S-1 1 nbft_s1.htm S-1

 

Registration No. [______]

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

NABUFIT GLOBAL, INC.

 (Exact name of registrant as specified in its charter)

 

 

 

Delaware

7372

84-1089377

(State or other jurisdiction of

incorporation or organization)

(Primary Standard Industrial

Classification Code Number)

(I.R.S. Employer

Identification Number)

 

 

0-11730

(Commission

File Number)

 

 

NABUFIT Global, Inc.

626 East 1820 North

Orem, UT 84097

801-362-2115

 

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

 

Brian Mertz

Chief Executive Officer

626 East 1820 North

Orem, UT 84097

801-362-2115

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

Copies to:

 

J. Martin Tate, Esq.

Lance Lehnhof, Esq.

Carman Lehnhof Israelsen, LP

299 S. Main Street, Suite 1300

Salt Lake City, UT 84111

(801) 534-4435

 

 


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Approximate date of commencement of proposed sale to the public: Promptly after the effective date of this registration statement.

 

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 (“Securities Act”) check the following box: þ

  

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

 

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

 

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer o

 

Accelerated filer o

Non-accelerated filer o (Do not check if a smaller reporting company)

 

Smaller reporting company þ

Emerging growth company þ                                                                           

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided in Section 7(a)(2)(B) of the Securities Act. þ

 

CALCULATION OF REGISTRATION FEE

 

Title of each class of securities to be registered

Amount to be Registered (1)

Proposed Maximum Offering Price per Share

Proposed Maximum Aggregate Offering Price

Amount of Registration Fee

Common stock, par value $0.0001 per share offered by Company (2)

1,150,000

$3.00

$3,450,000

$399.85

Common Stock par value $0.0001 per share offered by Selling Stockholders (3)

270,877

$3.00

$812,631

$94.18

TOTAL

1,420,877

 

$4,262,631

$494.03

 

(1)

Pursuant to Rule 416(a) of the Securities Act of 1933, this Registration Statement also covers any additional securities that may be offered or issued in connection with any stock split, stock dividend, or similar transaction.  

 

 

(2)

This registration statement covers under one prospectus, the registrant’s public offering of up to 1,150,000 shares of the registrant’s common stock, par value $0.0001 per share (the “Common Stock”).  The Common Stock will be sold in indeterminate number of shares being sold on a best effots basis.

 

 

(3)

 This registration statement also covers, under a separate prospectus, the resale (the “Resale Prospectus”) of an aggregate of 270,877 shares of Common Stock owned by all of the current stockholders (the “Selling Stockholders”), each as identified in the Resale Prospectus defined below. The Company will not receive any proceeds from the Resale.

 

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment that specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.


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EXPLANATORY NOTE

 

This registration statement contains two forms of prospectus, as set forth below.

 

 

Public Offering Prospectus. A prospectus to be used for the public offering by the registrant of up to 1,150,000 shares of common stock (the “Public Offering Prospectus”), sold on a “best efforts” basis by our directors and officers on a self-underwritten basis.  

 

 

 

 

Resale Prospectus. A prospectus to be used in connection with the potential distribution by the Selling Stockholders of up to an aggregate of 270,877 shares of the registrant’s common stock (the “Resale Prospectus”) using a “shelf registration” process.

 

The Public Offering Prospectus and the Resale Prospectus will be identical in all respects except for the following:

 

 

they contain different front covers;

 

 

 

 

they contain different tables of contents;

 

 

 

 

the summary contained in The Offering is not found in the Resale Prospectus;

 

 

 

 

they contain different Use of Proceeds sections;

 

 

 

 

a Shares Registered for Distribution section is included in the Resale Prospectus;

 

 

 

 

a Selling Stockholder section is included in the Resale Prospectus;

 

 

 

 

they contain different Plan of Distribution sections; and

 

 

 

 

they contain different back covers.

 

The registrant has included in this registration statement, after the financial statements, a set of alternate pages to reflect the foregoing differences between the Resale Prospectus and the Public Offering Prospectus.


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PROSPECTUS

Subject to Completion,

                 Dated              July 31, 2017

 

NABUFIT GLOBAL, INC

nbft_logo.jpg 

 

Up to 1,150,000 Shares of Common Stock

 

NABUFIT Global, Inc., a Delaware corporation (“us”, “we”, “our”, “NABUFIT Global” or the “Company”) is offering to sell up to 1,150,000 shares of our common stock in a public offering of our common stock.  There is no minimum for this offering and we will retain the proceeds from the sale of any of the offered shares that are sold.  The offering will commence promptly on the date upon which this prospectus was declared effective by the SEC and will continue for 180 days.  At the discretion of our management, we may discontinue the offering before expiration of the 180 day period or extend the offering following the expiration of the 180-day offering period.  We will pay all expenses incurred in this offering.  If all of the shares offered by us are purchased, the gross proceeds to us will be $3,450,000.

 

The offering of the 1,150,000 shares is a “best efforts” offering, which means that our directors and officers will use their best efforts to sell the common stock and there is no commitment by any person to purchase any shares, and is being conducted on a self-underwritten basis. The shares will be offered at a fixed price of $0.10 per share for the duration of the offering. There is no minimum number of shares required to be sold to close the offering. Proceeds from the sale of the shares will be used to fund our business development. The offering date is the date by which this Registration Statement becomes effective.

 

The Company anticipates that the shares will be sold directly to the public by the Company’s officers and directors without the participation of an underwriter, dealer or agent. See “Plan of Distribution.”

 

Our common stock currently trades on the OTCQB under the symbol NBFTD.  

 

We continue to be a “smaller reporting company,” as defined under the Exchange Act, and we are an “emerging growth company” under the federal securities laws and will have the option to use reduced public company reporting requirements.

 

Investing in our common stock involves a high degree of risk. You should review carefully the risks and uncertainties described under the heading “Risk Factors” beginning on page 18 of this prospectus, and under similar headings in any amendments or supplements to this prospectus.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

 

The securities being offering under this prospectus are being offered on a best efforts basis.  There is no minimum number of shares required to be sold to close the offering.  Purchases of securities shall not be eligible for cancellation and funds received will not be held in escrow and will not be eligible for return.  All funds received from sale of securities offered by this prospectus may be used immediately upon receipt by the


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Company.  Funds received and used by the Company may not be sufficient to carry out the Company’s business plan.  See “Risk Factors” beginning on page 18 of this prospectus.


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TABLE OF CONTENTS

 

PROSPECTUS SUMMARY

8

THE OFFERING

15

SUMMARY CONSOLIDATED FINANCIAL DATA

16

RISK FACTORS

19

INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS

40

INDUSTRY AND MARKET DATA

42

USE OF PROCEEDS

44

MARKET PRICE OF OUR COMMON STOCK

45

DIVIDEND POLICY

46

CAPITALIZATION

47

SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

48

MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

51

OUR BUSINESS

59

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

67

DIRECTORS, EXECUTIVE OFFICER, PROMOTERS AND CONTROL PERSONS

68

EXECUTIVE COMPENSATION

74

DESCRIPTION OF INDEBTEDNESS

75

DESCRIPTION OF SECURITIES

75

DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES

78

MARKET FOR OUR COMMON STOCK

79

MATERIAL U.S. FEDERAL TAX CONSEQUENCES TO NON U.S. HOLDERS OF OUR COMMON STOCK

82

RELATED PARTY TRANSACTIONS

87

THE EQUITY PURCHASE TRANSACTION

89

PLAN OF DISTRIBUTION

91

LEGAL MATTERS

97

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

97

EXPERTS

97

WHERE YOU CAN FIND MORE INFORMATION

97

FINANCIAL STATEMENTS

F-1

 

Dealer Prospectus Delivery Obligation

 

Until [November __, 2017] (90 days after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as a placement agent and with respect to any unsold allotments or subscriptions.


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ABOUT THIS PROSPECTUS

 

This prospectus is part of a registration statement on Form S-1 that we filed with the Securities and Exchange Commission, or the SEC offering to sell up to 1,150,000 shares of our common stock in one or more offerings in any combination, with an aggregate value of up to $3,450,000.

 

You should rely only on the information contained or incorporated by reference in this prospectus and any prospectus supplement. No one has been authorized to provide you with information that is different from that contained or incorporated by reference in this prospectus and any amendments and post effective amendments thereto, and, if given or made, such information or representations must not be relied upon as having been authorized by us. If anyone provides you with different or inconsistent information, you should not rely on it. The information contained in this prospectus, amendment or post-effective amendment is accurate only as of the date of such prospectus, amendment or post effective amendment, regardless of the time of delivery of this prospectus or any sale of securities described in this prospectus. You should assume that the information appearing in this prospectus, any amendment or post effective amendment, as well as information we have previously filed with the SEC and incorporated by reference into this prospectus, is accurate as of the date on the front of those documents only. Our business, financial condition, results of operations and prospects may have changed since those dates. This prospectus shall not constitute an offer to sell or a solicitation of an offer to buy offered securities in any jurisdiction in which it is unlawful for such person to make such an offering or solicitation.

 

You should read the entire prospectus, any amendment or post-effective amendment, as well as the documents incorporated by reference into such documents, before making an investment decision. Neither the delivery of this prospectus, an amendment or post-effective amendment nor any sale made hereunder shall under any circumstances imply that the information contained or incorporated by reference herein or therein is correct as of any date subsequent to the date hereof or of such amendment or post-effective amendment, as applicable. You should assume that the information appearing in this prospectus, any amendment, or any post-effective amendment or any document incorporated by reference is accurate only as of the date of the applicable documents, regardless of the time of delivery of this prospectus or any sale of securities. Our business, financial condition, results of operations and prospects may have changed since that date.

 

 

CURRENCY INFORMATION

 

Our functional currency is the Danish Krone (DKK) and our reporting currency is U.S. dollars ($) for the purpose of the consolidated financial statements and other financial data contained elsewhere in this prospectus. Consolidated balance sheet accounts are translated into U.S. dollars at the exchange rate of 0.1486 and 0.1436 as of December 31, 2016 and March 31, 2017, respectively.  Revenue and expenses reported for the year ended December 31, 2016 and for the three months ended March 31, 2017 are translated into U.S. dollars at the average exchange rate for the period of 0.1415 and 0.1433, respectively.  Equity accounts are translated at historical rates.


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PROSPECTUS SUMMARY

 

This summary may not contain all of the information that may be important to you. You should read the entire prospectus, including the financial statements and related notes, and the risk factors under the section titled “Risk Factors.” Unless otherwise indicated or the context otherwise requires, all references in this prospectus to “NABUFIT Global,” “we,” “us,” “our” or the “Company” are to NABUFIT Global, Inc., a Delaware corporation.

 

Company Overview

 

NABUFIT Global, Inc. (“NABUFIT Global” or the “Company”) designs, manufactures and markets the NABUFIT virtual training and fitness products and services, a state-of-the-art online fitness portal (“NABUFIT” or, the “Product”) with the option of connecting existing and future monitoring devices (wearables, etc.) to the Product. The Company anticipates that the Product will incorporate interaction and input through Microsoft® Kinect® and other technologies which enable personal data collection, coaching and teaching through mentor services.

 

 

 

Customers obtain access to the Product through the purchase of monthly or annual memberships and the downloading of the software to their personal computer or mobile device application to their mobile phone, ipad, tablet or other mobile device.  The Product provides custom designed training plans, diet plans and access to mentors and coaching.


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Through Microsoft® Kinect®, the NABUFIT technology will collect data and measures each exercise to a set standard and past performances.  Based on the data collection and registration in the Kinect® module the user will receive immediate feedback, e.g. as a percentage, a graphic or an emoticon depending on how well the exercise has been performed. This provides a unique quality assurance ensuring maximum effect of the training. The quick feedback will also reduce the risk of injuries and streamline time spent on training.  Users can access training data, statistics and results online or through mobile device applications.

 

Membership of the portal will be divided into two levels – a basic membership and a VIP membership.  The difference between the levels of membership will be primarily based upon the access to features and to mentors.

 

The portal also offers a social forum for its users, where users can interact with like-minded members and train with them virtually. Some people will experience increased motivation by being part of a group. The member can allow others to see all or part of his profile. The personal profiles of the members can be matched, so the portal will suggest network and training mates, and thereby helping to ensure the optimum composition. It will be possible to do real-time training with training mates by sharing the screen in a videoconference on the portal.

 

Powerful Trends Driving Our Market

 

Several powerful trends are driving the growth of the virtual health and fitness market:

 

 

 

Individuals and employers are increasingly focused on health and fitness. A variety of factors, such as changing consumer lifestyles and demographics, combined with rising healthcare costs and employers’ increased emphasis on productivity, are leading individuals and employers to increasingly focus on health and fitness. Based on information from industry sources, we estimate consumers spent over $200 billion in 2014 on health and fitness services, such as gym and health club memberships, commercial weight management services, and consumer health products, such as weight management products and dietary supplements. In addition, IBISWorld estimates that the corporate wellness industry will grow from $7.2 billion in 2015 to $9.9 billion in 2019 in the United States* and the Research and Markets “Global Fitness App Market” report forcasts the market to grow at a CAGR of 31.25% during the period 2016-2020 (http://www.businesswire.com/news/home/20160229006652/en/Global-Fitness-App-Market-Growth-31.35-CAGR)

 

 

 

Advances in technology have enabled the emergence of virtual training and fitness products. Recent technological advances in streamlining video, monitoring sensors, high-speed broadband internet, the introduction of wireless standards such as Bluetooth low energy, and other technologies have enabled the emergence of virtual training and fitness programs that may be used by consumers within the confines of their own homes with the ability to receive real-time feedback based upon monitoring devices and applications which track biometric data, and fit a wide range of consumer preferences.

 

 

 

Mobile devices have become the preferred platform for accessing information. Mobile devices have become the preferred platform for people to access information and manage their lives, as well as the primary hub to connect a variety of consumer devices. According to Gartner, by 2018 more than 50% of users will go to a tablet or smartphone first for all online activities.*

 

 

 

More individuals are turning to technology solutions to improve health and fitness. Individuals are increasingly using mobile apps and other software to improve health and fitness, allowing consumers to directly manage and track their health and fitness in unprecedented ways. According to The NPD Group, over 25% of U.S. consumers reported using a fitness app on their smartphone.*

 

Our Market Opportunity

 

According to International Data Corporation, or IDC, the wearable devices market is growing faster than any other segment of the global consumer electronics market.* In the third quarter of 2016, the overall wearables market grew 3.1% year over year.  Total wearables shipments reached a total of 23 million in the quarter.  In mid 2016, IDC predicted that the worldwide shipments of wearable devices were expected to reach 101.9 million units by the end of 2016, representing 29.0% growth over 2015. According to the IDC Worldwide Quarterly Wearable Device Tracker, the market for wearable devices will experience a compound annual growth rate (CAGR) of 20.3%, culminating in 213.6 million units shipped in 2020.* CCS Insight predicts that the market will grow almost threefold to more than $25 Billion with more than 245 million wearable devices sold by 2019.  Based upon this information, we believe that our products and platform, and the ability to connect with wearable devices are primed to take advantage of this expanding market, and that the future growth of this market represents a significant opportunity for us. As we develop our platform and as consumers increasingly view our connected health and fitness products and services as an alternative or complement to other health and wellness activities, we believe there is an opportunity to reach a significant portion of the expanding health and fitness market. Based on information from industry sources, we estimate this market represents over $300 billion and includes consumer spend on health and fitness services, such as gym and health club memberships, commercial weight management services, and consumer health products, such as weight management products and dietary supplements. The broader health and fitness market, however, presents several challenges to overcome before we are able to take advantage of this opportunity, including competition from larger, more established traditional health and fitness companies, uncertainty as to whether consumers will adopt our products and services as an alternative or complement to other health and wellness activities, and our relative lack of experience selling other products and services.

 

Our Competitive Strengths

 

We believe the following strengths position us to increase our revenue and profitability:

 


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Tracking activities through Microsoft ® Kinect ® and wearable connected health and fitness devices. We have developed industry-leading technology which will be incorporated in our NABUFIT product and will provide an optimal user experience for Product subscribers.  The use of the Microsoft® Kinect® interface will allow users to receive real-time feedback based upon actual actions taken by the users. We empower users to live healthier, more active lifestyles by both tracking the information that matters most to them and providing them with real-time feedback. Our connected health and fitness devices span multiple styles, form factors, and price points, addressing the needs of everyone—from people simply looking to get fit by increasing their activity levels to endurance athletes seeking to maximize their performance.

 

 Learning through our online dashboard and mobile apps. We offer our users a personalized online dashboard and mobile apps that sync automatically with our platform and provide our users with a wide range of information and analytics, such as charts and graphs of their progress and the ability to log caloric intake.

 

Professional Mentoring. Users are able to access professional and amateur mentors who will provide training and dietary programs which users may access.  In addition, users will be able to work with such mentors in a virtual capacity and receive feedback and assistance.

 

Staying motivated through social features, notifications, challenges, and virtual badgesOur products help users achieve their goals both individually and within the community that they choose. We motivate users by delivering real-time feedback including notifications, leaderboard and challenge updates, and virtual awards. Users can choose to share some or all of their health and fitness information on an opt-in basis with friends, family, and other parties, with third-party apps, and through social networks.  In addition, users can share workout, training and diet plans with other users and can engage with other users as amateur mentors.

 

Improving health and fitness through goal-setting, personalized insights, premium services, and virtual coaching. We believe our platform assists users in changing their daily behavior, such as eating healthier foods or going for a run or walking more to reach a goal or win a challenge. We also offer personalized insights and virtual coaching through customized fitness plans and interactive video-based exercise experiences on mobile devices and computers.

 

Our Strategy

 

Our objective is to make NABUFIT the premier online fitness and training platform in key markets, beginning with China, Europe and North America. To achieve this goal, we intend to do the following:

 

 

 

Introduce innovative products. We will to develop the world’s most innovative and diverse virtual health and fitness platform and we plan to continue to make significant investments in research and development to further strengthen our platform through both internally-developed and acquired technologies.

 

 

 

Introduce new features and services. We will continue to introduce innovative new features and services to increase user engagement and revenue.

 

 

 

Create brand awareness and drive sales of our products and services in key markets. We intend to target our marketing efforts to create global awareness of our brand and drive sales of our products and services in the key markets of China, Europe and North America.  

 

 

 

Employe Professional Athletes and Trainers.  We will employ a rhobust ensemble of professional athletes and trainers from around the world, who will provide customized tranining and diet programs and work with our subscribers to achieve their fitness goals.

 

 

 

Coordinate with strategic partners in each of the target markets for marketing and distribution. We believe that international markets represent a significant growth opportunity for us and we intend to expand sales of our products and services globally through select retailers and strategic partnerships.  We have entered into agreements with key partners in target markets such as China to provide marketing and distribution expertise and assistance.  Although it may be challenging to gain market acceptance in these markets, we believe the assistance of such experts will expedite the process.

 

Selected Risks Associated with Our Business

 

Our business is subject to a number of risks and uncertainties, including those highlighted in the section titled “Risk Factors” immediately following this prospectus summary. Some of these risks are:

 

 

 

 

We are in the development stage and our products and services are evolving;

We operate in a highly competitive market;

 

 

 

We must be able to anticipate and satisfy consumer preferences in a timely manner;

 

 

 

We must successfully develop and timely introduce new products and services or enhance existing products and services;

 

 

 

We must be able to accurately forecast consumer demand for our products and services and adequately manage our inventory;

 

 

 

Our quarterly operating results or other operating metrics may fluctuate significantly;

 

 

 

We rely on a limited number of third-party suppliers, contract manufacturers, and logistics providers over which we have limited control;

 

 

 

Many of our key components in our products come from limited or sole sources of supply, and we are susceptible to supply shortages, long lead times for components, and supply changes, which could disrupt our supply chain;

 

 

 

The market for virtual and connected health and fitness products is still in the early stages of growth and may not continue to develop;

 

 

 

An economic downturn or economic uncertainty may adversely affect demand for our products and services;

 

 

 

Our current and future products and services may experience quality problems from time to time that can result in adverse publicity, product recalls, litigation, regulatory proceedings, and warranty claims;

  

 

 

We may not be able to sustain our revenue growth or profitability in the future;

 

 

 

 

 

 

Material disruption or breach of our information technology systems or those of third parties could materially damage user and business partner relationships;

We must attract and retain key personell to create and implement our business plan; and

We must continue to raise capital through this and other offerings to finance our operations.

 

 

Corporate Information

 

We were incorporated in Colorado in May 1983 and reincorporated in Delaware in April 2008. Our principal executive offices are located at 626 East 1820 North, Orem, UT 84097. Our telephone number is (801) 592-3000. Our website address is www.nabufitglobal.com. (The information contained on, or that can be accessed through, our


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website is not incorporated by reference into this prospectus and should not be considered to be part of this prospectus.)

 

Share Exchange

 

On November 30, 2015, we consummated the transaction evidenced by an Agreement and Plan of Share Exchange (the "Share Exchange Agreement") dated October 8, 2015 by and among the Company, NABUFIT Global ApS, a Danish company (“NABUFIT Denmark”) and Mads H. Frederiksen and Ulrik Møll  (“Shareholder Representatives”), as the representatives of the shareholders holding one hundred percent (100%) of the issued and outstanding capital stock of NABUFIT Denmark (collectively, the “NABUFIT Shareholders” and each a “NABUFIT Shareholder”), pursuant to which the Company acquired from the NABUFIT Shareholders all of the issued and outstanding equity interests of NABUFIT Denmark in exchange for 516,667 shares of the Company (the “Share Exchange”).  As a result of the Share Exchange, the NABUFIT Shareholders, as the former shareholders of NABUFIT Denmark, became the controlling shareholders of the Company and NABUFIT Denmark became a subsidiary of the Company.  The Share Exchange was accounted for as a reverse takeover/recapitalization effected by a share exchange, wherein NABUFIT Denmark is considered the acquirer for accounting and financial reporting purposes.  The capital, share price, and earnings per share amount in these consolidated financial statements for the period prior to the reverse merger were restated to reflect the recapitalization in accordance with the exchange ratio established in the merger.

 

As a result of the Share Exchange, we discontinued our pre-exchange business, acquired the business of NABUFIT Denmark and have continued the existing business operations of NABUFIT Denmark as a publicly traded company under the name NABUFIT Global, Inc.

 

Reverse Stock Split

 

Effective June 27, 2017, the Company filed an Amended and Restated Certificate of Incorporation (“Restated Certificate”) with the Delaware Secretary of State whereby the Company effected a reverse stock split to reduce the number of shares of outstanding common stock at a rate of 1 share for every 30 shares of common stock then outstanding (“Reverse Split”).  The approval of the Restated Certificate was approved by written consent of holders of a majority of the Company’s common stock.  Each stockholder owning fewer than 30 shares of common stock immediately before the effective time of the Reverse Stock Split received from the Company $0.10 in cash, without interest, for each of such shares of common stock; and (b) each stockholder owning of record 30 or more shares of common stock immediately before the effective time of the Reverse Split held, after the Reverse Split, the number of shares of common stock equal to 1/30th of the number held prior to the Reverse Split.  On June 28, 2017 the Company filed with the Securities and Exchange Commission, and the Company’s stockholders were furnished with a Definitive Information Statement filed on Schedule 14(c) to advise the stockholders of the corporate actions.  All share and per-share amounts included in this report have been restated to reflect the 1 for 30 reverse stock split.

 

Implications of Being an Emerging Growth Company

 

As a company with less than $1.0 billion in revenue during our last completed fiscal year, we qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting requirements that are otherwise applicable generally to public companies. These reduced reporting requirements that are available to us include:

 

 

 

an exemption from compliance with the auditor attestation requirement on the effectiveness of our internal control over financial reporting;

 

 

 

an exemption from compliance with any requirement that the Public Company Accounting Oversight Board may adopt regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements;

 

 

 

reduced disclosure about our executive compensation arrangements; and

 

 

 

an exemption from the requirements to obtain a non-binding advisory vote on executive compensation or a stockholder approval of any golden parachute arrangements.

