was recognized under FASB ASC 718 for the years ended December 31, 2020 and 2019, respectively. Total unrecognized compensation cost related to non-vested stock option awards amounted to $955,768 and $393,230 as of December 31, 2020 and 2019, respectively, and will be recognized over a weighted average period of 22 months as of December 31, 2020.

 

Restricted Common Stock

 

During the year ended December 31, 2019, the Company granted 265,000 restricted shares of common stock under the 2017 Plan with a grant-date fair value of $0.41 per share. As of December 31, 2020 and 2019, there were 309,145  shares outstanding, and 266,117  and 46,157 shares were vested, respectively. In 2019, 7,855 restricted shares were forfeited. The Company recorded stock-based compensation expense of $136,373 and $59,700 in the statements of operations for the years ended December 31, 2020 and 2019, respectively. Total unrecognized compensation cost related to non-vested restricted common stock amounted to $32,466  and $213,920 as of December 31, 2020 and 2019, respectively, which is expected to be recognized over 1.5 years.

 

F-17

 

 

MISO ROBOTICS, INC.

 

NOTES TO FINANCIAL STATEMENTS

 

Classification

 

Stock-based compensation expense was classified in the statements of operations as follows:

 

    Year Ended  
    December 31,  
    2020     2019  
Research and development expenses   $ 76,279     $ 61,855  
General and administrative expenses     379,596       298,804  
    $ 455,875     $ 360,659  

 

9. INCOME TAXES

 

Deferred taxes are recognized for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes. The differences relate primarily to depreciable assets using accelerated depreciation methods for income tax purposes, stock-based compensation expense, research and development and net operating loss carryforwards. As of December 31, 2020 and 2019, the Company had net deferred tax assets before valuation allowance of $7,037,417  and $4,173,707, respectively. The following table presents the deferred tax assets and liabilities by source:

 

    December 31,  
    2020     2019  
Deferred tax assets:                
Net operating loss carryforwards   $ 6,488,551     $ 3,998,973  
Stock-based compensation     16,017       7,249  
Research and development tax credit carryforwards     342,485       69,036  
Depreciation timing difference     98,449       98,449  
Accrued interest     91,915       -  
Valuation allowance     (7,037,417 )     (4,173,707 )
Net deferred tax assets   $ -     $ -  

 

The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. The Company assessed the need for a valuation allowance against its net deferred tax assets and determined a full valuation allowance is required due to taxable losses for the years ended December 31, 2020 and 2019, cumulative losses through December 31, 2019, and no history of generating taxable income. Therefore, valuation allowances of $7,037,417  and $4,173,707 were recorded as of December 31, 2020 and 2019, respectively. Valuation allowance increased by $2,863,710  and $1,808,968 during the years ended December 31, 2020 and 2019, respectively. Deferred tax assets were calculated using the Company’s combined effective tax rate, which it estimated to be 28.0%. The effective rate is reduced to 0% for 2020 and 2019 due to the full valuation allowance on its net deferred tax assets.

 

The Company’s ability to utilize net operating loss carryforwards will depend on its ability to generate adequate future taxable income. At December 31, 2020 and 2019, the Company had net operating loss carryforwards available to offset future taxable income in the amounts of $23,213,191  and $14,306,571, respectively.

 

The Company has evaluated its income tax positions and has determined that it does not have any uncertain tax positions. The Company will recognize interest and penalties related to any uncertain tax positions through its income tax expense.

 

The Company may in the future become subject to federal, state and local income taxation though it has not been since its inception, other than minimum state tax. The Company is not presently subject to any income tax audit in any taxing jurisdiction, though its 2018-2020 tax years remain open to examination.

 

10. RELATED PARTY TRANSACTIONS 

 

During the year ended December 31, 2019, the Company recognized $86,154 in revenue with an entity owned by an investor in the Company pursuant to a hardware and software agreement.

 

F-18

 

 

MISO ROBOTICS, INC.

 

NOTES TO FINANCIAL STATEMENTS

 

In September 2019, the Company issued a promissory note to an entity with common management for a principal amount of $782,167. In conjunction with the note, the Company granted warrants to purchase 78,061 shares of common stock to the entity (see Note 6). In 2020, the Company issued additional notes to this entity for proceeds of $889,982 and grants warrants to purchase 88,821 shares of common stock.

 

As of December 31, 2020, the Company had accounts payable of $128,716 to an entity with common management.

 

During the year ended December 31, 2019, the Company issued 200,000 shares to an entity with common management for services performed. The fair value of $82,000 is included in general and administrative expenses in the statements of operations.

 

11. COMMITMENTS AND CONTINGENCIES

 

Lease Agreements

 

In August 2017, the Company entered into an operating lease to sublease office space. The lease term commenced on December 1, 2017 and expires on May 31, 2023. The lease agreement requires base rent payments of $9,000 per month through May 31, 2019 with annual escalations of approximately 3%. The lease required a security deposit of $150,000.