  

In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are not choosing to “opt out” of this provision. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

 

We will remain an “emerging growth company” until the last day of our fiscal year following the fifth anniversary of the date of our first sale of common equity securities pursuant to an effective registration under the Securities Act, or until the earliest of (i) the last day of the first fiscal year in which our total annual gross revenues exceed $1 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, which would occur if the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.

 

Until such time, however, we cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. Because we have elected to take advantage of certain of the reduced disclosure obligations and may elect to take advantage of other reduced reporting requirements in future filings, the information that we provide to our stockholders may be different than you might receive from other public reporting companies in which you hold equity interests.

 


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THE OFFERING

 

Issuer

 

Common stock offered by us

 

NABUFIT Global, Inc.

 

Up to 1,150,000 shares on a self-underwritten “best efforts” basis.

 

 

 

Common stock outstanding as of prior to the offering

 

1,031,461 shares.

 

 

 

Common stock to be outstanding after the offering

 

Up to 2,174,030 shares.

 

 

 

Use of proceeds

 

The offering price for the shares of common stock offered under this registration statement is $3.00 and the maximum offering proceeds, less expenses will be approximately $3,400,000.  The total offering proceeds could be reduced if the Company does not conduct a direct participation offering, but rather retains one or more placement agents and must pay commissions to such persons. Unless otherwise indicated in the prospectus supplement, we will use the net proceeds from the sale of securities offered by this prospectus primarily for general corporate purposes, including working capital, research and product development of our technology and virtual fitness traning platform, advertising, sales and marketing activities, general and administrative matters and capital expenditures. We may also use a portion of the proceeds to acquire or invest in complementary products or businesses.

 

We have not yet determined the amount of net proceeds to be used specifically for any of the foregoing purposes. Accordingly, our management will have broad discretion over the uses of such proceeds. This is an “any-or all” best efforts offering, and there can be no assurance that the offering contemplated hereby will ultimately be consummated. It is anticipated that some or all of the registered shares shall be sold in one or more direct offereings or used in connection with one or more strategic acquisitions.

 

To the extent that we are unable to raise a sufficient amount of proceeds in this offering, we may not be able to achieve all our business objectives in a timely manner.

 

See “Use of Proceeds” for more information.

 

 

 

Potential purchases by affiliates

 

Certain of our affiliates may purchase shares of our common stock in this offering on the same terms as they are offered and sold to the public.

 

 

 

Fees and Expenses

 

Risk factors

 

We will pay the fees and expenses related to the Offering.

 

The shares of common stock offered hereby involve a high degree of risk. See “Risk Factors.”

 

 

 

Dividend policy

 

We currently intend to retain any future earnings to fund the development and growth of our business. Therefore, we do not currently anticipate paying cash dividends on our Common Stock.

 

 

 

Trading Symbol

 

Our Common Stock is quoted on the OTC Markets (OTCQB) under the symbol “NBFTD”.  

 


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SUMMARY CONSOLIDATED FINANCIAL DATA

 

The following table sets forth selected historical statements of operations for the period from June 26, 2015 (date of inception) through December 31, 2015, for the year ended December 31, 2016, and for the three months ended March 31, 2017 and balance sheet data as of December 31, 2015, December 31, 2016, and March 31, 2017. NABUFIT Global ApS (“NABUFIT Denmark”) was considered the accounting acquirer in the Share Exchange and, as a result, the assets and liabilities and the historical operations that are reflected in our financial statements are those of NABUFIT Denmark. Therefore, the historical financial data of NABUFIT Denmark is deemed to be our historical financial data.

 

The balance sheet data as of December 31, 2016 and the statement of operations data for the year ending December 31, 2016 have been derived from our audited financial statements for that period included elsewhere in this prospectus.  

 

The following data for period from June 26, 2015 (date of inception) through December 31, 2015, and the year ended December 31, 2015, should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in this prospectus and with our financial statements and the related notes and other financial information included in this prospectus.

 

 


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Picture 21 


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Picture 22 

 


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RISK FACTORS

 

You should carefully consider and evaluate all of the information in this prospectus, including the risk factors listed below. Risks and uncertainties in addition to those we describe below, that may not be presently known to us, or that may also harm our business and operations. If any of these risks occur, our business, results of operations and financial condition could be harmed, the price of our shares common stock could decline (“Shares”), and future events and circumstances could differ significantly from those anticipated in the forward-looking statements contained in this prospectus.

 

Risks Associated with This Offering

 

Because the offering price has been set by the Company, you may not realize a return on your investment upon resale of your shares.

 

The offering price and other terms and  conditions  relative to the  Company's shares have been  determined by us based upon a discount from the current trading price of our common stock and and do not bear any relationship to assets,  earnings,  book  value or any other  objective  financial  criteria. Additionally, the Company has only a limited operating history with no earnings, the current trading price of the Company’s Common Stock and the price of the offered shares is not based on its earnings, and as such our stockholders  may not be able to receive a return on their  investment when they sell their shares of common stock.

 

We are selling this offering without an underwriter and may be unable to sell any shares.

 

This  offering  is  self-underwritten,  that is, we are not going to engage  the services  of an  underwriter or broker-dealer to sell the  shares;  we intend to sell our shares through our officers and directors,  who will receive no  commissions.  There is no guarantee that they will be able to sell any of the shares.  Also, the best-efforts offering does not require a minimum amount to be raised.  If we are not able to raise sufficient funds, we may not be able to fully fund our operations as planned, and our business will suffer and your investment may be materially adversely affected. Our inability to successfully conduct a best-effort offering could be the basis of your losing your entire investment in us.

 

Stockholders may suffer substantial dilution related to issued stock options and warrants, convertible notes, and stock grants.

 

As of June 30, 2017, we had a number of agreements or obligations for the possible issuance of common stock that may result in dilution to investors. These include:

 

5,964,928 shares required for issuance under our outstanding convertible notes.

 

The common stock to be issued on conversion of our convertible notes may be discounted to the lowest daily volume-weighted average price of our common stock for the number of consecutive trading days under the term of the respective debt instruments. Additionally, the sale, or even the possibility of the sale, of the shares of common stock underlying these commitments could have an adverse effect on the market price for our securities or on our ability to obtain future financing.

 

Additional issuances of stock options and warrants, convertible notes, and stock grants will cause additional substantial dilution to our stockholders.

 

Given our limited cash, liquidity, and revenues, it is our intent to put shares to Kodiak Capital Group, LLC, under the Equity Purchase Agreement dated May 9, 2017 or issue additional warrants, stock grants, and convertible debt to finance our future business operations and acquisitions and strategic relationships. The issuance of additional shares of common stock, the exercise of warrants, and the conversion of debt to stock could cause additional dilution to our stockholders and could have further adverse effects on the market price for our securities or on our ability to obtain future financing.


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The sale of our common stock to Kodiak Capital may cause dilution, and the sale of the shares of common stock acquired by Kodiak Capital, or the perception that such sales may occur, could cause the price of our common stock to fall.

 

Under the Equity Purchase Agreement with Kodiak Capital, we may put shares to it at our discretion until December 31, 2020. We generally have the right to control the timing and amount of any sales of our shares to Kodiak Capital, except that, pursuant to the terms of the Equity Purchase Agreement, we would be unable to sell shares to Kodiak Capital if the value of the shares is less than the Purchase Price. We cannot assure that Kodiak Capital will comply with its covenant in the Equity Purchase Agreement not to sell, or “short,” in anticipation of the purchase of stock from us. After Kodiak Capital has acquired our shares, it may sell all, some, or none of those shares. Therefore, sales to Kodiak Capital by us could result in substantial dilution to the interests of other holders of our common stock. Additionally, the sale of a substantial number of shares of our common stock to Kodiak Capital, or the anticipation of such sales, could make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish.  Depending on market liquidity at the time, sales of these shares may cause the trading price of our common stock to fall.

 

Kodiak Capital will pay less than the then-prevailing market price for our common stock.

 

We will sell common stock to Kodiak Capital pursuant to the Purchase Agreement at the Purchase Price, which represents discount to the price of the common stock. Kodiak Capital has a financial incentive to sell our common stock immediately upon receiving the shares to realize the profit equal to the difference between the discounted price and the market price. If Kodiak Capital sells the shares, the price of our common stock could decrease. If our stock price decreases, Kodiak Capital may have a further incentive to sell the shares of our common stock that it holds. These sales may have a further impact on our stock price.

 

Risks Related to Our Business and Strategy

 

The Company lacks an established operating history on which to evaluate its business and determine if it will be able to execute our business plan, and can give no assurance that operations will result in profits.

 

On November 30, 2015, NABUFIT Global, Inc. acquired 100% of the outstanding capital stock of NABUFIT Global ApS, a Danish company (“NABUFIT Denmark”) for the purpose of executing the business plan of NABUFIT Denmark.  NABUFIT Denmark was incorporated in Denmark on June 26, 2015 and operates an online fitness and training platform.  NABUFIT Denmark has a limited operating history that makes it difficult to evaluate its business.  NABUFIT Denmark has recently begun its operations, and cannot say with certainty when it will begin to generate revenue or achieve profitability.  No assurance can be made that the Company will ever become profitable.

 

As a rapidly growing company with a relatively limited operating history at our current scale, we face increased risks, uncertainties, expenses and difficulties.

 

We have a limited operating history at our current scale, and we have encountered and will continue to encounter risks, uncertainties, expenses and difficulties, including:

 

developing and launching the NABUFIT portal ("NABUFIT") and gaining market acceptance and penetration; 

attracting customers; 

entering into new markets and introducing new loan products; 

continuing to develop, maintain and scale our platform; 

effectively using limited personnel and technology resources; 

effectively maintaining and scaling our financial and risk management controls and procedures; 

maintaining the security of our platform and the confidentiality of the information provided and   utilized across our platform; and 


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attracting, integrating, and retaining an appropriate number of qualified employees. 

 

If we are not able to timely and effectively address these requirements, our business and results of operations may be harmed.

 

We have incurred significant losses since our inception and anticipate that we will continue to incur significant losses for the foreseeable future. 

 

We have historically incurred substantial net losses, including net losses of $372,396 during the period from inception (June 26, 2015) through December 31, 2015, $4,038,605 for the year ended December 31, 2016 and $1,166,181 for the three months ended March 31, 2017 and have an accumulated deficit of $4,411,001 at December 31, 2016 and $5,577,182 at March 31, 2017. We expect our net losses to continue as a result of ongoing expansion of our commercial operations, including increased manufacturing, sales and marketing costs. These net losses have had, and will continue to have, a negative impact on our working capital, total assets and stockholders’ equity. Because of the numerous risks and uncertainties associated with our commercialization efforts, we are unable to predict when we will become profitable, and we may never become profitable. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our inability to achieve and then maintain profitability could harm our business, financial condition, results of operations and cash flows.

 

Further, the net losses we incur may fluctuate significantly from quarter-to-quarter and year-to-year, such that a period-to-period comparison of our results of operations may not be a good indication of our future performance quarter-to-quarter and year-to-year, due to factors including the execution of collaboration, licensing or other agreements and the timing of any payments we make or receive thereunder.

 

In that the Company only recently commenced business operations, the Company relied on loans and on sales of its debt and equity securities to continue operations. If the Company is unable to raise funds through sales of its securities, there can be no assurance that the Company will be able to implement its business plan, generate sustainable revenue or ever achieve profitable operations. The Company expects to have operating losses until such time as it develops a substantial and stable revenue base. The Company cannot assure you that it can achieve or sustain profitability on a quarterly or annual basis in the future.

 

If we do not obtain adequate financing, our business will fail.

 

If we are not successful in earning revenues once we have started our business activities, we may require additional financing to sustain business operations. Currently, we do not have any arrangements for financing and can provide no assurance to investors that we will be able to obtain financing when required. Obtaining additional financing would be subject to a number of factors, including the company's ability to attract customers. These factors may have an effect on the timing, amount, terms or conditions of additional financing and make such additional financing unavailable to us.

 

No assurance can be given that the Company will obtain access to capital markets in the future or that financing, adequate to satisfy the cash requirements of implementing our business strategies, will be available on acceptable terms. The inability of the Company to gain access to capital markets or obtain acceptable financing could have a material adverse effect upon the results of its operations and upon its financial conditions.

 Our operating results may prove unpredictable

 

Our operating results are likely to fluctuate significantly in the future due to a variety of factors, many of which we have no control over. Factors that may cause our operating results to fluctuate significantly include our ability to generate enough working capital from future equity sales; the level of commercial acceptance by the market of our product; fluctuations in the demand; the amount and timing of operating costs and capital expenditures relating to expansion of our business, operations, infrastructure and general economic conditions.

 


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If realized, any of these risks could have a material adverse effect on our business, financial condition and operating results.

 

We require funding to develop our business as planned, over the next 24 months.  If we do not secure the funding from this offering or otherwise, we may not be able to develop our business and distribute our product, which will prevent us from generating revenues and achieving profitability.

 

We anticipate that we will require funding of at least the amounts being sought in this offering to conduct our operations over the next 24 months in order to develop our business. Our failure to raise the necessary capital or generate the cash flows necessary to finance our business could force us to limit or cease our operations. Our business plan contemplates that we will further develop our platform and product, commence product marketing and enter into agreements with a number of personal trainers. Accordingly, we will need to raise additional funds in excess of the amount sought in this offering, and we may not be able to obtain additional debt or equity financing on favorable terms, if at all.

 

If we raise additional equity financing, our stockholders may experience significant dilution of their ownership interests, and the per-share value of our common stock could decline. If we engage in debt financing, we may be required to accept terms that restrict our ability to incur additional indebtedness and force us to maintain specified liquidity or other ratios. If we need additional capital and cannot raise it on acceptable terms, we may not be able to, among other things, distribute and market our products, which would negatively impact our business and our ability to generate revenues and achieve profitability.

 

Our business model is not proven and our services may not be attractive to consumers.

 

The concept of personal training is strongly established with medium and high-end health clubs generating significant revenue.  However, our business concept revolves around a virtual “gym” with online training and plans being provided through our portal and personal trainers and mentors working with a client remotely, without the aid of facilities provided by a health club.  Though we believe that this is an attractive alternative for clients who are not able to make it to a gym or health club, especially in target markets such as China, or simply find it inconvenient to leave their home to work out, this business model is not yet established in the industry and we will have to convince our customers that remote personal training can be an effective way to maintain a healthy lifestyle.

 

We believe that we will be successful in marketing our services, but there can be no assurance that we will be able to attract sufficient consumers to achieve profitability or even generate anything but minimal revenues.  If our services are not accepted by consumers, we will fail.

 

We will rely on third party broadband internet providers and systems and there can be no assurance that such systems will perform effectively and consistently.  If we are not able to find a consistent third party systems, we may not be able to secure long-term customers and our revenues will suffer. 

 

Our system relies upon broadband internet providers to adequately provide sufficient bandwith to connect our users with the system and our mentors and trainers.  We could incur significant expenses, lost revenue, and reputational harm if we fail to detect or effectively address technology issues relating to communication between mentors, personal trainers and users.

 

Our stand-alone software products also may experience quality or reliability problems. The software we license or develop may contain bugs and other defects that interfere with its intended operation. Any defects we do not detect and fix could result in reduced sales and revenue, damage to our reputation, repair or remediation costs, or legal liability. If our customers face continuing difficulties with communicating with their personal trainers, they may discontinue using our service and we will not be able to generate revenues.

 

Since we are a new company and lack an operating history, we face a high risk of business failure, which would result in the loss of your investment.


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We have only a limited operating history upon which an evaluation of its prospects can be made.  NABUFIT Denmark was incorporated in June 2015 and to date we have been involved primarily in the creation of our business plan, development and we have transacted no business operations. Thus, there is no internal or industry-based historical financial data upon which to estimate the company's planned operating expenses.

 

We expect that our results of operations may also fluctuate significantly in the future as a result of a variety of market factors, including, among others, the dominance of other companies offering similar product, the entry of new competitors into the online fitness industry, our ability to attract, retain and motivate qualified personnel, the initiation, renewal or expiration of our customer base, pricing changes by the company or its competitors, specific economic conditions in the fitness industry and general economic conditions. Accordingly, our future revenue and operating results are difficult to forecast.

 

As of the date of this report, we have earned minimal revenue. Failure to generate revenue will cause us to go out of business, which will result in the complete loss of your investment.

 

We operate in a highly competitive market. If we do not compete effectively, our prospects, operating results, and financial condition could be adversely affected.

 

The health and fitness market is highly competitive, with companies offering a variety of competitive products and services. We expect competition in our market to intensify in the future as new and existing competitors introduce new or enhanced products and services that are potentially more competitive than our products and services. The health and fitness market has a multitude of participants, including gyms, fitness centers, home fitness equipment, virtual fitness programs and platforms, wearable and connected fitness products and traditional health and fitness companies. We may also face competition from manufacturers of lower-cost solutions. We believe many of our competitors and potential competitors have significant competitive advantages, including longer operating histories, ability to leverage their sales efforts and marketing expenditures across a broader portfolio of products and services, larger and broader customer bases, more established relationships with a larger number of suppliers, contract manufacturers, and channel partners, greater brand recognition, ability to leverage app stores which they may operate, and greater financial, research and development, marketing, distribution, and other resources than we do. Our competitors and potential competitors may also be able to develop products or services that are equal or superior to ours, achieve greater market acceptance of their products and services, and increase sales by utilizing different distribution channels than we do. Some of our competitors may aggressively discount their products and services in order to gain market share, which could result in pricing pressures, reduced profit margins, lost market share, or a failure to grow market share for us. If we are not able to compete effectively against our current or potential competitors, our prospects, operating results, and financial condition could be adversely affected.

 

If we are unable to anticipate and satisfy consumer preferences in a timely manner, our business may be adversely affected.

 

Our success depends on our ability to anticipate and satisfy consumer preferences in a timely manner. All of our products are subject to changing consumer preferences that cannot be predicted with certainty. Consumers may decide not to purchase our products and services as their preferences could shift rapidly to different types of connected health and fitness devices or away from these types of products and services altogether, and our future success depends in part on our ability to anticipate and respond to shifts in consumer preferences. In addition, our products and services may have higher prices than many of our earlier products and the products of some of our competitors, which may not appeal to consumers or only appeal to a smaller subset of consumers. It is also possible that competitors could introduce new products and services that negatively impact consumer preference for our health and fitness products, which could result in decreased sales of our products and services and a loss in market share. Accordingly, if we fail to anticipate and satisfy consumer preferences in a timely manner, our business may be adversely affected.

 

We may be unable to gain any significant market acceptance for our products and services or establish a significant market presence.

 


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Our growth strategy is substantially dependent upon our ability to market our product successfully to prospective clients in the target markets, which shall initially be China, Europe and the United States.   This requires that we heavily rely upon our development and marketing partners in the target markets.  Failure to select the right development and marketing partners in the target markets and other target markets will significantly delay or prohibit our ability to develop the products and services, market the products and gain market acceptance.  Our products and services may not achieve significant acceptance. Such acceptance, if achieved, may not be sustained for any significant period of time. Failure of our services to achieve or sustain market acceptance could have a material adverse effect on our business, financial conditions and the results of our operations.

 

Because the industry is dependent upon general economic conditions and uncertainties, future developments could result in a material adverse effect on our business. 

 

The amount of money people spend on health and fitness is subject to economic changes and periodical fluctuations. Prolonged declines in the economy and/or a recession could have a material adverse effect on our business. The economies of our target markets are generally affected by numerous factors and conditions, all of which are beyond our control, including (a) interest rates; (b) inflation; (c) employment levels; (d) changes in disposable income; (e) financing availability; (f) federal and state income tax policies; and (g) consumer confidence.

 

The market for virtual health and fitness devices is still in the early stages of growth and if it does not continue to grow, grows more slowly than we expect, or fails to grow as large as we expect, our business and operating results would be harmed.

 

The market for health and fitness products and services is relatively new and unproven, and it is uncertain whether connected health and fitness devices will sustain high levels of demand and wide market acceptance. Our success will depend to a substantial extent on the willingness of people to widely adopt our products and services. In part, adoption of our products and services will depend on the increasing prevalence of virtual and connected health and fitness devices as well as new entrants to the virtual and connected health and fitness device market to raise the profile of both the market as a whole and our own platform.

 

If we do not compete effectively in our target markets, our operating results could be harmed.

 

The online fitness and training market is highly competitive and evolving. We will compete with gyms, fitness centers, fitness equipment providers, other virtual trainers and training programs provided by more established companies with better name recognition and stronger capitalization.

 

Many of our competitors operate with different business models, have different cost structures or participate selectively in different market segments. Most of our current or potential competitors have significantly more financial, technical, marketing, and other resources than we do and may be able to devote greater resources to the development, promotion, sale and support of their products, platforms and distribution channels.  Our competitors also have longer operating histories, more extensive customer bases, greater brand recognition and brand loyalty and broader customer and partner relationships than we have. For example, more established companies that possess large, existing customer bases, substantial financial resources and established distribution channels exist in the market.  Additionally, a current or potential competitor may acquire one of our existing competitors or form a strategic alliance with one of our competitors. Our competitors may be better at developing new products, responding quickly to new technologies and undertaking more extensive marketing campaigns. If we are unable to compete with such companies and meet the need for innovation in our industry, the demand for our products and services could stagnate or substantially decline, we could experience reduced revenue or our marketplace could fail to achieve or maintain more widespread market acceptance, any of which could harm our business.

 

If potential users within the target markets do not widely adopt online or virtual training or NABUFIT fails to achieve and sustain sufficient market acceptance, we will not generate sufficient revenue and our growth prospects, financial condition and results of operations could be harmed.

 


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NABUFIT may never gain significant acceptance in the marketplace and, therefore, may never generate substantial revenue or allow us to achieve or maintain profitability. Widespread adoption of virtual and online training portals in the target markets depends on many factors, including acceptance by users that such systems and methods are more convenient or superior to going to a gym or other option other options. Our ability to achieve commercial market acceptance for NABUFIT or any other future products also depends on the strength of our sales, marketing and distribution organizations.

 

We require our clients to have and maintain adequate technology equipment.

 

Users of the NABUFIT portal are required to have personal computers and mobile devices with adequate internet access.  In addition, some features of our products require input from the Microsoft X-Box ® Kinect ®.  Potential users who do not have such equipment will not be able to access the portal without first purchasing such items.  This additional cost may discourage potential clients from purchasing our products and services. 

 

We may not be able to generate sufficient revenue from the commercialization of NABUFIT to achieve and maintain profitability.

 

We rely solely on the commercialization of NABUFIT to generate revenue, and we expect to generate substantially all of our revenue in the future from subscriptions to the NABUFIT portal and the sale of products and services on such Portal. To date, we have not generated any revenue from subscriptions or sales.  We cannot assure you that we will be able to generate such income, achieve, or maintain profitability. If we fail to successfully commercialize NABUFIT, we may never receive a return on the substantial investments in product development, sales and marketing we have made, as well as further investments we intend to make, which may cause us to fail to generate revenue and gain economies of scale from such investments.

 

In addition, potential customers may decide not to purchase NABUFIT, or our customers may decide to cancel subscriptions.

 

If NABUFIT does not perform as expected, or if we are unable to satisfy customers’ demands for additional product features, our reputation, business and results of operations will suffer.

 

Our success depends on the market’s confidence that NABUFIT can develop and provide a reliable, high-quality fitness experience. We currently do not have a completed product and therefore, we have no way to predict the success, efficacy or reliability of NABUFIT. We believe that our customers are likely to be particularly sensitive to poor design, functionality, product defects and errors.  In addition, our customers are technologically well informed and may have specific demands or requests for additional functionality. If we are unable to meet those demands through the development of new features for NABUFIT or future products, those new features or products do not function at the level that our customers expect, we are unable to increase throughput as expected or we are unable to obtain regulatory clearance or approval of those new features or products, where applicable, our reputation, business and results of operations could be harmed.

 

We may not be able to attract qualified trainers, mentors or professional athletes, which will decrease the value of our product offering and may make it difficult to differentiate NABUFIT from other online training programs.

 

Our strategy includes developing relationships with professional trainers and athletes that can act as mentors to our clients and provide one-on-one virtual training programs. If we are unable to establish relationships with these trainers and athletes or if these mentors determine that NABUFIT is not effective or that alternative products are more effective, or if we encounter difficulty promoting adoption or establishing NABUFIT as a standard, our ability to achieve market acceptance of NABUFIT could be significantly limited.

 

We have no experience in marketing and selling NABUFIT, and if we are unable to adequately address our customers’ needs, it could negatively impact sales and market acceptance of NABUFIT and we may never generate sufficient revenue to achieve or sustain profitability.


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We have no experience in marketing and selling NABUFIT.  NABUFIT is a new product and our future sales will largely depend on our ability to establish our marketing efforts in the target markets and adequately address our customers’ needs.  We believe it is necessary to establish a strong marketing campaign through social media and other outlets.   Due to the fact we are small and do not have much capital, we must limit our marketing activities and may not be able to make our product known to potential customers. Because we will be limiting our marketing activities, we may not be able to attract enough customers to operate profitably. If we are unable to adequately market our products, it will negatively impact sales and market acceptance of NABUFIT and we may never generate sufficient revenue to achieve or sustain profitability. 

 

The payment structure we use in our customer arrangements may lead to unpredictable revenue

 

Although we anticipate that most users of the NABUFIT portal will become members through a monthly subscription model, our model in certain markets anticipates the offering of a “free” version with limited content and features in China and other markets.  Users who subscribe will provide credit card or ACH information and monthly payments will be made automatically.  However, subscribers may cancel their memberships at any time, which may result in unpredictable revenue streams and fluctuations in operating cash flows.  Therefore, we cannot rely upon our operating results in any particular period as an indication of future performance.

 

We may not be able to develop new products or enhance the capabilities of NABUFIT to keep pace with our industry’s rapidly changing technology and customer requirements.

 

Our industry is characterized by rapid technological changes, new product introductions, enhancements, and evolving industry standards. Our business prospects depend on our ability to develop new products and applications for our technology in new markets that develop as a result of technological and scientific advances, while improving the performance and cost-effectiveness of NABUFIT portal.  New technologies, techniques or products could emerge that might offer better combinations of price and performance than NABUFIT systems. The market for online or virtual fitness is characterized by rapid innovation and advancement in technology. It is important that we anticipate changes in technology and market demand.  If we do not successfully innovate and introduce new technology into our anticipated product lines or effectively manage the transitions of our technology to new product offerings, our business, financial condition and results of operations could be harmed.

 

Our current and future products and services may experience quality problems from time to time that can result in adverse publicity, product recalls, litigation, regulatory proceedings, and warranty claims resulting in significant direct or indirect costs, decreased revenue and operating margin, and harm to our brand.

 

We sell complex products and services that could contain design and manufacturing defects in their materials, hardware, and firmware. These defects could include defective materials or components, or “bugs” that can unexpectedly interfere with the products’ intended operations or cause injuries to users. Although we will extensively and rigorously test new and enhanced products and services before their release, there can be no assurance we will be able to detect, prevent, or fix all defects.

 

Failure to detect, prevent, or fix defects could result in a variety of consequences including greater number of returns of products than expected from users and retailers, regulatory proceedings, product recalls, and litigation, which could harm our revenue and operating results. The occurrence of real or perceived quality problems or material defects in our current and future products could expose us to warranty claims in excess of our current reserves. If we experience greater returns from retailers or users in excess of our reserves, our business and operating results could be harmed. In addition, any negative publicity or lawsuits filed against us related to the perceived quality and safety of our products could also affect our brand and decrease demand for our products and services, and adversely affect our operating results and financial condition.

 

Any material disruption of our information technology systems or those of third-party partners could materially damage user and business partner relationships, and subject us to significant reputational, financial, legal, and operational consequences.

 


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We depend on our information technology systems, as well as those of third parties, to develop new products and services, operate our platform and website, host and manage our services, store data, process transactions, respond to user inquiries, interact with mentors and provide other services.  Any material disruption or slowdown of our systems or those of third parties whom we depend upon, including a disruption or slowdown caused by our failure to successfully manage significant increases in user volume or successfully upgrade our or their systems, system failures, or other causes, could cause outages or delays in our services, which could harm our brand and adversely affect our operating results. In addition, such disruption could cause information, including data related to orders, to be lost or delayed which could result in delays or interruptions in providing the services which could reduce demand for our products and services, harm our brand and reputation, and cause our revenue to decline. If changes in technology cause our information systems, or those of third parties whom we depend upon, to become obsolete, or if our or their information systems are inadequate to handle our growth, we could lose users and our business and operating results could be adversely affected.

 

We collect, store, process, and use personal information and other customer data, which subjects us to governmental regulation and other legal obligations related to privacy, information security, and data protection, and any security breaches or our actual or perceived failure to comply with such legal obligations could harm our business.

 

We depend on information technology and telecommunications systems for our operations. We have developed propriety software related to the NABUFIT portal and its interface with the Microsoft Kinect. Information technology and telecommunications systems are vulnerable to damage from a variety of sources, including telecommunications or network failures, malicious human acts and natural disasters. We collect, store, process, and use personal information and other user data, and we rely on third parties that are not directly under our control to do so as well. Our users’ health and fitness-related data and other highly personal information may include, among other information, names, addresses, phone numbers, email addresses, payment account information, height, weight, and biometric information such as heart rates, sleeping patterns, location, and activity patterns. Due to the volume and sensitivity of the personal information and data we manage and the nature of our products, the security features of our platform and information systems are critical. If our security measures, some of which are managed by third parties, are breached or fail, unauthorized persons may be able to obtain access to or acquire sensitive user data. If we or our third-party service providers, business partners, or third-party apps with which our users choose to share their data were to experience a breach of systems compromising our users’ sensitive data, our brand and reputation could be adversely affected, use of our products and services could decrease, and we could be exposed to a risk of loss, litigation, and regulatory proceedings. Depending on the nature of the information compromised, in the event of a data breach or other unauthorized access to or acquisition of our user data, we may also have obligations to notify users about the incident and we may need to provide some form of remedy, such as a subscription to a credit monitoring service, for the individuals affected by the incident. A growing number of legislative and regulatory bodies have adopted consumer notification requirements in the event of unauthorized access to or acquisition of certain types of personal data. Such breach notification laws continue to evolve and may be inconsistent from one jurisdiction to another. Complying with these obligations could cause us to incur substantial costs and could increase negative publicity surrounding any incident that compromises user data. Our users may also accidentally disclose or lose control of their passwords, creating the perception that our systems are not secure against third-party access. Additionally, if third-party service providers that host user data on our behalf experience security breaches or violate applicable laws, agreements, or our policies, such events may also put our users’ information at risk and could in turn have an adverse effect on our business. While we maintain insurance coverage that, subject to policy terms and conditions and a significant self-insured retention, is designed to address certain aspects of cyber risks, such insurance coverage may be insufficient to cover all losses or all types of claims that may arise in the event we experience a security breach.

 

Cybersecurity risks could adversely affect our business and disrupt our operations.

 

The threats to network and data security are increasingly diverse and sophisticated. Despite our efforts and processes to prevent breaches, our devices, as well as our servers, computer systems, and those of third parties that we use in our operations are vulnerable to cybersecurity risks, including cyber attacks such as viruses and worms, phishing attacks, denial-of-service attacks, physical or electronic break-ins, employee theft or misuse, and similar disruptions from unauthorized tampering with our servers and computer systems or those of third parties that we use in our operations, which could lead to interruptions, delays, loss of critical data, and loss of consumer confidence. In


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addition, we may be the target of email scams that attempt to acquire sensitive information or company assets. Despite our efforts to create security barriers to such threats, we may not be able to entirely mitigate these risks. Any cyber attack that attempts to obtain our data and assets, disrupt our service, or otherwise access our systems, or those of third parties we use, if successful, could adversely affect our business, operating results, and financial condition, be expensive to remedy, and damage our reputation.

 

Our financial performance is subject to risks associated with changes in the value of the U.S. dollar versus local currencies.

 

Our primary exposure to movements in foreign currency exchange rates relates to non-U.S. dollar denominated sales and operating expenses worldwide. Weakening of foreign currencies relative to the U.S. dollar adversely affects the U.S. dollar value of our foreign currency-denominated sales and earnings, and generally leads us to raise international pricing, potentially reducing demand for our products. In some circumstances, for competitive or other reasons, we may decide not to raise local prices to fully offset the strengthening of the U.S. dollar, or at all, which would adversely affect the U.S. dollar value of our foreign currency denominated sales and earnings. Conversely, a strengthening of foreign currencies relative to the U.S. dollar, while generally beneficial to our foreign currency-denominated sales and earnings, could cause us to reduce international pricing, incur losses on our foreign currency derivative instruments, and incur increased operating expenses thereby limiting any benefit. Additionally, strengthening of foreign currencies may also increase our cost of product components denominated in those currencies, thus adversely affecting gross margins.

 

We do not use derivative instruments, such as foreign currency forward and option contracts, to hedge certain exposures to fluctuations in foreign currency exchange rates.

 

Sales of our products and services in the United State and other target markets subjects us to a variety of U.S. and foreign laws and regulations that are continuously evolving, including those related to privacy, data security, and data protection due to our collection, processing, and use of personal information and other user data, such as the E.U. Data Protection Directive which covers the transfer of personal data from the European Union to the United States.

 

We are or may become subject to a variety of laws and regulations in the United States and abroad that involve matters central to our business, including laws and regulations regarding privacy, data protection, data security, data retention, consumer protection, advertising, electronic commerce, intellectual property, manufacturing, anti-bribery and anti-corruption, and economic or other trade prohibitions or sanctions. These laws and regulations are continuously evolving and developing. The scope and interpretation of the laws that are or may be applicable to us are often uncertain and may be conflicting, particularly with respect to foreign laws.

 

In particular, there are numerous U.S. federal, state, and local laws and regulations and foreign laws and regulations regarding privacy and the collection, sharing, use, processing, disclosure, and protection of personal information and other user data, the scope of which is changing, subject to differing interpretations, and may be inconsistent among different jurisdictions. We strive to comply with all applicable laws, policies, legal obligations, and industry codes of conduct relating to privacy, data security, and data protection. However, given that the scope, interpretation, and application of these laws and regulations are often uncertain and may be conflicting, it is possible that these obligations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices. Any failure or perceived failure to comply with our privacy or security policies or privacy-related legal obligations by us or third-party service-providers or the failure or perceived failure by third-party apps, with which our users choose to share their Fitbit data, to comply with their privacy policies or privacy-related legal obligations as they relate to the Fitbit data shared with them, or any compromise of security that results in the unauthorized release or transfer of personally identifiable information or other user data, may result in governmental enforcement actions, litigation, or negative publicity, and could have an adverse effect on our brand and operating results.

 

We will need to develop solutions to ensure that data transfers from the E.U. provide adequate protections to comply with the E.U. Data Protection Directive. If we fail to develop such alternative data transfer solutions, one or more national data protection authorities in the European Union could bring enforcement actions seeking to prohibit or suspend our data transfers to the U.S. and we could also face additional legal liability, fines, negative publicity, and resulting loss of business.


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Certain health-related laws and regulations such as the Health Insurance Portability and Accountability Act of 1996, or HIPAA, and the Health Information Technology for Economic and Clinical Health Act, or HITECH, may have an impact on our business. For example, we recently announced that we intend to offer HIPAA compliant capabilities to certain customers of our corporate wellness offerings who are “covered entities” under HIPAA, which may include our execution of Business Associate Agreements with such covered entities. In addition, changes in applicable laws and regulations may result in the user data we collect being deemed protected health information, or PHI, under HIPAA and HITECH. If we are unable to comply with the applicable privacy and security requirements under HIPAA and HITECH, or we fail to comply with Business Associate Agreements that we enter into with covered entities, we could be subject to claims, legal liabilities, penalties, fines, and negative publicity, which could harm our operating results.

 

Governments are continuing to focus on privacy and data security and it is possible that new privacy or data security laws will be passed or existing laws will be amended in a way that is material to our business. Any significant change to applicable laws, regulations, or industry practices regarding our users’ data could require us to modify our services and features, possibly in a material manner, and may limit our ability to develop new products, services, and features. Although we have made efforts to design our policies, procedures, and systems to comply with the current requirements of applicable state, federal, and foreign laws, changes to applicable laws and regulations in this area could subject us to additional regulation and oversight, any of which could significantly increase our operating costs.

 

The labeling, distribution, importation, marketing, and sale of our products are subject to extensive regulation by various U.S. state and federal and foreign agencies, including the CPSC, Federal Trade Commission, Food and Drug Administration, or FDA, Federal Communications Commission, and state attorneys general, as well as by various other federal, state, provincial, local, and international regulatory authorities in the countries in which our products and services are distributed or sold. If we fail to comply with any of these regulations, we could become subject to enforcement actions or the imposition of significant monetary fines, other penalties, or claims, which could harm our operating results or our ability to conduct our business.

 

The global nature of our business operations also create various domestic and foreign regulatory challenges and subject us to laws and regulations such as the U.S. Foreign Corrupt Practices Act, or FCPA, the U.K. Bribery Act, and similar anti-bribery and anti-corruption laws in other jurisdictions, and our products are also subject to U.S. export controls, including the U.S. Department of Commerce’s Export Administration Regulations and various economic and trade sanctions regulations established by the Treasury Department’s Office of Foreign Assets Controls. If we become liable under these laws or regulations, we may be forced to implement new measures to reduce our exposure to this liability. This may require us to expend substantial resources or to discontinue certain products or services, which would negatively affect our business, financial condition, and operating results. In addition, the increased attention focused upon liability issues as a result of lawsuits, regulatory proceedings, and legislative proposals could harm our brand or otherwise impact the growth of our business. Any costs incurred as a result of compliance or other liabilities under these laws or regulations could harm our business and operating results.

 

Our international operations subject us to additional costs and risks, and our continued expansion internationally may not be successful.

 

We plan to enter many international markets in a relatively short time and may enter into additional markets in the future. We plan to focus on key markets of China, Europe and the United States and will expand into South America, Australia and a number of other countries in Asia. There are significant costs and risks inherent in conducting business in international markets, including:

 

 

 

establishing and maintaining effective controls at foreign locations and the associated increased costs;

 

 

 

 

 

 

adapting our technologies, products, and services for preferences and customs;

 

 

 

 

 

 

variations in margins by geography;

 

 

 

 

 

 

increased competition from local providers of similar products;

 

 

 

 

 

 

longer sales or collection cycles in some countries;

 

 

 

 

 

 

compliance with foreign laws and regulations;

 

 

 

 

 

 

compliance with the laws of numerous taxing jurisdictions where we conduct business, potential double taxation of our international earnings, and potentially adverse tax consequences due to U.S. and foreign tax laws as they relate to our international operations;

 

 

 

 

 

 

compliance with anti-bribery laws, such as the FCPA and the U.K. Bribery Act, by us, our employees, and our business partners;

 

 

 

 

 

 

complexity and other risks associated with current and future foreign legal requirements, including legal requirements related to consumer protection, consumer product safety, and data privacy frameworks, such as the E.U. Data Protection Directive, the proposed E.U. Data Protection Regulation, and applicable privacy and data protection laws in foreign jurisdictions where we currently conduct business or intend to conduct business in the future;

 

 

 

 

 

 

currency exchange rate fluctuations and related effects on our operating results;

 

 

 

 

 

 

economic and political instability in some countries, particularly those in China where we have recently expanded;

 

 

 

 

 

 

the uncertainty of protection for intellectual property rights in some countries and practical difficulties of enforcing rights abroad; and

 

 

 

 

 

 

other costs of doing business internationally.

 

 

 

 

 

These factors and other factors could harm our international operations and, consequently, materially impact our business, operating results, and financial condition. Further, we may incur significant operating expenses as a result of our international expansion, and it may not be successful. We expect that we will begin expanding into other target markets; however, we cannot assure you that our expansion plans will be realized, or if realized, be successful. We expect each market to have particular regulatory and funding hurdles to overcome and future developments in these markets, including the uncertainty relating to governmental policies and regulations, could harm our business. If we expend significant time and resources on expansion plans that fail or are delayed, our reputation, business and financial condition may be harmed.  We have limited experience with regulatory environments and market practices internationally, and we may not be able to penetrate or successfully operate in new markets. We may also encounter difficulty expanding into new international markets because of limited brand recognition in certain parts of the world, leading to delayed acceptance of our products and services by users in these new international markets. If we are unable to continue to expand internationally and manage the complexity of our global operations successfully, our financial condition and operating results could be adversely affected.

 

 

We may acquire other businesses, form joint ventures or make investments in other companies or technologies that could negatively affect our operating results, dilute our stockholders’ ownership, increase our debt or cause us to incur significant expense.


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We may pursue acquisitions of businesses and assets. We also may pursue strategic alliances and joint ventures that leverage our proprietary technology and industry experience to expand our offerings or distribution. We have no experience with acquiring other companies and limited experience with forming strategic partnerships. We may not be able to find suitable partners or acquisition candidates, and we may not be able to complete such transactions on favorable terms, if at all. If we make any acquisitions, we may not be able to integrate these acquisitions successfully into our existing business, and we could assume unknown or contingent liabilities. Any future acquisitions also could result in the incurrence of debt, contingent liabilities or future write-offs of intangible assets or goodwill, any of which could have a negative impact on our cash flows, financial condition and results of operations. Integration of an acquired company also may disrupt ongoing operations and require management resources that we would otherwise focus on developing our existing business. We may experience losses related to investments in other companies, which could harm our financial condition and results of operations. We may not realize the anticipated benefits of any acquisition, strategic alliance or joint venture.

 

Foreign acquisitions involve unique risks in addition to those mentioned above, including those related to integration of operations across different cultures and languages, currency risks and the particular economic, political and regulatory risks associated with specific countries. 

 

To finance any acquisitions or joint ventures, we may choose to issue shares of common stock as consideration, which could dilute the ownership of our stockholders. Additional funds may not be available on terms that are favorable to us, or at all. If the price of our Common Stock is low or volatile, we may not be able to acquire other companies or fund a joint venture project using our stock as consideration.

 

Risks Related to Our Reliance on Third Parties

 

We will depend on third-parties to market NABUFIT in international markets.

 

We will depend on a number of third parties to market and sell NABUFIT internationally. We may not be able to successfully identify marketing and distribution partners and even if we do, such parties may not be able to successfully market and sell NABUFIT and may not devote sufficient time and resources to support the marketing and selling efforts that enable the product to develop, achieve or sustain market acceptance. Any of these factors could reduce our revenue from affected international markets, increase our costs in those markets or damage our reputation. In addition, if we are unable to attract additional international distributors, our international revenue may not grow.

 

We depend on third-party technologies.

 

Certain modules of our NABUFIT product is built upon third-party technologies, including technologies developed by Microsoft® and as such we are dependent upon licenses from Microsoft and others.  In the event that such licenses are terminated, the Company will not be able to operate its technologies or conduct its business.

 

Risks Related to Being a Public Company

 

Our management team has limited experience managing a public company.

 

Most members of our management team have limited, or no experience managing a publicly-traded company, interacting with public company investors, and complying with the increasingly complex laws pertaining to public companies. Our management team may not successfully or efficiently manage our transition to being a public company subject to significant regulatory oversight and reporting obligations under the federal securities laws and the continuous scrutiny of securities analysts and investors. These new obligations and constituents will require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, financial condition, and operating results.


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We incur significant costs as a result of operating as a public company and our management expects to devote substantial time to public company compliance programs.

 

As a public company, we incur significant legal, accounting and other expenses due to our compliance with regulations and disclosure obligations applicable to us, including compliance with the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, as well as rules implemented by the Securities and Exchange Commission, or SEC, and the OTC Markets. Stockholder activism, the current political environment and the current high level of government intervention and regulatory reform may lead to substantial new regulations and disclosure obligations, which may lead to additional compliance costs and impact, in ways we cannot currently anticipate, the manner in which we operate our business. Our management and other personnel devote a substantial amount of time to these compliance programs and monitoring of public company reporting obligations and as a result of the new corporate governance and executive compensation related rules, regulations and guidelines prompted by the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, and further regulations and disclosure obligations expected in the future, we will likely need to devote additional time and costs to comply with such compliance programs and rules. These rules and regulations cause us to incur significant legal and financial compliance costs and make some activities more time-consuming and costly. 

 

To comply with the requirements of being a public company, we may need to undertake various actions, including implementing new internal controls and procedures and hiring new accounting or internal audit staff. The Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures and internal control over financial reporting. We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file with the SEC is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that information required to be disclosed in reports under the Securities Exchange Act of 1934, or the Exchange Act, is accumulated and communicated to our principal executive and financial officers. Our current controls and any new controls that we develop may become inadequate and weaknesses in our internal control over financial reporting may be discovered in the future. Any failure to develop or maintain effective controls could negatively impact the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we may be required to include in our periodic reports we will file with the SEC under Section 404 of the Sarbanes-Oxley Act, harm our operating results, cause us to fail to meet our reporting obligations or result in a restatement of our prior period financial statements. In the event that we are not able to demonstrate compliance with the Sarbanes-Oxley Act, that our internal control over financial reporting is perceived as inadequate or that we are unable to produce timely or accurate financial statements, investors may lose confidence in our operating results and the price of our Common Stock could decline. In addition, if we are unable to continue to meet these requirements, our Common Stock may not be able to remain eligible for quotation on the OTC Markets.

 

We are currently required to comply with the SEC rules that implement Section 404 of the Sarbanes-Oxley Act and are required to make a formal assessment of the effectiveness of our internal control over financial reporting for that purpose. We are required to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of our internal control over financial reporting commencing with our second annual report. During the evaluation and testing process, if we identify one or more material weaknesses in our internal control over financial reporting, we will be unable to assert that our internal control over financial reporting is effective.

 

Our independent registered public accounting firm will not be required to formally attest to the effectiveness of our internal control over financial reporting until the first annual report required to be filed with the SEC following the date we are no longer an “emerging growth company” as defined in the JOBS Act depending on whether we choose to rely on certain exemptions set forth in the JOBS Act. If we are unable to assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion on the effectiveness of our internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, which could harm our business.

 

 

Risks Related to Administrative, Organizational and Commercial Operations and Growth


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We may be unable to manage our future growth effectively, which could make it difficult to execute our business strategy.

 

We anticipate growth in our business operations. This future growth could create a strain on our organizational, administrative and operational infrastructure, including technical support and customer service, marketing and general and financial administration.  Our ability to manage our growth properly will require us to continue to improve our operational, financial and management controls, as well as our reporting systems and procedures.

 

The loss of our executive officers or our inability to attract and retain highly skilled developers and other personnel could negatively impact our business.

 

Our success depends on the skills, experience and performance of our executive officers, consultants and other key employees.  The individual and collective efforts of these employees will be important as we continue to develop NABUFIT and as we expand our commercial activities. The loss or incapacity of existing members of our executive management team could negatively impact our operations if we experience difficulties in hiring qualified successors. Our executive officers have employment agreements; however, the existence of an employment agreement does not guarantee the retention of the executive officer for any period of time. 

 

If we are unable to protect our domain names, our brand, business, and operating results could be adversely affected.