 

In May 2018, the Company entered into an operating lease for office and lab space. The lease term commenced on June 1, 2018 and expired on May 31, 2020. The lease agreement required  monthly base rent payments of $15,075 through May 31, 2019 and $15,527 for the year thereafter, plus operating costs estimated at $950 per month. The lease required a security deposit of $31,055 and advance rent payment of $46,581, which were returned in 2020. 

 

In June 2018, the Company entered into an operating lease to lease kitchen facilities. The lease term commenced on June 1, 2018 and expired on May 31, 2020, and was renewed for an additional two-year term to May 31, 2022. The lease agreement required  monthly base rent payments of $4,000 through May 31, 2019 and $4,120 for the year thereafter, plus operating costs of $500 per month.

 

Rent expense for the years ended December 31, 2020 and 2019 was $256,424 and $387,839, respectively.

 

Future minimum lease commitments under operating and capital leases as of December 31, 2020 are as follows:

 

Year Ending December 31,      
2021     168,397  
2022     141,934  
2023     50,648  
Total   $ 360,979  

 

Contingencies

 

The Company may be subject to pending legal proceedings and regulatory actions in the ordinary course of business. The results of such proceedings cannot be predicted with certainty, but the Company does not anticipate that the final outcome, if any, arising out of any such matters will have a material adverse effect on its business, financial condition or results of operations.

 

12. SUBSEQUENT EVENTS

 

In April 2021, the Company converted principal of $2,422,148 and accrued interest of $272,709 of venture debt to Series C Preferred Stock at a per share price of $13.728, a 20% discount to the offering per share price of $17.16, into 196,300 shares of Series C Preferred Stock. In March 2021, the Company repaid $1,222,465, comprised of principal of $1,062,500 and accrued interest of $159,965, of venture debt to Rise of Miso, LLC.

 

Through the issuance date, the Company has received approximately $11,490,978 in proceeds from the issuance of Series C preferred stock, including the subscription receivable at December 31, 2020.

 

Management has evaluated subsequent events through May 6, 2021, the date the financial statements were available to be issued. Based on this evaluation, no additional material events were identified which require adjustment or disclosure in these financial statements.

 

MISO ROBOTICS, INC.

FINANCIAL STATEMENTS

JUNE 30, 2020

 

F-19

 

  

MISO ROBOTICS, INC.
BALANCE SHEETS

 

    June 30,     December 31,  
    2020     2019  
    (unaudited)        
ASSETS            
Current assets:                
Cash and cash equivalents   $ 1,239,003     $ 2,021,777  
Accounts receivable - related party, net of allowance for doubtful accounts of $26,875     100,620       72,620  
Accounts receivable     52,500       -  
Inventory     330,445       330,445  
Prepaid expenses and other current assets     5,520       39,404  
Deferred offering costs     -       129,791  
Total current assets     1,728,088       2,594,037  
Property and equipment, net     208,765       245,670  
Deposits     181,055       227,636  
Total assets   $ 2,117,908     $ 3,067,343  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                
Current liabilities:                
Accounts payable   $ 234,927     $ 227,089  
Accrued expenses and other current liabilities     337,988       172,769  
Deferred revenue     92,967       467  
Deferred rent     10,207       10,207  
Total current liabilities     676,089       410,532  
Loan payable     450,000       -  
Venture debt, net of discount     2,369,569       2,106,763  
Total liabilities     3,495,658       2,517,295  
                 
Commitments and contingencies (Note 11)                
                 
Stockholders' equity:                
Series C convertible preferred stock, $0.0001 par value, 1,748,252 shares authorized; 103,811 shares issued and outstanding as of June 30, 2020 (unaudited) and December 31, 2019, respectively; liquidation preference of $1,781,397 and $0 as of June 30, 2020 (unaudited) and December 31, 2019, respectively     10       -  
Series B convertible preferred stock, $0.0001 par value, 997,616 shares authorized, issued and outstanding as of June 30, 2020 (unaudited) and December 31, 2019, respectively; liquidation preference of $10,000,000 as of June 30, 2020 (unaudited) and December 31, 2019, respectively     100       100  
Series A convertible preferred stock, $0.0001 par value, 769,784 shares authorized, issued and outstanding as of June 30, 2020 (unaudited) and December 31, 2019; liquidation preference of $3,164,433 as of  June 30, 2020 (unaudited) and December 31, 2019, respectively     77       77  
Common stock, $0.0001 par value, 7,000,000 and 6,000,000 shares authorized as of June 30, 2020 (unaudited) and December 31, 2019, respectively; 1,732,085 shares issued and outstanding as of both June 30, 2020 (unaudited) and December 31, 2019; 262,587 and 277,988 shares unvested as of June 30, 2020 (unaudited) and December 31, 2019     173       173  
Additional paid-in capital     17,699,569       16,206,138  
Accumulated deficit     (19,077,680 )     (15,656,440 )
Total stockholders' equity (deficit)     (1,377,750 )     550,048  
Total liabilities and stockholders' equity (deficit)   $ 2,117,908     $ 3,067,343  

  

The accompanying notes are an integral part of these financial statements.