 

We have registered domain names for websites, or URLs, that we use in our business, such as Nabufit.com, nabufitglobal.com, nabufitglobal.co.uk, nabufit.co.uk, nabufit.de, nabufitglobal.de and many others. If we are unable to maintain our rights in these domain names, our competitors or other third parties could capitalize on our brand recognition by using these domain names for their own benefit. In addition, although we own the “NABUFIT” domain name under various global top level domains such as .com and .net, as well as under various country-specific domains, we might not be able to, or may choose not to, acquire or maintain other country-specific versions of the “Fitbit” domain name or other potentially similar URLs. The regulation of domain names in the United States and elsewhere is generally conducted by Internet regulatory bodies and is subject to change. If we lose the ability to use a domain name in a particular country, we may be forced to either incur significant additional expenses to market our solutions within that country, including the development of a new brand and the creation of new promotional materials, or elect not to sell our solutions in that country. Either result could substantially harm our business and operating results. Regulatory bodies could establish additional top-level domains, appoint additional domain name registrars, or modify the requirements for holding domain names. As a result, we may not be able to acquire or maintain the domain names that utilize the name “NABUFIT” in all of the countries in which we currently conduct or intend to conduct business. Further, the relationship between regulations governing domain names and laws protecting trademarks and similar proprietary rights varies among jurisdictions and is unclear in some jurisdictions. Domain names similar to ours may be registered in the United States and elsewhere, and we may be unable to prevent third parties from acquiring and using domain names that infringe, are similar to, or otherwise decrease the value of, our brand or our trademarks. Protecting and enforcing our rights in our domain names and determining the rights of others may require litigation, which could result in substantial costs, divert management attention, and not be decided favorably to us.

 

Our use of “open source” software could negatively affect our ability to sell our products and subject us to possible litigation.

 

A portion of the technologies we use incorporates “open source” software, and we may incorporate open source software in the future. Such open source software is generally licensed by its authors or other third parties under open source licenses. These licenses may subject us to certain unfavorable conditions, including requirements that we offer our products and services that incorporate the open source software for no cost, that we make publicly available source code for modifications or derivative works we create based upon, incorporating, or using the open source software, or that we license such modifications or derivative works under the terms of the particular open source license. Additionally, if a third-party software provider has incorporated open source software into software that we license from such provider, we could be required to disclose or provide at no cost any of our source code


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that incorporates or is a modification of such licensed software. If an author or other third party that distributes open source software that we use or license were to allege that we had not complied with the conditions of the applicable license, we could be required to incur significant legal expenses defending against such allegations and could be subject to significant damages and enjoined from the sale of our products and services that contained the open source software. Any of the foregoing could disrupt the distribution and sale of our products and services and harm our business.

 

Risks Related to Intellectual Property

 

If we are unable to protect the confidentiality of our trade secrets, our business and competitive position could be harmed.

 

We rely upon patents, trademarks, copyright and trade secret protection, as well as non-disclosure agreements and invention assignment agreements with our employees, consultants and third parties, to protect our confidential and proprietary information. Significant elements of NABUFIT are based on unpatented trade secrets and know-how that are not publicly disclosed. In addition to contractual measures, we try to protect the confidential nature of our proprietary information using physical and technological security measures. Such measures may not, for example, in the case of misappropriation of a trade secret by an employee or third party with authorized access, provide adequate protection for our proprietary information. Our security measures may not prevent an employee or consultant from misappropriating our trade secrets and providing them to a competitor, and recourse we take against such misconduct may not provide an adequate remedy to protect our interests fully. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret can be difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, trade secrets may be independently developed by others in a manner that could prevent legal recourse by us. If any of our confidential or proprietary information, such as our trade secrets, were to be disclosed or misappropriated, or if any such information was independently developed by a competitor, our competitive position could be harmed.

 

Any failure to protect our own intellectual property rights could impair our brand, negatively impact our business or both.

 

Our success and ability to compete also depend in part on protecting our own intellectual property. We will rely on a combination of patents, copyright, trade secret, trademark and other rights, as well as confidentiality procedures and contractual provisions to protect our proprietary technology, processes and other intellectual property. However, the steps we take to protect our intellectual property rights may be inadequate. Third parties may seek to challenge, invalidate or circumvent our copyright, trade secret, trademark and other rights or applications for any of the foregoing. In order to protect our intellectual property rights, we may be required to spend significant resources. Litigation brought to protect and enforce our intellectual property rights could be costly, time-consuming and distracting to management and could result in the impairment or loss of portions of our intellectual property. Our failure to secure, protect and enforce our intellectual property rights could seriously adversely affect our brand and adversely impact our business.

 

 We may infringe the intellectual property rights of others, which may prevent or delay our product development efforts and stop us from commercializing or increase the costs of commercializing our products.

 

Our commercial success depends significantly on our ability to operate without infringing the patents and other intellectual property rights of third parties. For example, there could be issued patents of which we are not aware that our products infringe. There also could be patents that we believe we do not infringe, but that we may ultimately be found to infringe. Moreover, patent applications are in some cases maintained in secrecy until patents are issued. The publication of discoveries in the scientific or patent literature frequently occurs substantially later than the date on which the underlying discoveries were made and patent applications were filed. Because patents can take many years to issue, there may be currently pending applications of which we are unaware that may later result in issued patents that our products infringe. For example, pending applications may exist that provide support or can be amended to provide support for a claim that results in an issued patent that our product infringes.

 


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Our software is built upon open-sourced code and platforms.  Nevertheless, there is a risk a third party may assert that we are employing their proprietary technology without authorization. If a court held that any third-party patents are valid, enforceable and cover our products or their use, the holders of any of these patents may be able to block our ability to commercialize our products unless we obtained a license under the applicable patents, or until the patents expire. We may not be able to enter into licensing arrangements or make other arrangements at a reasonable cost or on reasonable terms. Any inability to secure licenses or alternative technology could result in delays in the introduction of our products or lead to prohibition of the manufacture or sale of products by us.

 

 Unfavorable outcomes in intellectual property litigation could limit our research and development activities and/or our ability to commercialize certain products.

 

 If third parties successfully assert intellectual property rights against us, we might be barred from using certain aspects of our technology, or barred from developing and commercializing certain products. Prohibitions against using certain technologies, or prohibitions against commercializing certain products, could be imposed by a court or by a settlement agreement between us and a plaintiff. In addition, if we are unsuccessful in defending against allegations of patent infringement or misappropriation of trade secrets, we may be forced to pay substantial damage awards to the plaintiff. There is inevitable uncertainty in any litigation, including intellectual property litigation. There can be no assurance that we would prevail in any intellectual property litigation, even if the case against us is weak or flawed. If litigation leads to an outcome unfavorable to us, we may be required to obtain a license from the patent owner, in order to continue our research and development programs or to market our product(s). It is possible that the necessary license will not be available to us on commercially acceptable terms, or at all. This could limit our research and development activities, our ability to commercialize certain products, or both.

 

Most of our competitors are larger than we are and have substantially greater resources. They are, therefore, likely to be able to sustain the costs of complex patent litigation longer than we could. In addition, the uncertainties associated with litigation could have a material adverse effect on our ability to raise the funds necessary to continue our clinical trials, continue our internal research programs, in-license needed technology, or enter into strategic partnerships that would help us bring our product candidates to market.

 

In addition, any future patent litigation, interference or other administrative proceedings will result in additional expense and distraction of our personnel. An adverse outcome in such litigation or proceedings may expose us or any future collaborators to loss of our proprietary position, expose us to significant liabilities, or require us to seek licenses that may not be available on commercially acceptable terms, if at all.

 

Risks Related to Ownership of Our Common Stock

 

The price of our Common Stock may be volatile and may be influenced by numerous factors, some of which are beyond our control.

 

Factors that could cause volatility in the market price of our Common Stock include, but are not limited to:

 

 

 

actual or anticipated fluctuations in our financial condition and operating results;

 

 

 

 

 

 

actual or anticipated changes in our growth rate relative to our competitors;

 

 

 

 

 

 

commercial success and market acceptance of NABUFIT;

 

 

 

 

 

 

success of our competitors in discovering, developing or commercializing products;

 

 

 

 

 

 

strategic transactions undertaken by us;

 

 

 

 

 

 

additions or departures of key personnel;

 

 

 

 

 

 

prevailing economic conditions;

 

 

 

 

 

 

disputes concerning our intellectual property or other proprietary rights;

 

 

 

 

 

 

sales of our Common Stock by our officers, directors or significant stockholders;

 

 

 

 

 

 

future sales or issuances of equity or debt securities by us;

 

 

 

 

 

 

business disruptions caused by earthquakes, tornadoes or other natural disasters; and

 

 

 

 

 

 

issuance of new or changed securities analysts’ reports or recommendations regarding us.

 

In addition, the stock markets in general have experienced extreme volatility that has been often unrelated to the operating performance of the issuer. These broad market fluctuations may negatively impact the price or liquidity of our Common Stock. In the past, when the price of a stock has been volatile, holders of that stock have sometimes instituted securities class action litigation against the issuer. If any of our stockholders were to bring such a lawsuit against us, we could incur substantial costs defending the lawsuit and the attention of our management would be diverted from the operation of our business.

 

As an “emerging growth company” under the JOBS Act, we are permitted to rely on exemptions from certain disclosure requirements.

 

We qualify as an “emerging growth company” under the JOBS Act. As a result, we are permitted to and may rely on exemptions from certain disclosure requirements. For so long as we are an emerging growth company, we will not be required to: 

 

  

have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;

  

comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis);

  

submit certain executive compensation matters to shareholder advisory votes, such as “say-on-pay”, “say-on-frequency” and “say-on-golden parachute;” and

  

disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the Chief Executive’s compensation to median employee compensation.

 

In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are not choosing to “opt out” of this provision. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.


31


 

We will remain an “emerging growth company” until the last day of our fiscal year following the fifth anniversary of the date of our first sale of common equity securities pursuant to an effective registration under the Securities Act, or until the earliest of (i) the last day of the first fiscal year in which our total annual gross revenues exceed $1 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, which would occur if the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.

 

Until such time, however, we cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

 

We have experienced a significant decline in our stock price

 

Over the past nine months, our stock price has declined from $82.50 per share in August of 2016 to $4.50 in June 2017.  There are no assurances that the stock price will not continue to decline and lose value.

 

Future sales of our Common Stock or securities convertible or exchangeable for our Common Stock may cause our stock price to decline.

 

If our existing stockholders sell, or indicate an intention to sell, substantial amounts of our Common Stock in the public market after the lock-up and legal restrictions on resale lapse, the price of our Common Stock could decline. The perception in the market that these sales may occur could also cause the price of our Common Stock to decline.

 

We also plan to file a registration statement in the near future for the shares issued in the Share Exchange and other holders. Registration of these shares under the Securities Act would result in the shares becoming freely tradable without restriction under the Securities Act, except for shares purchased by affiliates, subject to the lock-up agreements described above. Sales of such shares could cause the price of our Common Stock to decline. 

 

Our Common Stock is or may become subject to the “penny stock” rules of the SEC and the trading market in the securities is limited, which makes transactions in the stock cumbersome and may reduce the value of an investment in the stock.

 

Rule 15g-9 under the Exchange Act establishes the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: (a) that a broker or dealer approve a person’s account for transactions in penny stocks; and (b) the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.

 

In order to approve a person’s account for transactions in penny stocks, the broker or dealer must: (a) obtain financial information and investment experience objectives of the person and (b) make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

 

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form: (a) sets forth the basis on which the broker or dealer made the suitability determination; and (b) confirms that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. If our Common Stock is or becomes subject to the “penny stock” rules, it may be more difficult for investors to dispose of our Common Stock and cause a decline in the market value of our Common Stock.

 


32


Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker or dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

 

Our principal stockholders and management own a significant percentage of our stock and will be able to exert significant control over matters subject to stockholder approval.

 

Based on the beneficial ownership of our Common Stock at June 30, 2017, our officers and directors, together with holders of 5% or more of our outstanding common stock before the Offering and their respective affiliates, will beneficially own approximately 58.85% of our Common Stock. Accordingly, these stockholders will have significant influence over the outcome of corporate actions requiring stockholder approval, including the election of directors, merger, consolidation or sale of all or substantially all of our assets or any other significant corporate transaction. The interests of these stockholders may not be the same as or may even conflict with your interests. For example, these stockholders could delay or prevent a change in control of the Company, even if such a change in control would benefit our other stockholders, which could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of the company or our assets and might affect the prevailing price of our Common Stock. The significant concentration of stock ownership may negatively impact the price of our Common Stock due to investors’ perception that conflicts of interest may exist or arise. 

 

Shares of our Common Stock that have not been registered under federal securities laws are subject to resale restrictions imposed by Rule 144, including those set forth in Rule 144(i) which apply to a former “shell company.”

 

Prior to the closing of the Exchange, we were deemed a “shell company” under applicable SEC rules and regulations because we had no or nominal operations and either no or nominal assets, assets consisting solely of cash and cash equivalents, or assets consisting of any amount of cash and cash equivalents and nominal other assets. Pursuant to Rule 144 promulgated under the Securities Act, as amended, sales of the securities of a former shell company, such as us, under that rule are not permitted (i) until at least 12 months have elapsed from the date on which this Report, reflecting our status as a non-shell company, is filed with the SEC and (ii) unless at the time of a proposed sale, we are subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act and have filed all reports and other materials required to be filed by Section 13 or 15(d) of the Exchange Act, as applicable, during the preceding 12 months, other than Form 8-K reports. Although we intend to register such shares for sale under the Securities Act, our stockholders will be forced to hold their shares of our Common Stock for at least that 12-month period before they are eligible to sell those shares pursuant to Rule 144, and even after that 12-month period, sales may not be made under Rule 144 unless we and the selling stockholders are in compliance with other requirements of Rule 144. Further, it will be more difficult for us to raise funding to support our operations through the sale of debt or equity securities unless we agree to register such securities under the Securities Act, which could cause us to expend significant time and cash resources. The lack of liquidity of our securities as a result of the inability to sell under Rule 144 for a longer period of time than a non-former shell company could cause the market price of our securities to decline.  Furthermore, to the extent shares of Common Stock were purchased by Non- U.S. Persons pursuant to Regulation S, such shares may not be transferred within the United States or to a “U.S. Person” unless such transfer is made pursuant to registration under the Securities Act, pursuant to an exemption therefrom, or in a transaction outside the United States pursuant to the resale provisions of Regulation S.

 

We do not anticipate paying any cash dividends on our Common Stock in the foreseeable future; therefore, capital appreciation, if any, of our Common Stock will be your sole source of gain for the foreseeable future.

 

We have never declared or paid cash dividends on our Common Stock. We do not anticipate paying any cash dividends on our Common Stock in the foreseeable future. We currently intend to retain all available funds and any future earnings to fund the development and growth of our business. As a result, capital appreciation, if any, of our Common Stock will be your sole source of gain for the foreseeable future.

 


33


If securities or industry analysts do not publish research, or publish inaccurate or unfavorable research, about our business, our stock price and trading volume could decline.

 

The trading market for our Common Stock will depend, in part, on the research and reports that securities or industry analysts publish about us or our business. Securities and industry analysts do not currently, and may never, publish research on the company. If no securities or industry analysts commence coverage of the company, the price for our Common Stock could be negatively impacted. In the event securities or industry analysts initiate coverage, if one or more of the analysts who cover us downgrade our Common Stock or publish inaccurate or unfavorable research about our business, our stock price could decline. In addition, if our operating results fail to meet the forecast of analysts, our stock price could decline. If one or more of these analysts cease coverage of the company or fail to publish reports on us regularly, demand for our Common Stock could decrease, which might cause our stock price and trading volume to decline.

 

The risks above do not necessarily comprise all of those associated with an investment in the Company. This Report contains forward looking statements that involve unknown risks, uncertainties and other factors that may cause the actual results, financial condition, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. Factors that might cause such a difference include, but are not limited to, those set out above.


34


 

 

INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS

 

This prospectus, including the documents incorporated by reference herein, contains statements that do not directly or exclusively relate to historical facts. Such statements are “forward-looking statements.” You can typically identify forward-looking statements by the use of forward-looking words, such as “may,” “will,” “could,” “project,” “believe,” “anticipate,” “expect,” “estimate,” “continue,” “potential,” “plan,” “forecast” and other similar words. These include, but are not limited to, statements relating to our future financial and operating results, plans, objectives, expectations and intentions and other statements that are not historical facts. These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many of these factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by these forward-looking statements. In addition to the risk factors described under “Risk Factors” beginning on page 18 of this prospectus, these factors include:

 

 

·

the impact of any new or changed laws, regulations, card network rules or other industry standards affecting our business, including government decision to impose sanctions or other legal restrictions that may restrict our ability to do business in China, Europe, the United States;

 

 

·

the impact of any significant cancellations, which we may not be able to accurately predict or manage;

 

 

·

our reliance on third-party processors and service providers;

 

 

·

our dependence on third party sales, marketing and distribution groups that do not serve us exclusively to market and distribute our products in targeted global markets;

 

 

·

the effect of the loss of key personnel or our relationships with marketing and distribution partners;

 

 

·

the effects of increased competition, which could adversely impact our financial performance;

 

 

·

our ability to adopt technology to meet changing industry and customer needs or trends;

 

 

·

the impact of any decline in the use of credit cards as a payment mechanism for consumers or adverse developments with respect to the credit card industry in general;

 

 

·

the impact of seasonality on our operating results;

 

 

·

the impact of any failure in our systems due to factors beyond our control;

 

 

·

the impact of any material breaches in the security of third-party processing systems we use;

 

 

·

the impact on our growth and profitability if the markets for the services that we offer fail to expand or if such markets contract;

 

 

·

our ability (or inability) to continue as a going concern;

 

 

·

the willingness of the Company’s majority stockholders, and/or other affiliates of the Company, to continue investing in the Company’s business to fund working capital requirements;

 

 

·

the Company’s ability (or inability) to obtain additional financing in sufficient amounts or on acceptable terms when needed;

 

 

·

the impact on our operating results as a result of impairment of our goodwill and intangible assets;

 

 

·

our material weaknesses in internal control over financial reporting and our ability to maintain effective controls over financial reporting in the future; and

 

 

·

the other factors identified in the section of this prospectus entitled “Risk Factors.”

 

We describe material risks, uncertainties and assumptions that could affect our business, including our financial condition and results of operations, under “Risk Factors.” We base our forward-looking statements on our management’s beliefs and assumptions based on information available to our management at the time the statements are made. We caution you that actual outcomes and results may differ materially from what is expressed, implied or forecast by our forward-looking statements. Accordingly, you should be careful about relying on any forward-looking statements. Reference is made in particular to forward-looking statements regarding growth strategies, financial results, product development, competitive strengths, intellectual property rights, litigation, mergers and acquisitions, market acceptance or continued acceptance of our products, accounting estimates, financing activities, ongoing contractual obligations and sales efforts. Except as required under the federal securities laws and the rules and regulations of the SEC, we do not have any intention or obligation to update publicly any forward-looking statements after the distribution of this prospectus, whether as a result of new information, future events, changes in assumptions, or otherwise. 


35


INDUSTRY AND MARKET DATA

 

This prospectus contains statistical data, estimates, and forecasts that are based on independent industry publications or reports or other publicly available information, as well as other information based on our internal sources. This information involves a number of assumptions and limitations, are subject to risks and uncertainties, and are subject to change based on various factors, including those discussed in the section titled “Risk Factors” and elsewhere in this prospectus. These and other factors could cause results to differ materially from those expressed in the estimates made by the independent parties and by us.

 

The source of certain statistical data, estimates, and forecasts contained in this prospectus are based upon the following independent industry publications or reports:

  

 

IBISWorld Inc., IBISWorld Industry Report: Corporate Wellness Services in the U.S., September 2015.

 

 

 

 

International Data Corporation, Consumer Market Model 2010-2021 data, October 2015.

 

 

 

 

International Data Corporation, Worldwide Wearables 2015-2019 Forecast, October 2015.

 

 

 

 

The NPD Group, Inc., Retail Tracking Service, Digital Fitness Devices data, January 2013 - September 2015. We refer to connected activity trackers elsewhere in this prospectus, which has been defined in The NPD Group data as digital fitness wrist band and multi-location devices that connect to other devices (e.g., mobile devices and computers, via ANT+, Bluetooth, Wi-Fi, wireless combinations, wired connection only, and other wireless connections). We also refer to GPS fitness watches elsewhere in this prospectus, which has been defined in The NPD Group data as digital fitness watches that are GPS enabled. GPS fitness watches are not included in the connected activity trackers category.

 

 

 

 

http://www.ccsinsight.com/press/company-news/2332-wearables-market-to-be-worth-25-billion-by-2019-reveals-ccs-insight

 

 

 

 

http://www.worldometers.info/world-population/china-population/

 

 

 

 

http://www.scmp.com/news/china/article/1835527/chinas-middle-class-grew-203-million-10-years-report

 

 

 

 

https://www2.deloitte.com/content/dam/Deloitte/pl/Documents/Press/pl_PRESS_RELEASE_EuropeActive.pdf

 

 

 

 

http://www.mckinseychina.com/chinas-social-media-boom-2/#sthash.Bcv1swAL.dpuf

 

 

 

 

http://www.idc.com/getdoc.jsp?containerId=prUS42342317

 

 

 

 

http://www.idc.com/getdoc.jsp?containerId=prUS41530816

 

 

 

 

http://www.businessinsider.com/chinas-middle-class-is-exploding-2016-8

 

 

 

 

https://www.ecommerce-nation.co/chinese-ecommerce-market-growth-statistics-report-2016/

 

 

 

 

https://www.cta.tech/News/Press-Releases/2016/April/Consumers-Adopting-Innovation-Wearables,-Wireless.aspx

 

 

 

 

http://www.chinadaily.com.cn/business/tech/2017-02/13/content_28176755.htm

 

 

 

 

http://www.mobihealthnews.com/48273/survey-58-percent-of-smartphone-users-have-downloaded-a-fitness-or-health-app

 

 

 

 

https://www.cta.tech/News/Press-Releases/2016/April/Consumers-Adopting-Innovation-Wearables,-Wireless.aspx

 

 

 

 

http://journals.lww.com/acsm-healthfitness/Fulltext/2016/11000/WORLDWIDE_SURVEY_OF_FITNESS_TRENDS_FOR_2017.6.aspx

 

 

 

 

https://www.forbes.com/sites/paullamkin/2016/02/17/wearable-tech-market-to-be-worth-34-billion-by-2020/#715167173cb5

 

 

 

 

https://www2.deloitte.com/de/de/pages/consumer-business/articles/european-health-fitness-2017.html

 

 

 

 

http://www.businessinsider.com/wechat-breaks-700-million-monthly-active-users-2016-4?IR=T

 

 

 

 

https://www.theverge.com/2017/6/27/15880494/facebook-2-billion-monthly-users-announced

 

 


36


 

USE OF PROCEEDS

 

We are offering up to 1,150,000 shares of our common stock.  Presuming the sale of the 1,150,000 shares being offered under this registration statement, the maximum proceeds to the Company, less expenses would be $3,400,000.  

 

We intend to use the proceeds from this offering to expand our organization, research and develop our platform, market our products, attract additional professional mentors and trainers and expand our product offerings. All remaining proceeds will be used for working capital and general corporate purposes.  We may also use a portion of proceeds to acquire or invest in complementary products or businesses.

 

If we are unable to sell the initial targeted amount of 1,150,000 shares, we intend to first apply any proceeds raised towards the development and marketing of the product and platform. However, to the extent that we are unable to raise a sufficient amount of proceeds in this offering, we may not be able to achieve all our business objectives in a timely manner.