 

F-20

 

 

MISO ROBOTICS, INC.

STATEMENTS OF OPERATIONS

 

   Six Months Ended 
   June 30, 
   2020   2019 
    (unaudited) 
Net revenue  $75,500   $6,000 
Cost of net revenue   55,104    - 
Gross profit   20,396    6,000 
           
Operating expenses:          
Research and development   1,199,480    1,934,018 
Sales and marketing   743,981    166,180 
General and administrative   1,223,245    1,686,963 
Total operating expenses   3,166,706    3,787,161 
           
Loss from operations   (3,146,310)   (3,781,161)
           
Other income (expense):          
Interest expense   (310,128)   - 
Interest income   198    182 
Other income   35,000    - 
Total other income (expense), net   (274,930)   182 
           
Provision for income taxes   -    - 
Net loss  $(3,421,240)  $(3,780,979)
           
Weighted average common shares outstanding -basic and diluted   1,732,085    1,225,900 
Net loss per common share - basic and diluted  $(1.98)  $(3.08)

 

The accompanying notes are an integral part of these financial statements.

 

F-21

 

 

MISO ROBOTICS, INC.

STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICT)

 

   Series C Convertible   Series B Convertible   Series A Convertible           Additional       Total 
   Preferred Stock   Preferred Stock   Preferred Stock   Common Stock   Paid-in   Accumulated   Stockholders' 
   Shares   Amount   Shares   Amount   Shares   Amount   Shares   Amount   Capital   Deficit   Equity (Deficit) 
Balances at December 31, 2018   -   $-    997,616   $100    769,784   $77    1,272,810   $127   $15,043,929   $(8,665,608)  $6,378,625 
Exercise of stock options   -    -    -    -    -    -    1,875    -    7,708    -    7,708 
Stock-based compensation expense   -    -    -    -    -    -    -    -    201,177    -    201,177 
Net loss   -    -    -    -    -    -    -    -    -    (3,780,979)   (3,780,979)
Balances at June 30, 2019 (unaudited)   -   $-    997,616   $100    769,784   $77    1,274,685   $127   $15,252,814   $(12,446,587)  $2,806,531 
                                                        
Balances at December 31, 2019   -   $-    997,616   $100    769,784   $77    1,732,085   $173   $16,206,138   $(15,656,440)  $550,048 
Issuance of Series C preferred stock, net of issuance costs   103,811    10    -    -    -    -    -    -    1,316,285    -    1,316,295 
Stock-based compensation expense   -    -    -    -    -    -    -    -    144,842    -    144,842 
Issuance of debt discount   -    -    -    -    -    -    -    -    32,305    -    32,305 
Net loss   -    -    -    -    -    -    -    -    -    (3,421,240)   (3,421,240)
Balances at June 30, 2020 (unaudited)   103,811   $10    997,616   $100    769,784   $77    1,732,085   $173   $17,699,569   $(19,077,680)  $(1,377,750)

 

The accompanying notes are an integral part of these financial statements.

  

F-22

 

 

MISO ROBOTICS, INC.

 

STATEMENTS OF CASH FLOWS

 

   Six Months Ended 
   June 30, 
   2020   2019 
   (unaudited) 
Cash flows from operating activities:          
Net loss  $(3,421,240)  $(3,780,979)
Adjustments to reconcile net loss to net cash used in operating activities:          
Stock-based compensation expense   144,842    201,177 
Amortization of debt discount   170,111    - 
Depreciation and amortization expense   50,405    48,088 
Changes in operating assets and liabilities:          
Accounts receivable   (80,500)   (58,500)
Inventory   -    (13,101)
Prepaid expenses and other current assets   33,884    4,007 
Accounts payable   7,838    19,716 
Accrued expenses and other current liabilities   165,219    (30,393)
Deferred revenue   92,500    52,500 
Net cash used in operating activities   (2,836,942)   (3,557,486)
Cash flows from investing activities:          
Purchases of property and equipment   (13,500)   (9,237)
Deposits   46,581    - 
Net cash provided by (used in) investing activities   33,081    (9,237)
Cash flows from financing activities:          
Proceeds from issuance of preferred stock, net of issuance costs   1,446,086    - 
Proceeds from issuance of venture debt   125,000    - 
Proceeds from loan payable   450,000    - 
Exercise of stock options   -    7,708 
Net cash provided by financing activities   2,021,086    7,708 
Net decrease in cash and cash equivalents   (782,774)   (3,559,015)
Cash and cash equivalents at beginning of period   2,021,777    5,606,848 
Cash and cash equivalents at end of period  $1,239,003   $2,047,833 
           
Supplemental disclosure of cash flow information:          
Cash paid for income taxes  $-   $- 
Cash paid for interest  $-   $- 
           
Supplemental disclosure of non-cash investing and financing activities:          
Warrants issued with venture debt  $527   $- 
Beneficial conversion feature on venture debt