 

The amounts and timing of our actual expenditures will depend on numerous factors, including market conditions, results from our research and development efforts, business developments and opportunities and the rate of our growth, sales and marketing activities and competition. Accordingly, our management will have broad discretion in the application of the net proceeds, and investors will be relying on the judgment of our management regarding the application of the proceeds from this offering. We may find it necessary or advisable to use portions of the proceeds from this offering for other purposes. Circumstances that may give rise to a change in the use of proceeds and the alternate purposes for which the proceeds may be used include:

 

the existence of unforeseen or other opportunities or the need to take advantage of changes in the timing of our existing activities;

 

the need or desire on our part to accelerate, increase, reduce or eliminate one or more existing initiatives due to, among other things, changing market conditions and competitive developments or interim results of research and development efforts;

 

results from our business development and marketing efforts, including opportunities that may materialize;

 

the effect of federal, state and foreign regulation on us and on our identified industries;

 

our ability to attract development funding or to license or sell our vaccine candidates; and/or

 

the presentation of strategic opportunities of which we are not currently aware (including acquisitions, joint ventures, licensing and other similar transactions).

 


37


MARKET PRICE OF OUR COMMON STOCK

 

Our shares are currently traded on the OTC Markets (“OTCQB”) under the symbol “NBFTD”.  The following table presents the high and low bid prices for the years ended December 31, 2016 and 2015.  These quotations have been adjusted for the 30-1 reverse stock split and reflect inter-dealer prices without retail mark-up, mark-down, or commissions and may not necessarily represent actual transactions.

 

Year ended December 31, 2016

 

High

 

Low

 

 

 

 

 

    Fourth quarter

 

$36.00 

 

 

$12.00 

 

    Third quarter

 

$82.50 

 

 

$31.50 

 

    Second quarter

 

$66.00 

 

 

$52.50 

 

    First quarter

 

$90.00 

 

 

$36.00 

 

 

 

 

 

 

 

 

Year ended December 31, 2015

 

High

 

Low

 

 

 

 

 

    Fourth quarter

 

$120.00 

 

 

$75.00 

 

    Third quarter

 

$142.50 

 

 

$75.00 

 

    Second quarter

 

$142.50 

 

 

$105.00 

 

    First quarter

 

$210.00 

 

 

$52.50 

 

 

 

As of December 31, 2016 we had approximately 387 shareholders of record holding 854,338 shares of our common stock.  As of December 31, 2015 we had approximately 330 shareholders of record holding 647,908 shares of our common stock.  The number of record holders was determined from the records of our transfer agent and does not include beneficial owners of common stock whose shares are held in the names of various security brokers, dealers, and registered clearing agencies.


38


DIVIDEND POLICY

 

We have never paid any cash dividends on our capital stock and do not anticipate paying any cash dividends on our Common Stock in the foreseeable future. We intend to retain future earnings to fund ongoing operations and future capital requirements. Any future determination to pay cash dividends will be at the discretion of our Board of Directors and will be dependent upon financial condition, results of operations, capital requirements and such other factors as the Board of Directors deems relevant.

 

 


39


 

CAPITALIZATION

 

The table below sets forth our cash and cash equivalents and capitalization on an accrual basis as of December 31, 2015, December 31, 2016 and March 31, 2017.

 

You should read this capitalization table together with “Use of Proceeds,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and the related notes appearing elsewhere in this prospectus.


40


 Picture 2

 

 

 

 

SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

 

We derived the selected consolidated statements of operations data and the selected consolidated cash flow data for the period from June 26, 2015 (date of inception) to December 31, 2015, for the year ended on December 31, 2016, and for the three months ended March 31, 2017 (unaudited) from our consolidated financial statements included elsewhere in this prospectus.  Our historical results are not necessarily indicative of the results that may be expected in the future. You should read this data together with our consolidated financial statements and related notes appearing elsewhere in this prospectus.


41


Picture 24 

  


42


Picture 25 


43


MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following management’s discussion and analysis should be read in conjunction with the historical financial statements and the related notes thereto contained in this report. The management’s discussion and analysis contains forward-looking statements, such as statements of our plans, objectives, expectations and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect” and the like, and/or future tense or conditional constructions (“will,” “may,” “could,” “should,” etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties, including those under “Risk Factors” in this Report that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. The Company’s actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors. The Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this report.  The following information should be read together and in connection with the management’s discussion and analysis of financial condition and results of operations found in any applicable prospectus supplement.

 

NABUFIT Global, Inc., a Delaware Corporation (the “Company”) was incorporated in May 1983 in the State of Colorado and re-incorporated in the State of Delaware in April 2008.  On November 30, 2015, we consummated the transaction evidenced by an Agreement and Plan of Share Exchange (the "Share Exchange Agreement") dated October 8, 2015 by and among NABUFIT Global and NABUFIT Denmark, pursuant to which NABUFIT Global acquired from the NABUFIT Denmark shareholders (“NABUFIT Shareholders”) all of the issued and outstanding equity interests of NABUFIT Denmark in exchange for 516,667 shares of NABUFIT Global (the “Share Exchange”).  As a result of the Share Exchange, the NABUFIT Shareholders, as the former shareholders of NABUFIT Denmark, became the controlling shareholders of the Company and NABUFIT Denmark became a subsidiary of the Company.  The Share Exchange was accounted for as a reverse merger/recapitalization effected by a share exchange, wherein NABUFIT Denmark is considered the acquirer for accounting and financial reporting purposes.  The capital, share price, and earnings per share amount in the consolidated financial statements for the period prior to the reverse merger were restated to reflect the recapitalization in accordance with the exchange ratio established in the merger.

 

As the result of the Share Exchange and the change in business and operations of the Company, the historical financial results of NABUFIT Global, ApS, a Danish company (“NABUFIT Denmark”), the accounting acquirer, prior to the Share Exchange are considered the historical financial results of the Company.

 

The following discussion highlights the results of operations for NABUFIT Global, Inc. and the principal factors that have affected our financial condition as well as our liquidity and capital resources for the periods described, and provides information that management believes is relevant for an assessment and understanding of the statements of financial condition and results of operations presented herein. The following discussion and analysis are based on the Company’s audited financial statements contained in this prospectus, which we have prepared in accordance with United States generally accepted accounting principles. You should read the discussion and analysis together with such financial statements and the related notes thereto.

 

Basis of Presentation

 

The audited financial statements of the Company for the year ended December 31, 2016 contained herein include a summary of our significant accounting policies and should be read in conjunction with the discussion below. In the opinion of management, all material adjustments necessary to present fairly the results of operations for such period have been included in these audited financial statements. All such adjustments are of a normal recurring nature.

 

Company Overview


44


 

We design and market the NABUFIT virtual training and fitness products and services, a state-of-the-art online fitness portal (the "NABUFIT," the "Portal" or “Product”).  The Product incorporates interaction and input through Microsoft® Kinect® and other technologies and the option for personal data collection through wearable and other monitoring devices, coaching and teaching through mentor services.

 

Customers obtain access to the Product through the purchase of monthly or annual memberships and the downloading of the software or mobile device application.  The Product provides custom designed training plans, diet plans and access to mentors and coaching.

 

Through the Microsoft® Kinect® and other optional monitoring devices, the Product collects and measures data from each exercise and compares that data to a standard and prior data.  Based on the measuring and the data registration in the Kinect® Module the user will get immediate feedback, e.g. as a percentage, a graphic or an emoticon depending on how well the exercise has been performed. This provides a unique experience and quality assurance designed to maximize the effect of the training. The quick feedback will also reduce the risk of injuries and streamline time spent on training.  Users can access training data, statistics and results online or through mobile device applications.

 

Membership is divided into two levels – a basic membership and a VIP membership.  The difference between the levels of membership will be primarily based upon the access to features and to mentors.

 

The Portal also offers a social forum for its users, where users can interact with like-minded members and train with them virtually. Some people will experience increased motivation by being part of a group. The member can allow others to see all or part of his profile. The personal profiles of the members can be matched, so the portal will suggest network and training mates, and thereby helping to ensure the optimum composition.  It will be possible to do real-time training with training mates by sharing the screen in a videoconference on the portal.

 

We plan to market the Product initially in the target area of China with a concentrated social media and direct marketing campaigns. We will then expand into the target markets of Europe and the United States.  We will market the Product to a broad range of worldwide consumers who are seeking a customized training program and platform without having to attend a gym or training center. Our sales and revenue cycle is based upon monthly subscription fees and purchases of addition products and services.  Subscription payments are automatically charged on a monthly basis and additional payments are processed on a cash basis.

 

We have not generated any product or service revenue and had a net loss of $4,038,605 for the year ended December 31, 2016.

 

We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future. We expect our expenses will increase substantially in connection with our ongoing activities, as we:

 

 

 

add personnel to support our product development and commercialization efforts;

 

 

 

 

 

 

continue our development efforts; and

 

 

 

 

 

 

operate as a public company.

 

Accordingly, we may seek to fund our operations through public or private equity or debt financings or other sources. However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. Our failure to raise capital or enter into such other arrangements as and when needed would have a negative impact on our financial condition and our ability to develop enhancements to and integrate new technologies into the NABUFIT virtual training and fitness products and services.

 


45


Components of Statements of Operations

 

Operating Expenses

 

Selling, General and Administrative. Our selling, general and administrative expenses consist primarily of salaries, share-based compensation, professional fees, travel and entertainment, employee benefits, IT and computer costs not capitalized, lease expense and consulting fees. We expect selling, general and administrative expenses to increase in absolute dollars following the consummation of the Share Exchange due to additional legal, accounting, insurance, investor relations and other costs associated with being a public company, as well as other costs associated with growing our business.

 

Interest Expense.  On September 15, 2015, the Company entered into a 600,000 DKK (approximately $90,000) line-of-credit agreement with a bank.  The agreement bears interest at a variable rate of 6.021%, which is renegotiated annually on June 1.  The line of credit is unsecured.  Default interest rate of 19% goes into effect from the first late payment and is calculated on the balance of the outstanding debt.  During 2016 and 2015 the Company utilized the full credit line but then paid it down to zero by year end both years.  The Company paid $161 and $641 in interest during the year ended December 31, 2016 and during the period ended December 31, 2015, respectively.

 

Reverse Stock Split

 

Effective June 27, 2017, the Company filed an Amended and Restated Certificate of Incorporation (“Restated Certificate”) with the Delaware Secretary of State whereby the Company effected a reverse stock split to reduce the number of shares of outstanding common stock at a rate of 1 share for every 30 shares of common stock then outstanding (“Reverse Split”).  The approval of the Restated Certificate was approved by written consent of holders of a majority of the Company’s common stock.  Each stockholder owning fewer than 30 shares of common stock immediately before the effective time of the Reverse Stock Split received from the Company $0.10 in cash, without interest, for each of such shares of common stock; and (b) each stockholder owning of record 30 or more shares of common stock immediately before the effective time of the Reverse Split held, after the Reverse Split, the number of shares of common stock equal to 1/30th of the number held prior to the Reverse Split.  On June 28, 2017 the Company filed with the Securities and Exchange Commission, and the Company’s stockholders were furnished with a Definitive Information Statement filed on Schedule 14(c) to advise the stockholders of the corporate actions.  All share and per-share amounts included herein have been restated to reflect the 1 for 30 reverse stock split.


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Results of Operations

 

For the year ended December 31, 2016, the Period from June 26, 2015 (date of inception) through December 31, 2015 and for the three months ended March 31, 2017 and 2016.

 

 

Picture 26 

 

Comparisons to Prior Periods

 

The Company was organized June 26, 2015 and therefore the periods ended December 31, 2015 and December 31, 2016 are not equal lengths of time.

 

Period ended December 31, 2015

 

Operating Expenses. Operating expenses were $371,746 for the period from June 26, 2015 (date of inception) through December 31, 2015.  Operating expenses consisted of selling, general and administrative expenses of


47


$371,746 for the period from June 26, 2015 (date of inception) through December 31, 2015.  The selling, general and administrative expenses consisted mainly of salaries of $129,162, professional fees of $68,468, travel and entertainment of $26,670 and share-based compensation of $20,000.  The remaining $127,446 of selling, general and administrative expenses consisted mainly of employee benefits, IT and computer costs not capitalized, lease expense and consulting fees.

 

Interest Expense. Interest expense was $650 during the period from June 26, 2015 (date of inception) through December 31, 2015, which was primarily due to the interest on the line-of-credit agreement.

 

Year ended December 31, 2016

 

Operating Expenses. Operating expenses were $4,038,582 for the year ended December 31, 2016.  Operating expenses consisted of selling, general and administrative expenses of $3,665,216 and marketing expenses of $373,366 for the year ended December 31, 2016.  Operating expenses consist mainly of employee salaries and benefits, stock based compensation and professional fees.  

 

Interest Income. Interest income was $140 during the year ended December 31, 2016.

 

Interest Expense. Interest expense was $163 during the year ended December 31, 2016, which was primarily due to the interest on the line-of-credit agreement.

 

Period Ended March 31, 2016

 

Operating Expenses. Operating expenses were $527,846 for the three months ended March 31, 2016.  Operating expenses consisted of selling, general and administrative expenses of $527,846.  Selling, general and administrative expenses consist mainly of employee salaries and benefits, stock based compensation and professional fees.  

 

Interest Income. Interest income was $135 during the three months ended March 31, 2016.

 

Interest Expense. Interest expense was $17 during the three months ended March 31, 2016.

 

Period Ended March 31, 2017

 

Operating Expenses. Operating expenses were $1,145,217 for the three months ended March 31, 2017.  Operating expenses consisted of selling, general and administrative expenses of $883,983 and marketing expenses of $261,890.  Selling, general and administrative expenses consist mainly of employee salaries and benefits, stock based compensation and professional fees.  

 

Interest Expense. Interest expense was $20,964 during the three months ended March 31, 2017, which consisted mainly of amortization of debt discounts on convertible debt.

 

Revenue. The Company began generating revenue but slower than anticipated.  Revenue was $656 for the three months ended March 31, 2017.

 

Liquidity and Capital Resources

 

Period from June 26, 2015 (date of inception) through December 31, 2015

 

Since NABUFIT Denmark’s inception in June 2015, it has incurred significant net losses and negative cash flows from operations. During the period from June 26, 2015 (date of inception) through December 31, 2015, we had a net loss of $372,396. At December 31, 2015, we had an accumulated deficit of $372,396.

 

At December 31, 2015, we had cash of $1,133,247. To date, we have financed our operations principally through private placements of NABUFIT Denmark’s common stock. On October 8, 2015, we received net proceeds of


48


approximately USD $1,795,000 (DKK 11.9 million) from the issuance of shares of NABUFIT Denmark’s common stock.

 

Year ended December 31, 2016

 

During the year ended December 31, 2016, the Company had a net loss of $4,038,605, which consisted of operating expenses of $4,038,582, interest income of $140 and interest expense of $163.  At December 31, 2016, we had an accumulated deficit of $4,411,001.

 

At December 31, 2016, we had cash of $1,402,626. We have financed our operations principally through private placements of common stock. During 2016, we received net proceeds of $3,139,445 from the issuance of shares of NABUFIT Global, Inc.’s common stock.

 

We could potentially use our available financial resources sooner than we currently expect, and we may incur additional indebtedness to meet future financing needs. Adequate additional funding may not be available to us on acceptable terms or at all. In addition, although we anticipate being able to obtain additional financing through non-dilutive means, we may be unable to do so. Our failure to raise capital as and when needed could have significant negative consequences for our business, financial condition and results of operations. Our future capital requirements and the adequacy of available funds will depend on many factors, including those set forth in the section titled “Risk Factors.”

 

Period Ended March 31, 2016

 

During the three months ended March 31, 2016, the Company had a net loss of $527,728. At March 31, 2017, we had cash of $676,878.

 

Period Ended March 31, 2017

 

During the three months ended March 31, 2017, the Company had a net loss of $1,166,181. At March 31, 2017, we had an accumulated deficit of $5,577,182 and cash of $92,509.  During the three months ended March 31, 2017, the Company received proceeds of $145,034 from the issuance of convertible notes payable.

 

Cash Flows

 

The following table summarizes our cash flows for the year ended December 31, 2016, the period from June 26, 2015 (date of inception) through December 31, 2015 and the three months ended March 31, 2017 and 2016:

 

Picture 27 

Cash used in operations for the period from June 26, 2015 (date of inception) through December 31, 2015 was $378,508. We anticipate that we will incur significant additional technology development costs in order to execute our business plan.


49


Cash provided by investing activities was $126,843 for the period from June 26, 2015 (date of inception) through December 31, 2015, which consisted of cash acquired in acquisition.

 

Cash provided by financing activities was $1,398,133 for the period from June 26, 2015 (date of inception) through December 31, 2015, which consisted of cash proceeds from the issuance of stock of $1,775,383, less cash paid to acquire treasury stock of $377,250.

 

Cash used in operations for the year ended December 31, 2016 was $2,876,044.

 

Cash provided by financing activities was $3,139,445 for the year ended December 31, 2016, which consisted of cash proceeds from the issuance of stock.

 

Period Ended March 31, 2016

 

Cash used in operations for the three months ended March 31, 2016 was $488,445.

 

Period Ended March 31, 2017

 

Cash used in operations for the three months ended March 31, 2017 was $1,470,228.

 

Cash provided by financing activities was $145,034 for the three months ended March 31, 2017, which consisted of cash proceeds from the issuance of convertible notes payable.

 

Off Balance Sheet Arrangements

 

We do not maintain off-balance sheet arrangements nor do we participate in any non-exchange traded contracts requiring fair value accounting treatment.  The Company had no off-balance sheet financing arrangements as of March 31, 2017, December 31, 2016 and December 31, 2015.

 

Revenue Recognition

 

The Company recognizes revenue when persuasive evidence of an arrangement exists, performance of the service has occurred, the sales price charged is fixed or determinable, and collectability is reasonably assured.  Revenue is net of taxes and discounts and is recorded on an accrual basis. The Company has not recognized revenue through December 31, 2015 nor through December 31, 2016.  The Company began recognizing revenue during the three months ended March 31, 2017 of $656.

 

Accounting Estimates

 

The preparation of financial statements in accordance with accounting standards generally accepted in the United States requires management to make estimates and assumptions that affect both the recorded values of assets and liabilities at the date of the financial statements and the revenues recognized and expenses incurred during the reporting period. Our estimates and assumptions affect our recognition of income taxes, the carrying value of our long-lived assets and our provision for certain contingencies.  We evaluate the reasonableness of these estimates and assumptions continually based on a combination of historical information and other information that comes to our attention that may vary our outlook for the future. Actual results may differ from these estimates under different assumptions.

 

Critical Accounting Policies and Estimates

 

We believe that assumptions and estimates have the greatest potential impact on our financial statements. Therefore, we consider these to be our critical accounting policies and estimates. For further information on all of our significant accounting policies, see the notes to our financial statements.


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JOBS Act Accounting Election

 

We are an “emerging growth company” within the meaning of the JOBS Act. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.

 

Recently Issued and Adopted Accounting Pronouncements

 

We review new accounting standards to determine the expected financial impact, if any, that the adoption of each such standard will have. There are no recently issued accounting standards that we believe will have an impact on our financial statements

 


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OUR BUSINESS

 

Company Overview

 

NABUFIT Global, Inc. (“NABUFIT Global” or the “Company”) designs, manufactures and markets the NABUFIT virtual training and fitness products and services, a state-of-the-art online fitness portal (“NABUFIT” or, the “Product”). The Product incorporates interaction and input through Microsoft® Kinect® and other technologies and the option for personal data collection through wearables and personal monitoring devices, coaching and teaching through mentor services.

 

Customers obtain access to the Product through the purchase of monthly or annual memberships and the downloading of the software or mobile device application.  The Product provides custom designed training plans, diet plans and access to mentors and coaching.

 

Through Microsoft® Kinect® and optional personal monitoring devices (such as heart rate monitors and other wearables), the NABUFIT technology collects data and measures each exercise relatively to a set standard and past performances.  Based on the data collection and registration in the Kinect® module the user will receive immediate feedback, e.g. as a percentage, a graphic or an emoticon depending on how well the exercise has been performed. This provides a unique quality assurance ensuring maximum effect of the training. The quick feedback will also reduce the risk of injuries and streamline time spent on training.  Users can access training data, statistics and results online or through mobile device applications.

 

Membership is divided into two levels – a basic membership and a VIP membership.  The difference between the levels of membership will be primarily based upon the access to features and to mentors.

 

The portal also offers a social forum for its users, where users can interact with like-minded members and train with them virtually. Some people will experience increased motivation by being part of a group. The member can allow others to see all or part of his profile. The personal profiles of the members can be matched, so the portal will suggest network and training mates, and thereby helping to ensure the optimum composition. It will be possible to do real-time training with training mates by sharing the screen in a videoconference on the portal.

 

Trends Driving Our Market

 

Several powerful trends are driving the growth of the virtual health and fitness market:

 

 

 

Individuals and employers are increasingly focused on health and fitness. A variety of factors, such as changing consumer lifestyles and demographics, combined with rising healthcare costs and employers’ increased emphasis on productivity, are leading individuals and employers to increasingly focus on health and fitness. Based on information from industry sources, we estimate consumers spent over $200 billion in 2014 on health and fitness services, such as gym and health club memberships, commercial weight management services, and consumer health products, such as weight management products and dietary supplements. In addition, IBISWorld estimates that the corporate wellness industry will grow from $7.2 billion in 2015 to $9.9 billion in 2019 in the United States.*

 

 

 

Advances in technology have enabled the emergence of virtual training and fitness products. Recent technological advances in streamlining video, monitoring sensors, high-speed broadband internet, the introduction of wireless standards such as Bluetooth low energy wireless, and other technologies have enabled the emergence of virtual training and fitness programs that may be used by consumers within the confines of their own homes with the abiity to receive real-time feedback based upon monitoring devices and applications which track biometric data, and fit a wide range of consumer preferences.

 

 

 

Mobile devices have become the preferred platform for accessing information. Mobile devices have become the preferred platform for people to access information and manage their lives, as well as the primary hub to connect a variety of consumer devices. According to Gartner, by 2018 more than 50% of users will go to a tablet or smartphone first for all online activities.*

 

 

 

More individuals are turning to technology solutions to improve health and fitness. Individuals are increasingly using mobile apps and other software to improve health and fitness, allowing consumers to directly manage and track their health and fitness in unprecedented ways. According to The NPD Group, over 25% of U.S. consumers reported using a fitness app on their smartphone.*

 

Our Market Opportunity

 

According to International Data Corporation, or IDC, the worldwide wearables market reached a new all-time high as shipments reached 33.9 million units in the fourth quarter of 2016.2 Additionally, the market for wearable devices will experience a compound annual growth rate of 20.3%, culminating in 213.6 million units shipped in 2020.3  Based upon this information, we believe that our products and platform, and the ability to connect with wearable devices are primed to take advantage of this expanding market, and that the future growth of this market represents a significant opportunity for us. Further, as we develop our platform and as consumers increasingly view our connected health and fitness products and services as an alternative or complement to other health and wellness activities, we believe there is an opportunity to reach a significant portion of the expanding health and fitness market. Based on information from industry sources, we estimate this market represents an over $200 billion opportunity and includes consumer spend on health and fitness services, such as gym and health club memberships, commercial weight management services, and consumer health products, such as weight management products and dietary supplements. The broader health and fitness market, however, presents several challenges to overcome before we are able to take advantage of this opportunity, including competition from larger, more established traditional health and fitness companies, uncertainty as to whether consumers will adopt our products and services as an alternative or complement to other health and wellness activities, and our relative lack of experience selling other products and services.

 

Our Competitive Strengths

 

We believe the following strengths position us to increase our revenue and profitability:

    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tracking activities through Microsoft ® Kinect ® and wearable connected health and fitness devices. We have developed industry-leading technology which is incorporated in our NABUFIT product, which will provide an optimal user experience for Product subscribers.  The use of the Microsoft® Kinect® interface allows users to receive real-time feedback based upon actual actions taken by the users. We empower users to live healthier, more active lifestyles by both tracking the information that matters most to them and providing them with real-time feedback. Our connected health and fitness devices span multiple styles, form factors, and price points, addressing the needs of everyone—from people simply looking to get fit by increasing their activity levels to endurance athletes seeking to maximize their performance.

 

Learning through our online dashboard and mobile apps. We offer our users a personalized online dashboard and mobile apps that sync automatically with our platform and provide our users with a wide range of information and analytics, such as charts and graphs of their progress and the ability to log caloric intake.

 

Professional Mentoring. Users are able to access professional and amateur mentors who will provide training and dietary programs which users may access.  In addition, users will be able to work with such mentors in a virtual capacity and receive feedback and assistance.

 

Staying motivated through social features, notifications, challenges, and virtual badgesOur products help users achieve their goals both individually and within the community that they choose. We motivate users by delivering real-time feedback including notifications, leaderboard and challenge updates, and virtual awards. Users can choose to share some or all of their health and fitness information on an opt-in basis with friends, family, and other parties, with third-party apps, and through social networks.  In addition, users can share workout, training and diet plans with other users and can engage with others users as amateur mentors

 

Improving health and fitness through goal-setting, personalized insights, premium services, and virtual coaching. We believe our platform assists users in changing their daily behavior, such as eating healthier foods or going for a run or walking more to reach a goal or win a challenge. We also offer personalized insights and virtual coaching through customized fitness plans and interactive video-based exercise experiences on mobile devices and computers.

 

Our Strategy

 

Our objective is to make NABUFIT the premier online fitness and training platform in key markets, beginning with China, Europe and North America. To achieve this goal, we intend to do the following:

 

 

 

Introduce innovative products. We will to develop the world’s most innovative and diverse virtual health and fitness platform and we plan to continue to make significant investments in research and development to further strengthen our platform through both internally-developed and acquired technologies.

 

 

 

Introduce new features and services. We will continue to introduce innovative new features and services to increase user engagement and revenue.

 

 

 

Create brand awareness and drive sales of our products and services in key markets. We intend to target our marketing efforts to create global awareness of our brand and drive sales of our products and services in the key markets of China, Europe and North America.  

 

 

 

Employee Professional Athletes and Trainers.  We will employ a rhobust ensemble of professional athletes and trainers from around the world, who will provide customized training and diet programs and work with our subscribers to achieve their fitness goals.

 

 

 

Coordinate with strategic partners in each of the target markets for marketing and distribution. We believe that international markets represent a significant growth opportunity for us and we intend to expand sales of our products and services globally through select retailers and strategic partnerships. We will work with key partners in target markets to provide marketing and distribution expertise and assistance.  Although it may be challenging to gain market acceptance in these markets, we believe the assistance of such experts will expedite the process.

 

Target Market

 

The Company will initially market its products and services in China, Europe and North America.  China has a current population of approximately 1.4 billion people4 of which approximately 54% (749 million) will belong to the upper middle class by 2022.5 Growth of the e-commerce market in China grew 26.2% in 2016, resulting in 5 trillion yuan of transactions.6 Currently, 36% of China’s population shops online, making it the world’s number one online market.7 Mainland China’s middle-income class grew by 203 million people in the 10 years after 2001, a Pew Research Centre report found - evidence, it said, of a "pivot to the east".8 This rising population will struggle with life style diseases, lack of time and increased need for healthy diet and physical training.

 

According to a survey of over 1,600 people, 58% of US smartphone users have downloaded a fitness app, with 65% of those opening the app once a day.9 In the U.S., 20% of households in 2016 owned wearable fitness activity trackers, nearly double that of 2015 with an expected 35% ownership in 2017.10  Wearable technology is the number 1 fitness trend for 2017,11  with 187 million fitness devices set to ship in the year 2020.12 The global market for wearable devices will reach USD 34 billion in revenues by 2020 despite such limiting factors as lack of suitable technology, poor user compliance, and lack of an overall enhanced experience, according to IMS Research.

 

 

The dynamic growth of mobile devices will continue to drive the sale of related accessories, giving manufacturers and retailers a wealth of opportunities – along with an equal amount of challenges – to increase revenue, margin and customer traffic in-store and online which NABUFIT expect to gain from.  By most, if not all accounts, there is consistent yearly growth for health and fitness technology gadgets, software apps and other products.  As more Americans turn to calorie trackers, fitness video games, pedometers, heart rate monitors, fitness trackers, digital weight scales, lab counters, smart watches, motion sensors in sports gear sleep trackers, blood pressure monitors, accelerometers and smartphone apps for assistance with their daily health and fitness routines, these digital tech products are going mainstream.

 

Likewise, the European fitness industry enjoyed a dramatic increase during 2016 according to the European Health & Fitness Market Report,13 published by EuropeActive, the European fitness trade association and Deloitte.

 

In 2017, there were 56.4 million members in European wellness and fitness centers, which is an increase for 4.4% compared to 2016. 14 This is also reflected in the sales of fitness related products, online videos and wearables.

 


2 http://www.idc.com/getdoc.jsp?containerId=prUS42342317

3 http://www.idc.com/getdoc.jsp?containerId=prUS41530816

4 http://www.worldometers.info/world-population/china-population/

5 http://www.businessinsider.com/chinas-middle-class-is-exploding-2016-8

6 https://www.ecommerce-nation.co/chinese-ecommerce-market-growth-statistics-report-2016/

7 http://www.chinadaily.com.cn/business/tech/2017-02/13/content_28176755.htm

8 http://www.scmp.com/news/china/article/1835527/chinas-middle-class-grew-203-million-10-years-report 

9 http://www.mobihealthnews.com/48273/survey-58-percent-of-smartphone-users-have-downloaded-a-fitness-or-health-app

10 https://www.cta.tech/News/Press-Releases/2016/April/Consumers-Adopting-Innovation-Wearables,-Wireless.aspx

11 http://journals.lww.com/acsm-healthfitness/Fulltext/2016/11000/WORLDWIDE_SURVEY_OF_FITNESS_TRENDS_FOR_2017.6.aspx

12 https://www.forbes.com/sites/paullamkin/2016/02/17/wearable-tech-market-to-be-worth-34-billion-by-2020/#715167173cb5

13 https://www2.deloitte.com/de/de/pages/consumer-business/articles/european-health-fitness-2017.html

14 https://www2.deloitte.com/de/de/pages/consumer-business/articles/european-health-fitness-2017.html


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Customers

 

 

·

NABUFIT Members:

 

 

o

Persons becoming members of the NABUFIT portal (Basic and VIP) and buying training modules, diet programs, other programs and features offered on the portal.

 

 

·

Amateur and professional mentors and others offering their training and diet modules and plans on the portal:

 

 

o

The Company will receive a percentage of fees charged by professional and amateur mentors; and

 

 

o

The Company will charge a fee to mentors to become licensed on the portal.

 

Sources of Income and Pricing

 

The basic membership is priced at $5 USD per month, which is less than or comparable with other virtual or online training programs and is generally less than most gym memberships. We anticipate that a VIP membership will be priced at $10 USD per month.  In addition, users will be able to purchase additional products, access to additional programs, personal access to mentors and their training programs and other additional options.  NABUFIT will receive membership fees, a percentage of additional purchases, transaction fees and revenue from sales of other products, goods and services offered on the portal.

 

Monthly membership fee:

 

Members will pay a monthly fee for a basic or a VIP membership of NABUFIT. Access to professional and amateur mentoring and other offers on the portal can be purchases separately.

 

Certification fee:

 

Members of the portal can offer training and diet plans to other members on the portal and achieve certification as an amateur mentor.  Certification by a member as an amateur mentor requires payment of a certification fee.

 

In addition, the portal will offer professional trainers and athletes the opportunity to be certified as a pro-mentor for a certification fee. Professional mentors may offer and sell their training and diet programs and offer ongoing services.

 

Transaction fee:

 

The portal is a total solution connecting members with all providers of training on the portal.  The Company anticipates charging a transaction fee of approximately 15% on all transactions on the portal taking place between mentors and members.

 

Top ranking fee

 

The top ranking is a feature offered to mentors for them to buy a higher ranking as compared to other mentors on the portal. This can be introduced when the portal reaches a higher number of members – expectedly during year two. Both professional and amateur mentors can use top rankings to promote their products and services.  Top ranking is connected to rating so that a mentor can only buy top ranking within the rating he has achieved.

 

Web shop

 


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Finally, there will be income connected to the sale of products in the web shop, where members can use cash or earned points to purchase items.

 

Sales and Marketing

 

The Company will place a large emphasis on social media for the marketing and advancement of the portal.  For instance, the population of China is unusually frequent users of social media.  A new survey of 5,700 Internet users in China has found that 95 percent of those living in Tier 1, Tier 2, and Tier 3 cities are registered on a social-media site; in addition, the country has by far the world’s most active social-media population, with 91 percent of respondents saying they visited a social-media site in the previous six-months, compared with 30 percent in Japan, 67 percent in the United States, and 70 percent in South Korea.15 The most popular Chinese social media application is WeChat, with over 600 million Chinese users16 compared to Facebook’s 2 billion users worldwide.17

 

We believe Chinese consumers are more likely to consider buying a product if they see it mentioned on a social-media site and more likely to purchase a product or service if a friend or acquaintance recommends it on a social-media site.

 

Chinese consumers rely heavily upon peer-to-peer recommendations over general mass advertising. In general, the Chinese populace is skeptical of information from news sources and advertising and rely more on word-of-mouth from friends, family, and key opinion leaders, many of whom share information on social media.18

 

While messaging and sharing photos is as popular in China as in other regions, one aspect of usage in the country stands out: social media has a greater influence on purchasing decisions for consumers in China than for those anywhere else in the world.19  Due to the widespread use of social media in China, the Company will focus its marketing efforts on this medium.  The Company will be present with its own social media site on the largest Chinese social media platforms and be linked to the sites of sports stars and their profiles on the social media. Sale of memberships, products and services will take place on the portal.  With regards to North America and European Market, we anticipate employing a similar strategy.

 

With professional assistance from industry leaders, the Company will produce a digital strategy for SEO and social media marketing in China aimed to optimize online marketing.

 

Major Western social media outlets such as Facebook, YouTube, Twitter and Google search engine are blocked in China and can only be used in very few places with VPN. On the other hand, China has a wide range of its own social media with a very large number of users.

 

Twitter-like media:

 

• Sina Weibo: a micro blogging platform with 340 million active users.

 

Facebook-like media:

 

• RenRen (Xiaonei): about 240 million activated users.

 


15 http://www.mckinsey.com/insights/marketing_sales/chinas_social-media_boom

16 http://www.businessinsider.com/wechat-breaks-700-million-monthly-active-users-2016-4?IR=T

17 https://www.theverge.com/2017/6/27/15880494/facebook-2-billion-monthly-users-announced

18 http://www.mckinseychina.com/chinas-social-media-boom-2/#sthash.Bcv1swAL.dpuf

19 http://www.mckinsey.com/insights/marketing_sales/chinas_social-media_boom


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• Pengyou (Tencent): about 259 million registered users + Tencent QQ network (messenger) with 784 million users.

 

Yelp-like media:

 

• Dianping.com: 170 million active users per month.

 

MySpace-like media:

 

• DOUBAN: more than 200 million users.

 

Google-like search engine:

 

• Baidu (largest).

 

Manufacturing

 

The Company does not at this time engage in any manufacturing but may engage in manufacturing of products to be sold on the Portal or on the Company’s website in the future.

 

Intellectual Property

 

As a company primarily focused on fitness and training platforms with interactive interfacing technologies, we expect that our intellectual property constitutes a significant part of our assets.  Protection of our intellectual property is being pursued in Denmark, China and the United States, along with, common-law trademarks, trade secrets and know-how protection.

 

Research and Development

 

Certain modules of the NABUFIT product are based upon the Microsoft® technology platform, which the Company believes provides optimal scalability at this time. The Company has a very good relationship with Microsoft® and continues to work with Microsoft® towards the development of its products. Microsoft® sees the NABUFIT value proposition to customers, and as such Microsoft® has agreed to grant the Company the necessary Microsoft® licenses, at a value of USD $20,000, for free.

 

The Company has identified a strong in-house development team headed by experienced individuals with significant experience in driving larger, complex products, including products for one of the largest providers of Energy in Denmark. 

 

The Company is driving the development based on SCRUM, which is a well-known software development tool securing full transparency of the development. SCRUM provides a vast visual picture of how far development is according to the original plan.

 

Additional members of the in-house development team will be added as required.

 

Government Regulation

 

To the Company’s knowledge, there are no legal issues in selling the Company’s products or services in the expected markets and regions.

 

Employees

 


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At June 30, 2017, we had 14 full-time employees. We have no collective bargaining agreements with our employees, and we have not experienced any work stoppages. We consider our relations with our employees to be good.

 

Properties

 

Our corporate headquarters are located in Frederica, Denmark, and our U.S. mailing address is 626 East 1820 North, Orem, Utah 84097.  The Company does not own any properties, but currently leases office space at one location in Denmark for approximately $1,900 per month, with annual increases of a minimum of 2% based on the changes in the consumer price index.  The term of the lease is four years; however, the Company can terminate the lease with six months’ notice but not before December 1, 2017.  

 

Legal Proceedings

 

From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. We are not currently a party to in any legal proceeding that we believe would have a material adverse effect on our business, financial condition or operating results.


56


 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

The following table sets forth the number of shares of our common stock beneficially owned by the following persons or groups as of June 30, 2017 (i) each person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock, (ii) each of our executive officers and directors and (iii) all of our executive officers and directors as a group.  Beneficial ownership is determined in accordance with Rule 13d-3 under the Exchange Act. In determining the percentages, the following table assumes 1,024,030 shares of our common stock are issued and outstanding.

 

 

Name and Address of Beneficial Owner (1)

 

  

Number of

Shares

Beneficially

Owned (2)

 

  

Number of

Shares

Exercisable

Within 60 Days

 

  

Number of

Shares

Beneficially

Owned

 

  

Percentage

of Beneficial

Ownership

 

 

5% and Greater Stockholders

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

 

 

 

 

 

 

 

Brian Palm Svaneeng Mertz (3)

  

 

54,568

 

 

 

—  

  

  

 

54,568

  

  

 

5.33

 

Michael Maze (4)

  

 

103,902

  

  

 

—  

  

  

 

103,902

  

  

 

10.15

 

M. Krarup Holdings IVS(5)

  

 

96,679

  

  

 

—  

  

  

 

96,679

 

  

 

9.44

%

 

Mads Frederiksen (6)

  

 

73,780

 

  

 

—  

  

  

 

73,780

  

  

 

7.20

 %

 

Mikkel Kessler

 

 

60,772

  

 

 

—  

 

  

 

60,772

 

  

 

            5.93

 %

 

Morton Albaek (7)

 

 

94,308

 

 

 

 

 

 

 

94,308

 

 

 

9.21

%

 

Hans Kjaer Holdings A/S

 

 

47,824

  

 

 

—  

 

  

 

47,824

 

  

 

            4.67

 %

 

LF Investment APS

 

 

95,510

 

 

 

 

 

 

 

95,510

 

 

 

9.33

%

 

 

  

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

Other Officers and Directors

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Robert Bench (8)

  

 

982

  

  

 

—  

  

  

 

986

  

  

 

*

 

 

Ole Sigetty (9)

 

 

8,616

 

 

 

 

 

 

 

258,496

 

 

 

 *

 

 

All current directors and executive officers as a group (six persons)

  

 

301,933

 

 

 

 

 

 

 

 

 

 

 

  31.18

%

 

*Indicates beneficial ownership of less than 1% of the total outstanding common stock. 

 

(1) The address is the address of the Company, 626 East 1820 North, Orem, UT 84097.

 

(2) Except as indicated, each person has sole voting and/or investment power over the shares listed, subject to applicable community property laws.  There are no options granted or outstanding.

 

(3) Mr. Mertz is the Company’s Chief Executive Officer.  This amount includes, 17,053 owned by Mr. Mertz personally, 9,365 shares owned by World Wide Investment Fund Ltd., 21,467 shares owned by Stratega ApS, 5,500 shares owned by Growthcom ApS and 733 shares held by the DTC on behalf of Hansard Pension Fund which may be deemed to be beneficially owned by Mr. Mertz who is a control person in each company.

 

(4) Includes shares owned through Maze Holdings Aps, an entity owned and controlled by Michael John Maze.

 

(5) Beneficially owned by Morten Krarup, Chief Business Development Officer.

 

(6) Includes shares owned by F-Reklame A/S, an entity owned and controlled by Mads Frederiksen, a member of the Board of Directors.

 

(7)  Includes 57,022 shares held by Jan Bech Andersen, 13,442 shares held by Jan Flemming Bech Andersen and 23,844 shares held by Jan Bech.  These shares are deemed beneficially owned by Morton Albaek, member of the Board of Directors

 

(8) Includes 296 shares owned by Vector Capital, LLC, an entity controlled by Mr. Bench, President and Chief Financial Officer

 

(9) Includes 2,222 shares owned by FPP ApS, an entity owned and controlled by Mr. Sigetty, a member of the Board of Directors.


57


DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

 

Directors and Executive Officers

 

Below are the names of and certain information regarding the Company’s current executive officers and directors who were appointed effective as of the closing of the Share Exchange:

Name

Age

Positions(s)

Executive Officers

 

 

Brian Mertz

48

Chief Executive Officer

Mads H. Frederiksen

42

Chief Marketing Officer

Robert Bench

67

Chief Financial Officer

Ole Sigetty(1)

57

Secretary, Director

Non-Employee Directors

 

 

Morten Albaek (2)

41

Director

Allen Vestergard (3)

56

Director, Chairman

Kristoffer Ewald (3)

44

Director

Anette Norgaard (3)

50

Director

Jorgen Buhl Rasmussen (2)(3)

61

Director

 

(1) Member of audit committee.

(2) Member of compensation committee.

(3) Elected on March 14, 2017, effective as of April 5, 2017

 

Executive Officers

 

Brian Mertz, Chief Executive Officer - Mr. Mertz has over fifteen years of experience working with start-up enterprises where he has served on management teams, boards of directors and in executive level management positions.  Mr. Mertz has special qualifications within international negotiations, merger & acquisitions, public offerings, sales, business development and business-to-business marketing. Mr. Mertz served as Chief Operations Officer of the Nasdaq listed IT-security company EuroTrust in the period of 2001 to 2004, where he worked with the company’s largest shareholder, VeriSign (now Symantec).  Mr. Mertz was the co-founder and Chief Executive Officer of Guava A/S, a Danish online marketing company listed on the Danish Stock Exchange from the period 2004 to 2009 and Chief Executive Officer of the Norwegian listed entertainment company NIO Inc. during the period 2012 to 2014. Mr Mertz is educated with a BA in Organization and Marketing from Niels Brock Business College in Copenhagen, Denmark.  

 

Mads Frederiksen, Director, and Chief Marketing Officer- Mr. Frederiksen was appointed to the Board of Directors and as the Chief Marketing Officer on November 30, 2015.  Mr. Frederiksen currently serves as the Chief Executive Officer and co-owner of F. Reklame, a sports agency, which for more than 40 years has specialized in sports marketing. Clients of F. Reklame include, among others, Peter Schmeichel, Kasper Schmeichel, Michael Laudrup, Brian Laudrup, Michael Maze, Thorbjorn Olesen and Morten Olsen. Mr. Fredericksen deals with sponsorships, TV contracts, events, media handling, etc.

 

Robert Bench, Chief Financial Officer- Mr. Bench has served as our Chief Financial Officer since October 2008, and served as the Company’s President from 2008 until 2015.   Mr. Bench also served as a member of our board of directors from December 2007 through November 2014.  Mr. Bench was a founder and since April 1999 has been a managing member of BayHill Group LC, a consulting group focused on assisting microcap companies (“BayHill Group”). From January 2005 until April 2007, he also served as the Chief Financial Officer of Innuity, Inc. (INNU), software as a service company that delivers applications for small business. From November 2000 until August 2004, he also served as Chief Financial Officer of The SCO Group (SCOX), a developer and marketer of software applications and operating systems. Mr. Bench is a certified public accountant and holds a bachelor degree in accounting from Utah State University.

 

Morten Krarup, Chief Business Development Officer- Mr. Krarup was appointed as a Director and Chief Business Development Officer on November 30, 2015.  Since 2014, Mr. Krarup has served as a Completion and Well


58


Intervention Engineer at Weatherford Denmark.  Prior to this position, Mr. Krarup worked as a Senior Wireline and Logging Supervisor for Archer Denmark from September 2005 until February 2014.Mr. Krarup is also engaged in Business Development and Project Management in the oil industry in Denmark and Netherlands. Mr. Krarup has been key to the creation of NABUFIT.

 

 

Non-Employee Directors

 

Morten Albk, Director- Mr. Albæk was appointed as a Director on November 30, 2015.  Mr. Albæk currently serves as the Chief Executive Officer and Co-founder of the investment company Voluntas A/S.  Prior to this position, Mr. Albæk served as the CMO & Group Senior Vice President, Vestas Wind Systems A/S from 2009 through July 2015. Mr. Albæk currently serves as a board member for various other companies, including, Valuntas Advisory ApS (Chairman) Brøndbyernes I.F. Fodbold A/S (member), Vertic A/S (member) and Voluntas Danmark A/S (member).

 

Additional Directors

 

On March 15, 2017, the Company filed a Schedule 14C Definitive Information Statement relating to the election of Directors Allen J. Vestergard, Anette Nogaard, Kristoffer Ewald and Jorgen Bulh Rasmussen to our Board of Directors for a term of one year.  The new directors were elected pursuant to an action by written consent in lieu of a meeting dated March 14, 2017 executed by stockholders of the Company holding a majority of the issued and outstanding shares of the Company’s common stock and is effective as of April 5, 2017.  The election of the directors follows the resignation of Soren Jonassen and Morten Krarup

 

Dr. Allan J. Vestergaard, Chairman.  – Dr. Allan J. Vestergaard has more than twenty years of experience as a CEO and chairman/board member of various high-tech, predominately private equity backed, global companies. During the most recent eight years, Dr. Vestergaard has worked as a global consultant for various clients with assignments covering strategic focusing, senior management alignment, complex forensic matters, and mergers & acquisitions; with a particular focus on Asia (China) and North America.  Dr. Vestergaard holds a Ph.D. in Organizational Theory from the University of Aarhus, Denmark.

 

Kristoffer Ewald, Director. Mr. Ewald has a background in economics, entrepreneurship and machine learning and has spent his career in the disruptive landscape of digital strategies, data science and marketing. During the last nine years he has served various roles with Netbooster Group SA, Paris, France, including his current position of Group Chief Innovation Officer.   During the period 2004 to 2008 he co-founded a number of startups. From 2001 to 2003 he served in several professional roles including Chief Analyst for NxT at Copenhagen Institute for Futures Studies from 2001 to 2003.  Mr. Ewald studied Economics at Copenhagen University from 1991 to 1999, and received diplomas in machine learning and business intelligence also during this period. He also holds a certificate as Google Enterprise Professional 2006 and received a 100% score in the GAIQ certification from Google.

 

Anette Nørgaard, Director.  Ms. Norgaard has a background in business development, marketing and communications. Ms. Norgaard also has many years of experience in the IT industry, with roles at Microsoft and Oracle.  She began her career developing and converting applications on mainframes. During the most recent six years she has served as the Marketing Manager for Emerging Audience (AEM for startups & Students) for Microsoft Denmark.  Prior to that time she served as the Co-founder and Director of Business Development for Miracle from 2000 to 2009.  She also worked for her own companies Capernow Projects and Company42.  Before the above roles. Ms Norgaard served as Senior Consultant at Oracle from 1998-2000 (until department was closed). From 1992-1998 as IT specialist at GlaxoWelcome and from 1987-1992 as IT specialist/developer at Nefo.

 

Jørgen Buhl Rasmussen, Director. Mr. Rasmussen has had an international career, with nearly 40 years of rich and varied experience in the field of marketing and general management. Mr. Rasmussen is currently serving as the Chairman of Novozymes A/S, a Danish company specializing in enzyme industry and the Chairman of Uhrenholt A/S, an international dairy. In addition Mr. Rasmussen is also engaged in various early stage companies. From 2007 to 2015, Mr. Rassmussen served as the Chief Executive Officer and President of Carlsberg Breweries. Prior to that time, he was the European Regional President in the Gillette Group.  Prior to that he held positions with Duracell,


59


including head of Northern Europe. Mr. Rasmussen received a Bachelor degree from Copenhagen Business University in 1977.

 

Director Independence

 

Our board of directors currently consists of three members.  After April 5, our board of directors will consist of seven members, five of which will be considered independent. We are not currently subject to listing requirements of any national securities exchange that has requirements that a majority of the board of directors be “independent.” Nevertheless, our board of directors has determined that all of our directors qualify as “independent” directors in accordance with listing requirements.  In making these determinations, our board of directors reviewed and discussed information provided by the directors and us with regard to each director’s business and personal activities and relationships as they may relate to us and our management.

 

Except as discussed above, to our knowledge, there have been no events under any bankruptcy act, criminal proceedings and no federal or state judicial or administrative orders, judgments, decrees or findings, no violations of any federal or state securities laws, and no violation of any federal commodities law material to the evaluation of the ability and integrity of any director (existing or proposed), executive officer (existing or proposed), promoter or control person of the Company during the past 10 years.

 

To our knowledge, there are no material proceedings to which any director (existing or proposed), officer (existing or proposed), affiliate of the Company, any holder of 5% or more of our currently outstanding common stock, any associate of any such director or officer, or any affiliate of such security holder that is adverse to us or has a material interest adverse to us. There are no family relationships among any of the officers and directors.

 

Role of Board in Risk Oversight Process

 

Risk assessment and oversight are an integral part of our governance and management processes. Our board of directors encourages management to promote a culture that incorporates risk management into our corporate strategy and day-to-day business operations. Management discusses strategic and operational risks at regular management meetings and conducts specific strategic planning and review sessions during the year that include a focused discussion and analysis of the risks facing us. Throughout the year, senior management reviews these risks with the board of directors at regular board meetings as part of management presentations that focus on particular business functions, operations or strategies, and presents the steps taken by management to mitigate or eliminate such risks.

 

Our board of directors does not have a standing risk management committee, but rather administers this oversight function directly through our board of directors as a whole, as well as through various standing committees of our board of directors that address risks inherent in their respective areas of oversight. In particular, our board of directors is responsible for monitoring and assessing strategic risk exposure, and our audit committee is responsible for overseeing our major financial risk exposures and the steps our management has taken to monitor and control these exposures. The audit committee also monitors compliance with legal and regulatory requirements. Our nominating and governance committee monitors the effectiveness of our corporate governance guidelines and considers and approves or disapproves any related-person transactions. Our compensation committee assesses and monitors whether any of our compensation policies and programs has the potential to encourage excessive risk-taking.

 

Board Committees

 

Our Board of Directors has a standing Audit Committee and Compensation Committee. To date, our Board of Directors has not established a Nominating or Governance Committee, in part because our Board of Directors believes that, at this stage of our development, all of our directors should be actively involved in the matters, which would be addressed by such committees. We may, in the future, establish a Nominating or Governance Committee. We believe each of the directors serving on our Audit Committee is an independent director pursuant to NASD Rule 4200(a) (15).

 


60


Audit Committee. Ole Sigetty and Jorn Jensen serve as members of the Audit Committee, with Mr. Sigetty serving as Chairman. Our Board of Directors has determined that Mr. Sigetty satisfies the criteria for an audit committee financial expert under Rule 401(e) of Regulation S-B promulgated by the SEC. Each member of our Audit Committee is able to read and understand fundamental financial statements, including our consolidated balance sheets, statements of operations and statements of cash flows. The functions of the Audit Committee are primarily to: (a) facilitate the integrity of our financial statements and internal controls, (b) oversee our compliance with legal and regulatory requirements related to accounting and/or financial controls, (c) evaluate our independent registered public accounting firm’s qualifications and independence, (d) oversee the performance of any internal audit function that we may adopt and oversee our independent registered public accounting firm, and (e) review our systems of disclosure controls and procedures, internal controls over financial reporting, and compliance with ethical standards related to accounting and/or financial controls we have adopted. Our Board of Directors has adopted a written charter for our Audit Committee, a copy of which is available on the Company’s website, www.nabufitglobal.com. Except as otherwise required by applicable laws, regulations or listing standards or our Audit Committee Charter, major decisions regarding our activities and operations are considered by our Board of Directors as a whole.

 

Compensation Committee.  Jorgen Buhl and Morten Albæk serve as members of the Compensation Committee of our Board of Directors, with Mr. Buhl serving as Chairman. The functions of our Compensation Committee are primarily to: (a) to oversee the responsibilities of the Board relating to compensation, and (b) to ensure that our compensation plans, programs and values transferred through cash pay, stock and stock-based awards, whether immediate, deferred, or contingent are fair and appropriate to attract, retain and motivate management and are reasonable in view of company economics and of the relevant practices of other, similar companies. Our Board of Directors has adopted a written charter for our Compensation Committee, a copy of which is available on the Company’s website, www.nabufitglobal.com.

 

Director Nominations.  Our Board of Directors will consider recommendations for director nominees by shareholders if the names of those nominees and relevant biographical information are submitted in writing to our Corporate Secretary in the manner described for shareholder nominations below under the heading “Proposals of Shareholders.” All director nominations, whether submitted by a shareholder or the Board of Directors, will be evaluated in the same manner.

 

Code of Business Conduct and Ethics

 

We have adopted a code of business conduct and ethics that applies to all of our employees, officers and directors, including those officers responsible for financial reporting. The code of business conduct and ethics is available on our website at www.nabufitglobal.com. We expect that any amendments to the code, or any waivers of its requirements, will be disclosed on our website. The reference to our web address does not constitute incorporation by reference of the information contained at or available through our website.

 

 

 Limitation on Liability and Indemnification Matters

 

Our certificate of incorporation contains provisions that limit the liability of our directors for monetary damages to the fullest extent permitted by Delaware law. Consequently, our directors will not be personally liable to us or our stockholders for monetary damages for any breach of fiduciary duties as directors, except liability for:

 

 

 

any breach of the director’s duty of loyalty to us or our stockholders;

 

 

 

any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;

 

 

 

unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law; or

 

 

 

any transaction from which the director derived an improper personal benefit.

 


61


Our certificate of incorporation and bylaws provide that we are required to indemnify our directors and officers, in each case to the fullest extent permitted by Delaware law. Our bylaws also provide that we are obligated to advance expenses incurred by a director or officer in advance of the final disposition of any action or proceeding, and permit us to secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his, her or its actions in that capacity regardless of whether we would otherwise be permitted to indemnify him, her or it under Delaware law.

 

In addition to the indemnification required in our certificate of incorporation and bylaws, we have entered or intend to enter into indemnification agreements with each of our directors, officers and certain other employees prior to the consummation of the Share Exchange. These agreements will provide for the indemnification of our directors, officers and certain other employees for all reasonable expenses and liabilities incurred in connection with any action or proceeding brought against them by reason of the fact that they are or were our agents. We believe that these provisions in our certificate of incorporation, bylaws and indemnification agreements are necessary to attract and retain qualified persons as directors and officers. This description of the limitation of liability and indemnification provisions of our certificate of incorporation, of our bylaws and of our indemnification agreements is qualified in its entirety by reference to these documents, each of which is attached as an exhibit to this Report.

 

The limitation of liability and indemnification provisions in our certificate of incorporation and may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation against directors and officers, even though an action, if successful, might benefit us and our stockholders. A stockholder’s investment may be harmed to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. There is no pending litigation or proceeding naming any of our directors, officers or employees as to which indemnification is being sought, nor are we aware of any pending or threatened litigation that may result in claims for indemnification by any director, officer or employee.

 

Compensation of Directors

 

Compensation for the Company’s directors includes cash and non-cash components.  The cash component is based on attendance at Board of Directors meetings in accordance with the following table:

 

 

Quarterly

Face to Face Mtg.

Telephonic Mtg.

Board Chairman

$5,000

$

$

 

Board Member

$3,000

$

$

 

Committee Chair

 

$

$

 

Committee Member

 

$

$

 

 

In addition, non-management members of the Board of Directors may stock grants and option grants from time to time with the minimum set forth in the following table:

 

 

Upon Election

Annual Refresh

Stock Grants

Board Chairman

Up to $150,000

 

 

$20,000

Board Member

 

 

 

 

  

Director Compensation Table

 

The following table sets forth information for the period from June 26, 2015 (date of inception) through December 31, 2015, regarding the compensation awarded to, earned by or paid to NABUFIT Denmark’s non-employee directors as if NABUFIT Denmark had been a reporting company on December 31, 2015.  The table also includes compensation awarded to Soren Jonassen, Ole Sigetty and Brian Palm Svaneeng Mertz, during that same


62


period.  Following the closing of the Share Exchange, Mr. Sigetty and Mr. Jonassen continued to serve as non-employee members of the Board of Directors.

 

 

Name 

Year

Fees Earned

or Paid in

Cash($)

Option

Awards

($)(1)

Stock

Awards

($)

Total($)

Mads H. Frederiksen

2016

$ -

$ -

$15,000 

$15,000 

 

2015

-

-

- 

- 

Soren Jonassen

2016

-

-

10,000 

10,000 

 

2015

-

-

120,000 

120,000 

Ole Sigetty

2016

-

-

10,000 

10,000 

 

2015

-

-

120,000 

120,000 

Morten Krarup

2016

-

-

10,000 

10,000 

 

2015

-

-

- 

- 

Morton Albaek

2016

-

-

10,000 

10,000 

 

2015

-

-

- 

- 

Brian Mertz

2016

-

-

230,002 

230,002 

 

2015

-

-

120,000 

120,000 

 

(1) There were no Option Awards during the years ended December 31, 2016 or 2015.

 

In August 2016, the Board of Directors approved stock compensation for the period July 1, 2016 to June 30, 2017.  Each of the four board members will receive 725 shares of common stock, the chairman will receive 1,087 shares of common stock and the secretary will receive 272 shares of common stock.  The shares were issued during July 2017.

 

In August 2016, the Board of Directors approved stock payments for services to Directors Soren Jonassen (1,034 shares) and Ole Sigetty (2,138 shares) for professional services from July 1, 2016 to June 30, 2017.  The shares were issued during July 2017.

 

In September 2015, Directors Soren Jonassen and Ole Sigetty and former Director Brian Palm Svaneeng Mertz each received 1,000 shares of common stock. These shares were recorded for book purposes at the market price at the time of the award of $4.00 per share for total compensation of $360,000.

 

Involvement in Certain Legal Proceedings

 

None of our directors or executive officers has been involved in any of the following events during the past 10 years:

 

 

 

any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

 

 

 

any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offences);

 

 

 

being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his or her involvement in any type of business, securities or banking activities; or

 

 

 

being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

 


63


EXECUTIVE COMPENSATION

 

The following table sets forth information concerning all cash and non-cash compensation awarded to, earned by or paid to the named person for services rendered in all capacities during the year ended December 31, 2016 and the period from inception (June 26, 2015) through December 31, 2015.  No other executive officers received total annual compensation in excess of $100,000.

Person

Year

Salary

($)

Bonus

($)

Stock

Awards

($)

Option

Awards

($)

Non-

equity

Incentive

Comp ($)

 

All Other

Comp.

($)

Total

($)

Morten Krarup (1)

2015

$ 10,960   

 

 

 

 

 

$ 10,960   

 

2016

$ 123,700   

 

10,000

 

 

 

$133,700   

Ulrik Moll (2)

2015

$ 46,716   

 

 

 

 

 

$ 46,716   

 

2016

$ 117,735   

 

 

 

 

 

$ 117,735   

Robert K. Bench (3)

2015

$ 80,000   

 

 

 

 

 

$ 80,000   

 

2016

$ 90,500   

 

 

 

 

 

$ 90,500   

Brian Mertz (4)

2016

$ 40,500   

 

$230,002

 

 

 

$ 270,502   

 

(1)Mr. Krarup was appointed as the Company’s Chief Business Development Officer on July 1, 2015 

(2)Mr. Moll served as the Company’s Chief Executive Officer from June 26, 2015 to July 6, 2016.  

(3)Mr. Bench has served as the Company’s Chief Financial Officer since November 30, 2008.  

(4)Mr. Mertz has served as the Company’s Chief Executive Officer since July 6, 2016. 

 

 

Outstanding Equity Awards at December 31, 2016

 

In August 2016, the Board of Directors approved stock payments for services to then Directors Soren Jonassen (1,034 shares) and Ole Sigetty (2,138 shares) for professional services from July 1, 2016 to June 30, 2017.  In addition, the Board of Directors approved the issuance of 725 shares for each of the members of the Board of Directors and 1,087 shares for the Chairman for the same period.  The shares will be issued later in 2017.  These shares were originally recorded at the market price of $27.60 per share for a total of $217,598.  In the quarter ended December 31, 2016, the valuation was reduced to $0.73 per share based on the public market trading price of the Company’s stock.  

 

 


64


 

DESCRIPTION OF INDEBTEDNESS

 

Summarized below are the principal terms of the agreements that govern our indebtedness and is subject to, and is qualified in its entirety by, such agreements, which are filed as exhibits to the registration statement to which this prospectus forms a part.

 

On September 15, 2015, the Company entered into a 600,000 DKK (approximately $90,000) line-of-credit agreement with Jyske Bank.  The agreement bears interest at a variable rate of 6.021%, which is renegotiated annually on June 1.  The line of credit is unsecured.  Default interest rate of 19% goes into effect from the first late payment and is calculated on the balance of the outstanding debt.  During the period ended December 31, 2015, the Company utilized the full credit line but then paid it down to zero on October 12, 2015.  The Company paid $650 in interest during the period ended December 31, 2015. During the year ended December 31, 2016, the Company utilized the full credit line and paid it down to zero by December 31, 2016.  The Company paid $163 in interest during the year ended December 31, 2016.

Effective May 23, 2017, the Company issued a Convertible Promissory Note in the amount of $58,000 to Power Up Capital, who then sold it to Jabro Funding Corp.  The Convertible Promissory Note contains an interest rate of nine percent per annum and has a maturity date of February 9, 2018.  The amounts due under the Note are convertible at any time after 180 days but prior to the Maturity Date at a rate of 65% of the market price.

On May 9, 2017, the Company extended a convertible note to Kodiak Capital Group, LLC for $50,000, which is convertible at $3.00 per share pre-reverse stock split.

On March 23, 2017, the Company granted a convertible note to Mikkel Kessler in the amount of $29,600, which had a conversion price of $3.00 per share.  The debt was converted into 9,669 shares of common stock on May 9, 2017.

On March 23, 2017, the Company granted a convertible note to Mads Wissing in the amount of $29,600, which had a conversion price of $0.10 per share.  The debt was converted into 9,669 shares of common stock on May 9, 2017.

On March 23, 2017, the Company granted a convertible note to Ulrick Moll/Chunmeilin Holding in the amount of $14,500, which had a conversion price of $3.00 per share.  The debt was converted into 4,835 shares of common stock on May 9, 2017.

On March 23, 2017, the Company granted a convertible note Jan Bech Andersen in the amount of $74,000, which had a conversion price of $3.00 per share.  The debt was converted into 24,172 shares of common stock on May 9, 2017.

On June 27, 2017, the Company granted a convertible note to MEMP ApS, a Danish company in the amount of $331,325

 

DESCRIPTION OF SECURITIES

 

We have authorized capital stock consisting of 100,000,000 shares of common stock and 400,000 shares of preferred stock. As of the date of this Report, we had 1,024,030 shares of common stock issued and outstanding, and no shares of preferred stock issued and outstanding held by approximately 340 shareholders.

 


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Common Stock

 

The holders of outstanding shares of common stock are entitled to receive dividends out of assets or funds legally available for the payment of dividends of such times and in such amounts as the board from time to time may determine. Holders of common stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders. There is no cumulative voting of the election of directors then standing for election. The common stock is not entitled to pre-emptive rights and is not subject to conversion or redemption. Upon liquidation, dissolution or winding up of our company, the assets legally available for distribution to stockholders are distributable ratably among the holders of the common stock after payment of liquidation preferences, if any, on any outstanding payment of other claims of creditors. Each outstanding share of common stock is duly and validly issued, fully paid and non-assessable.

 

Preferred Stock

 

Shares of preferred stock may be issued from time to time in one or more series, each of which will have such distinctive designation or title as shall be determined by our Board of Directors prior to the issuance of any shares thereof. Preferred stock will have such voting powers, full or limited, or no voting powers, and such preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated in such resolution or resolutions providing for the issue of such class or series of preferred stock as may be adopted from time to time by the Board of Directors prior to the issuance of any shares thereof. The number of authorized shares of preferred stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the voting power of all the then outstanding shares of our capital stock entitled to vote generally in the election of the directors, voting together as a single class, without a separate vote of the holders of the preferred stock, or any series thereof, unless a vote of any such holders is required pursuant to any preferred stock designation.

 

While we do not currently have any plans for the issuance of preferred stock, the issuance of such preferred stock could adversely affect the rights of the holders of common stock and, therefore, reduce the value of the common stock. It is not possible to state the actual effect of the issuance of any shares of preferred stock on the rights of holders of the common stock until the Board of Directors determines the specific rights of the holders of the preferred stock; however, these effects may include:

 

 

 

Restricting dividends on the common stock;

 

 

 

Diluting the voting power of the common stock;

 

 

 

Impairing the liquidation rights of the common stock; or

 

 

 

Delaying or preventing a change in control of the Company without further action by the stockholders.

 

Other than in connection with shares of preferred stock (as explained above), which preferred stock is not currently designated nor contemplated by us, we do not believe that any provision of our amended and restated charter or bylaws would delay, defer or prevent a change in control.

 

Warrants and Options

 

Effective May 23, 2017, the Company issued a Convertible Promissory Note in the amount of $58,000 to Jabro Funding Corp.  The Convertible Promissory Note contains an interest rate of nine percent per annum and has a maturity date of February 9, 2018.  The amounts due under the Note are convertible at any time after 180 days but prior to the Maturity Date at a rate of 65% of the market price.

On May 9, 2017, the Company extended a convertible note to Kodiak Capital Group, LLC for $50,000, which is convertible at $3.00 per share pre-reverse stock split.


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On June 27, 2017, the Company granted a convertible note to MEMP ApS, a Danish company in the amount of $331,325

 

As of the date hereof, the Company has no issued or outstanding warrants options or other outstanding convertible securities.

 

The Company has granted Allen Vestergaard a call option to purchase a number of shares up to $150,000 at the price of $15.00 per share, as may be adjusted by the Board to account for share price fluctuations.   

 

Reverse Stock Split

 

Effective June 27, 2017, the Company filed an Amended and Restated Certificate of Incorporation (“Restated Certificate”) with the Delaware Secretary of State whereby the Company effected a reverse stock split to reduce the number of shares of outstanding common stock at a rate of 1 share for every 30 shares of common stock then outstanding (“Reverse Split”).  The approval of the Restated Certificate was approved by written consent of holders of a majority of the Company’s common stock.  Each stockholder owning fewer than 30 shares of common stock immediately before the effective time of the Reverse Stock Split received from the Company $0.10 in cash, without interest, for each of such shares of common stock; and (b) each stockholder owning of record 30 or more shares of common stock immediately before the effective time of the Reverse Split held, after the Reverse Split, the number of shares of common stock equal to 1/30th of the number held prior to the Reverse Split.  On June 28, 2017 the Company filed with the Securities and Exchange Commission, and the Company’s stockholders were furnished with a Definitive Information Statement filed on Schedule 14(c) to advise the stockholders of the corporate actions.  All share and per-share amounts included in this report have been restated to reflect the 1 for 30 reverse stock split.

 

 

Anti-Takeover Effects of Provisions of our Certificate of Incorporation, our Bylaws and Delaware Law

 

Some provisions of Delaware law, our certificate of incorporation and our bylaws that will be in effect immediately prior to the consummation of the Share Exchange contain provisions that could make the following transactions more difficult: acquisition of us by means of a tender offer; acquisition of us by means of a proxy contest or otherwise; or removal of our incumbent officers and directors. It is possible that these provisions could make it more difficult to accomplish or could deter transactions that stockholders may otherwise consider to be in their best interest or in our best interests, including transactions that might result in a premium over the price of our Common Stock.

 

These provisions, summarized below, are expected to discourage coercive takeover practices and inadequate takeover bids. These provisions are also designed to encourage persons seeking to acquire control of us to first negotiate with our board of directors. We believe that the benefits of increased protection of our potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure us outweigh the disadvantages of discouraging these proposals because negotiation of these proposals could result in an improvement of their terms.

 

Delaware Anti-Takeover Statute

 

We are subject to Section 203 of the Delaware General Corporation Law, which prohibits a person deemed an “interested stockholder” from engaging in a “business combination” with a publicly held Delaware corporation for three years following the date such person becomes an interested stockholder unless the business combination is, or the transaction in which the person became an interested stockholder was, approved in a prescribed manner or another prescribed exception applies. Generally, an “interested stockholder” is a person who, together with affiliates and associates, owns, or within three years prior to the determination of interested stockholder status did own, 15% or more of a corporation’s voting stock. Generally, a “business combination” includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. The existence of this provision may


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have an anti-takeover effect with respect to transactions not approved in advance by the board of directors, such as discouraging takeover attempts that might result in a premium over the price of our common stock.

 

Undesignated Preferred Stock

 

The ability to authorize undesignated preferred stock makes it possible for our board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to change control of the company. These and other provisions may have the effect of deterring hostile takeovers or delaying changes in control or management of the company.

  

Special Stockholder Meetings

 

Our bylaws provide that a special meeting of stockholders may be called only by our Board of Directors, our Chairman of the Board of Directors, Chief Executive Officer, or in the absence of a Chief Executive Officer, the President.

 

Requirements for Advance Notification of Stockholder Nominations and Proposals

 

Our bylaws establish advance notice procedures with respect to stockholder proposals and the nomination of candidates for election as directors, other than nominations made by or at the direction of the board of directors or a committee of the board of directors.

 

Limitations of Liability and Indemnification Matters

 

For a discussion of liability and indemnification, please see the section titled “Directors, Executive Officers, Promoters and Control Persons—Limitation on Liability and Indemnification Matters.”

 

Transfer Agent and Registrar

 

The transfer agent and registrar for the common stock is Action Stock Transfer, 2469 E. Fort Union Blvd, Suite 214, Salt Lake City, UT 84121.

  

DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES

 

Section 145 of the DGCL provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses including attorneys’ fees, judgments, fines and amounts paid in settlement in connection with various actions, suits or proceedings, whether civil, criminal, administrative or investigative other than an action by or in the right of the corporation (a derivative action), if they acted in good faith and in a manner they reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, if they had no reasonable cause to believe their conduct was unlawful. A similar standard is applicable in the case of derivative actions, except that indemnification only extends to expenses including attorneys’ fees incurred in connection with the defense or settlement of such actions, and the statute requires court approval before there can be any indemnification where the person seeking indemnification has been found liable to the corporation. The statute provides that it is not exclusive of other indemnification that may be granted by a corporation’s certificate of incorporation, bylaws, agreement, a vote of stockholders or disinterested directors or otherwise.

 

NABUFIT Global’s Certificate of Incorporation provides that it will indemnify and hold harmless, to the fullest extent permitted by Section 145 of the DGCL, as amended from time to time, each person that such section grants us the power to indemnify.

 


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The DGCL permits a corporation to provide in its certificate of incorporation that a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability for:

 

·    any breach of the director’s duty of loyalty to the corporation or its stockholders;

 

·      acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;

 

·      payments of unlawful dividends or unlawful stock repurchases or redemptions; or

 

·      any transaction from which the director derived an improper personal benefit.

 

NABUFIT Global’s Certificate of Incorporation provides that, to the fullest extent permitted by applicable law, none of our directors will be personally liable to us, or our stockholders, for monetary damages for breach of fiduciary duty as a director. Any repeal or modification of this provision will be prospective only and will not adversely affect any limitation, right or protection of a director of our company existing at the time of such repeal or modification.

 

Delaware law and NABUFIT Global’s Certificate of Incorporation and Bylaws may permit indemnification for liabilities under the Securities Act or the Securities Exchange Act of 1934, as amended (“Exchange Act”). Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling NABUFIT Global pursuant to the foregoing provisions, NABUFIT Global has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

 

MARKET FOR OUR COMMON STOCK

 

Our shares are currently traded on the OTC Markets (“OTCQB”) under the symbol “NBFTD.”  The following table presents the high and low bid prices for the fiscal years ended December, 2016 and 2015.  The prices have been adjusted retroactively to reflect the reverse stock split effective June 2017.  These quotations reflect inter-dealer prices without retail mark-up, mark-down, or commissions and may not necessarily represent actual transactions.

 

Year ended December 31, 2016

 

High

 

Low

 

 

 

 

 

    Fourth quarter

 

$36.00 

 

 

$12.00 

 

    Third quarter

 

$82.50 

 

 

$31.50 

 

    Second quarter

 

$66.00 

 

 

$52.50 

 

    First quarter

 

$90.00 

 

 

$36.00 

 

 

 

 

 

 

 

 

Year ended December 31, 2015

 

High

 

Low

 

 

 

 

 

    Fourth quarter

 

$120.00 

 

 

$75.00 

 

    Third quarter

 

$142.50 

 

 

$75.00 

 

    Second quarter

 

$142.50 

 

 

$105.00 

 

    First quarter

 

$210.00 

 

 

$52.50 

 

 

 

Our common stock is quoted on the OTC Markets (OTCQB) under the symbol “NBFTD”.  

 


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However, there has been very limited trading to date, and an active trading market may never develop.

 

As of the date of this Report, we have 1,024,030 shares of common stock outstanding held by approximately 340 stockholders of record.

 

Dividend Policy

 

We have never paid any cash dividends on our capital stock and do not anticipate paying any cash dividends on our Common Stock in the foreseeable future. We intend to retain future earnings to fund ongoing operations and future capital requirements. Any future determination to pay cash dividends will be at the discretion of our Board of Directors and will be dependent upon financial condition, results of operations, capital requirements and such other factors as the Board of Directors deems relevant.

 

Shares Eligible for Future Sale

 

Prior to the Share Exchange, there has been a limited public market for our Common Stock. Future sales of our common stock in the public market after the Share Exchange, or the perception that those sales may occur, could cause the prevailing price for our common stock to fall or impair our ability to raise equity capital in the future. As described below, only a limited number of shares of our common stock will be available for sale in the public market for a period of several months after consummation of the Share Exchange due to contractual and legal restrictions on resale described below. Future sales of our common stock in the public market either before (to the extent permitted) or after restrictions lapse, or the perception that those sales may occur, could adversely affect the prevailing price of our common stock at such time and our ability to raise equity capital at a time and price we deem appropriate.

 

All of the shares of common stock sold in this offering will be freely tradable, except that any shares purchased by our affiliates following this offering, as that term is defined in Rule 144 under the Securities Act, would only be able to be sold in compliance with the Rule 144 limitations described below.

 

In addition, as set forth in the Resale Prospectus, 270,877 shares registered pursuant to that prospectus will also be freely tradeable, subject only to certain lock-up agreements and restrictions set forth below.  

 

Any remaining outstanding shares of our common stock will be deemed “restricted securities” as defined in Rule 144 under the Securities Act. Restricted securities may be sold in the public market only if they are registered under the Securities Act or if they qualify for an exemption from registration under Rule 144 promulgated under the Securities Act, which rule is summarized below.

 

Rule 144

 

Pursuant to Rule 144 promulgated under the Securities Act, sales of the securities of a former shell company, such as us, under that rule are not permitted (i) until at least 12 months have elapsed from the date on which this Report, reflecting our status as a non-shell company, is filed with the SEC and (ii) unless at the time of a proposed sale, we are subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act and have filed all reports and other materials required to be filed by Section 13 or 15(d) of the Exchange Act, as applicable, during the preceding 12 months, other than Form 8-K reports. We intend to register such shares for sale under the Securities Act pursuant to the Resell Prospectus.  Unless we register such shares for sale under the Securities Act, most of our stockholders will be forced to hold their shares of our common stock for at least that 12-month period before they are eligible to sell those shares, and even after that 12-month period, sales may not be made under Rule 144 unless we and the selling stockholders are in compliance with other requirements of Rule 144.  

 

In general, Rule 144 provides that (i) any of our non-affiliates that has held restricted common stock for at least 12 months is thereafter entitled to sell its restricted stock freely and without restriction, provided that we remain compliant and current with our SEC reporting obligations, and (ii) any of our affiliates, which includes our directors, executive officers and other person in control of us, that has held restricted common stock for at least 12 months is thereafter entitled to sell its restricted stock subject to the following restrictions: (a) we are compliant and current


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with our SEC reporting obligations, (b) certain manner of sale provisions are satisfied, (c) a Form 144 is filed with the SEC, and (d) certain volume limitations are satisfied, which limit the sale of shares within any three-month period to a number of shares that does not exceed the greater of 1% of the total number of outstanding shares. A person who has ceased to be an affiliate at least six months immediately preceding the sale and who has owned such shares of common stock for at least one year is entitled to sell the shares under Rule 144 without regard to any of the limitations described above.

 

Regulation S

 

Regulation S under the Securities Act provides that shares owned by any person may be sold without registration in the U.S., provided that the sale is effected in an offshore transaction and no directed selling efforts are made in the U.S. (as these terms are defined in Regulation S), subject to certain other conditions. In general, this means that our shares of common stock may be sold in some other manner outside the U.S. without requiring registration in the U.S.

  


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MATERIAL U.S. FEDERAL TAX CONSEQUENCES TO NON-U.S. HOLDERS

OF OUR COMMON STOCK

 

The following summary describes the material U.S. federal income tax considerations of the acquisition, ownership, and disposition of our common stock by “non-U.S. holders” (as described below under the section titled “—Non-U.S. Holder Defined”). This summary does not address all aspects of U.S. federal income tax considerations relating thereto. This summary also does not address the tax considerations arising under the laws of any non-U.S., state, or local jurisdiction, or under U.S. federal gift and estate tax laws, except to the limited extent provided below.

 

Special rules different from those described below may apply to certain non-U.S. holders that are subject to special treatment under the Code including, without limitation:

 

 

 

banks, insurance companies, or other financial institutions;

 

 

 

 

 

 

corporations that accumulate earnings to avoid U.S. federal income tax;

 

 

 

 

 

 

persons subject to the alternative minimum tax or Medicare contribution tax;

 

 

 

 

 

 

tax-exempt entities (including private foundations) or tax-qualified retirement plans;

 

 

 

 

 

 

controlled foreign corporations or passive foreign investment companies;

 

 

 

 

 

 

persons who acquired our common stock as compensation for services;

 

 

 

 

 

 

dealers in securities or currencies;

 

 

 

 

 

 

traders in securities that elect to use a mark-to-market method of accounting for their securities holdings;

 

 

 

 

 

 

persons that own, or are deemed to own, more than 5% of our capital stock (except to the extent specifically set forth below);

 

 

 

 

 

 

U.S. expatriates, certain former citizens, or long-term residents of the United States;

 

 

 

 

 

 

persons who hold our common stock as a position in a hedging transaction, “straddle,” “conversion transaction,” or other risk reduction transaction;

 

 

 

 

 

 

persons who do not hold our common stock as a capital asset within the meaning of Section 1221 of the Code (generally, for investment purposes); or

 

 

 

 

 

 

persons deemed to sell our common stock under the constructive sale provisions of the Code.

 

In addition, if a partnership or an entity or an arrangement classified as a partnership or other pass-through entity for U.S. federal income tax purposes is a beneficial owner of our common stock, the tax treatment of a partner in the partnership or an owner of the entity will depend upon the status of the partner or other owner and the activities of the partnership or other entity. Therefore, this summary does not address tax considerations applicable to partnerships that hold our common stock, and partners in such partnerships should consult their tax advisors.

 

This summary also does not address tax considerations applicable to entities that are disregarded for U.S. federal income tax purposes (regardless of their place of organization or formation).


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The information provided below is based upon provisions of the Code, Treasury regulations promulgated thereunder, administrative rulings and judicial decisions as of the date hereof. Such authorities may be subject to differing interpretations, repealed, revoked or modified, perhaps retroactively, so as to result in U.S. federal income tax consequences different from those discussed below. We have not requested a ruling from the Internal Revenue Service, or IRS, with respect to the statements made and the conclusions reached in the following summary, and there can be no assurance that the IRS will not take a contrary position regarding the tax consequences of the acquisition, ownership, and disposition of our common stock, or that any such contrary position would not be sustained by a court. In either case, the tax considerations of owning or disposing of our common stock could differ from those described below and as a result, we cannot assure you that the tax consequences described in this discussion will not be challenged by the IRS or will be sustained by a court if challenged by the IRS.

 

INVESTORS CONSIDERING THE PURCHASE OF OUR COMMON STOCK SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING THE APPLICATION OF THE U.S. FEDERAL INCOME AND ESTATE TAX LAWS TO THEIR PARTICULAR SITUATIONS AND THE CONSEQUENCES OF FOREIGN, STATE, OR LOCAL LAWS, AND TAX TREATIES.

 

Non-U.S. Holder Defined

 

For purposes of this summary, a “non-U.S. holder” is any beneficial owner of our common stock, other than a partnership, that is not:

 

 

 

an individual who is a citizen or resident of the United States (as determined under U.S. federal income tax rules);

 

 

 

a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized under the laws of the United States, any state therein, or the District of Columbia;

 

 

 

a trust if it (i) is subject to the primary supervision of a court within the United States and one or more U.S. persons have authority to control all substantial decisions of the trust or (ii) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person; or

 

 

 

an estate whose income is subject to U.S. income tax regardless of its source.

 

If you are a non-U.S. citizen that is an individual, you may, in some cases, be deemed to be a resident alien (as opposed to a nonresident alien) by virtue of being present in the United States for at least 31 days in the calendar year and for an aggregate of at least 183 days during a three-year period ending in the current calendar year. Generally, for this purpose, all the days present in the current year, one-third of the days present in the immediately preceding year, and one-sixth of the days present in the second preceding year, are counted.

 

Resident aliens are generally subject to U.S. federal income tax as if they were U.S. citizens. Such an individual is urged to consult his or her own tax advisor regarding the U.S. federal income tax consequences of the ownership or disposition of our common stock.

 

Distributions

 

We do not expect to declare or make any distributions on our common stock in the foreseeable future. If we do make distributions on our common stock, however, such distributions will generally constitute dividends for U.S. federal income tax purposes to the extent it is paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Distributions in excess of our current and accumulated earnings and profits will constitute a return of capital that is applied against and reduces, but not below zero, a non-U.S. holder’s adjusted tax basis in our common stock. Any remaining excess will be treated as gain realized on the sale or exchange of our common stock as described below under the section titled “—Gain on Disposition of our Common Stock.” The amount of any distribution of property other than cash will be the fair market value of that property on the date of distribution.

 

Any distribution on our common stock that is treated as a dividend paid to a non-U.S. holder that is not effectively connected with the non-U.S. holder’s conduct of a trade or business in the United States will generally be subject to U.S. withholding tax at a 30% rate or such lower rate as may be specified under the terms of an applicable income


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tax treaty between the United States and the non-U.S. holder’s country of residence. Non-U.S. holders should consult their tax advisors regarding their entitlement to benefits under a relevant income tax treaty. Generally, in order for us or our paying agent to withhold tax at a lower treaty rate, a non-U.S. holder must certify its entitlement to treaty benefits. A non-U.S. holder generally can meet this certification requirement by providing a properly executed Form W-8BEN or Form W-8BEN-E (or any successor of such forms) or appropriate substitute form to us or our paying agent. In the case of a non-U.S. holder that is an entity, Treasury regulations and the relevant tax treaty provide rules to determine whether, for purposes of determining the applicability of a tax treaty, dividends will be treated as paid to the entity or to those holding an interest in that entity. If the non-U.S. holder holds the stock through a financial institution or other agent acting on the holder’s behalf, the holder will be required to provide appropriate documentation to the agent. The holder’s agent will then be required to provide certification to us or our paying agent, either directly or through other intermediaries. A non-U.S. holder that is eligible for a reduced rate of U.S. federal withholding tax under an income tax treaty with the United States may obtain a refund or credit of any excess amounts withheld by filing an appropriate claim for a refund with the IRS in a timely manner.

 

Dividends received by a non-U.S. holder that are effectively connected with a U.S. trade or business conducted by the non-U.S. holder, and if required by an applicable income tax treaty between the United States and the non-U.S. holder’s country of residence, are attributable to a permanent establishment maintained by the non-U.S. holder in the United States, are not subject to U.S. withholding tax. To obtain this exemption, a non-U.S. holder must provide us or our paying agent with a properly executed IRS Form W-8ECI certifying such exemption. Such effectively connected dividends, although not subject to withholding tax, are taxed at the same graduated rates applicable to U.S. persons, net of certain deductions and credits. In addition to being taxed at graduated income tax rates, dividends received by corporate non-U.S. holders that are effectively connected with a U.S. trade or business of the corporate non-U.S. holder may also be subject to an additional “branch profits tax,” which is imposed, under certain circumstances, at a rate of 30% (or such lower rate as may be specified by an applicable tax treaty) on the corporate non-U.S. holder’s effectively connected earnings and profits, subject to certain adjustments.

 

See the section titled “—Foreign Accounts” for additional information on withholding rules that may apply to dividends paid to foreign financial institutions (as specifically defined by the applicable rules), or to non-financial foreign entities that have substantial direct or indirect U.S. owners.

 

Gain on Disposition of our Common Stock

 

Subject to the discussions below under the sections titled “—Backup Withholding and Information Reporting” and “—Foreign Accounts,” non-U.S. holders will generally not be subject to U.S. federal income tax on gain realized on the sale, exchange or other disposition of our common stock unless:

 

 

(a)

 

the gain is effectively connected with the conduct by the non-U.S. holder of a U.S. trade or business and if required by an applicable income tax treaty between the United States and the non-U.S. holder’s country of residence, is attributable to a permanent establishment maintained by the non-U.S. holder in the United States;

 

 

(b)

 

the non-U.S. holder is a nonresident individual and is present in the United States for 183 days or more in the taxable year of the sale, exchange or other disposition of our common stock, and certain other requirements are met; or

 

 

(c)

 

the rules of the Foreign Investment in Real Property Tax Act, or FIRPTA, apply to treat the gain as effectively connected with a U.S. trade or business.

 

A non-U.S. holder described in (a) above, will be required to pay tax on the net gain derived from the sale, exchange or other disposition of our common stock at regular graduated U.S. federal income tax rates, unless a specific treaty exemption applies, and corporate non-U.S. holders described in (a) above may be subject to the additional branch profits tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty.

 

An individual non-U.S. holder described in (b) above, will be required to pay a flat 30% tax on the gain derived from the sale, exchange or other disposition of our common stock, or such other reduced rate as may be specified by an applicable income tax treaty, which gain may be offset by U.S. source capital losses (even though the non-U.S. holder is not considered a resident of the United States).

 


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With respect to (c) above, in general, the FIRPTA rules may apply to a sale, exchange or other disposition of our common stock if we are, or were within the shorter of the five-year period preceding the disposition and the non-U.S. holder’s holding period, a U.S. real property holding corporation, or USRPHC. We do not believe that we are a USRPHC and we do not anticipate becoming a USRPHC in the future. Even if we become a USRPHC, gain realized by a non-U.S. holder on a disposition of our common stock will not be subject to U.S. federal income tax under FIRPTA as long as (1) our common stock is regularly traded on an established securities market, and (2) the non-U.S. holder owned, directly, indirectly and constructively, no more than 5% of our outstanding common stock at all times within the shorter of (i) the five-year period preceding the disposition or (ii) the holder’s holding period.

 

See the section titled “—Foreign Accounts” for additional information regarding additional withholding rules that may apply to proceeds of a disposition of our common stock paid to foreign financial institutions (as specifically defined by the applicable rules), or to non-financial foreign entities that have substantial direct or indirect U.S. owners.

 

U.S. Federal Estate Tax

 

The estates of nonresident alien individuals generally are subject to U.S. federal estate tax on property with a U.S. situs. Because we are a U.S. corporation, our common stock will be U.S. situs property and therefore will be included in the taxable estate of a nonresident alien decedent, unless an applicable estate tax treaty between the United States and the decedent’s country of residence provides otherwise. Investors are urged to consult their own tax advisors regarding the U.S. federal estate tax consequences of the ownership or disposition of our common stock.

 

Backup Withholding and Information Reporting

 

The Code and the Treasury regulations require those who make specified payments to report the payments to the IRS. Among the specified payments are dividends and proceeds paid by brokers to their customers. The required information returns enable the IRS to determine whether the recipient properly included the payments in income. This reporting regime is reinforced by “backup withholding” rules. These rules require the payors to withhold tax from payments subject to information reporting if the recipient fails to comply with the reporting requirements by failing to provide his taxpayer identification number or other certification of exempt status to the payor, furnishing an incorrect identification number, or failing to report interest or dividends on his returns. The backup withholding tax rate is currently 28%. The backup withholding rules do not apply to payments to corporations, whether domestic or foreign, provided they establish such exemption.

 

Payments to non-U.S. holders of dividends on common stock generally will not be subject to backup withholding, and payments of proceeds made to non-U.S. holders by a broker upon a sale of common stock will not be subject to information reporting or backup withholding, in each case so long as the non-U.S. holder certifies its nonresident status (and we or our paying agent do not have actual knowledge or reason to know the holder is a U.S. person or that the conditions of any other exemption are not, in fact, satisfied) or otherwise establishes an exemption. U.S. backup withholding generally will not apply to a non-U.S. holder who provides a properly executed IRS Form W-8BEN, IRS Form W-8BEN-E or otherwise establishes an exemption. We must report annually to the IRS any dividends paid to each non-U.S. holder and the tax withheld, if any, with respect to these dividends. Copies of these reports may be made available to tax authorities in the country where the non-U.S. holder resides.

 

Under the Treasury regulations, the payment of proceeds from the disposition of shares of our common stock by a non-U.S. holder made to or through a U.S. office of a broker generally will be subject to information reporting and backup withholding unless the beneficial owner certifies, under penalties of perjury, among other things, its status as a non-U.S. holder (and the broker does not have actual knowledge or reason to know the holder is a U.S. person) or otherwise establishes an exemption. The payment of proceeds from the disposition of shares of our common stock by a non-U.S. holder made to or through a non-U.S. office of a broker generally will not be subject to backup withholding and information reporting, except as noted below. Information reporting, but not backup withholding, will apply to a payment of proceeds, even if that payment is made outside of the United States, if a non-U.S. holder sells our common stock through a non-U.S. office of a broker that is:

 

 

 

a U.S. person (including a foreign branch or office of such person);

 

 

 

a “controlled foreign corporation” for U.S. federal income tax purposes;

 

 

 

a foreign person 50% or more of whose gross income from certain periods is effectively connected with a U.S. trade or business; or

 

 

 

a foreign partnership if at any time during its tax year (a) one or more of its partners are U.S. persons who, in the aggregate, hold more than 50% of the income or capital interests of the partnership or (b) the foreign partnership is engaged in a U.S. trade or business, unless the broker has documentary evidence that the beneficial owner is a non-U.S. holder and certain other conditions are satisfied, or the beneficial owner otherwise establishes an exemption (and the broker has no actual knowledge or reason to know to the contrary).

 

 Backup withholding is not an additional tax. Any amounts withheld from a payment to a holder of common stock under the backup withholding rules can be credited against any U.S. federal income tax liability of the holder and may entitle the holder to a refund, provided that the required information is furnished to the IRS in a timely manner.

 

Foreign Accounts

 

Sections 1471 through 1474 of the Code, commonly referred to as the Foreign Account Tax Compliance Act, or FATCA, and applicable Treasury regulations thereunder, impose a withholding tax of 30% on certain “witholdable payments,” including dividends and the gross proceeds of a disposition of our common stock paid to a foreign financial institution (as specifically defined by the applicable rules) unless such institution enters into an agreement with the U.S. government to withhold on certain payments and to collect and provide to the U.S. tax authorities substantial information regarding U.S. account holders of such institution (which includes certain equity holders of such institution, as well as certain account holders that are foreign entities with U.S. owners). The FATCA withholding tax of 30% will also apply to dividends and the gross proceeds of a disposition of our common stock paid to a non-financial foreign entity unless such entity provides the withholding agent with either a certification that it does not have any substantial direct or indirect U.S. owners or provides information regarding direct and indirect U.S. owners of the entity. The 30% withholding tax described in this paragraph cannot be reduced under an income tax treaty with the United States or by providing an IRS Form W-8BEN or similar documentation. The withholding tax described above will not apply if the foreign financial institution or non-financial foreign entity otherwise qualifies for an exemption from the rules. Under certain circumstances, a non-U.S. holder might be eligible for refunds or credits of such taxes. Holders should consult with their own tax advisors regarding the possible implications of the withholding described herein.

 

THE PRECEDING DISCUSSION OF U.S. FEDERAL TAX CONSIDERATIONS IS FOR GENERAL INFORMATION PURPOSES ONLY. IT IS NOT TAX ADVICE. EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS OWN TAX ADVISOR REGARDING THE PARTICULAR U.S. FEDERAL, GIFT, ESTATE, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF PURCHASING, HOLDING, AND DISPOSING OF OUR CLASS A COMMON STOCK, INCLUDING THE CONSEQUENCES OF ANY PROPOSED CHANGE IN APPLICABLE LAWS.


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RELATED PARTY TRANSACTIONS

 

SEC rules require us to disclose any transaction or currently proposed transaction in which the Company is a participant and in which any related person has or will have a direct or indirect material interest involving the lesser of $120,000 or 1% of the average of the Company’s total assets as of the end of last two completed fiscal years. A related person is any executive officer, director, nominee for director, or holder of 5% or more of the Company’s common stock, or an immediate family member of any of those persons. The descriptions set forth above under the captions “The Share Exchange and Related Transactions—Exchange Agreement,” “Lock-up Agreements and Other Restrictions” and “Executive Compensation Employment and Related Agreements” and “Director Compensation” and below under “Description of Securities Options” are incorporated herein by reference.

 

Except as set forth below, there have been no transactions during the years ended December 31, 2015 and 2016 to which we have been a party, in which the amount involved exceeded or will exceed $120,000, and in which any of our directors, executive officers or holders of more than 5% of the Company’s capital stock, or an affiliate or immediate family member thereof, had or will have a direct or indirect material interest, other than compensation and other arrangements that are described in the section titled “Executive Compensation.”

 

 

The following table sets forth the issuances of capital stock by the Company to related persons and by NABUFIT Denmark to its holders in connection with its organization.   

 

Name

Date of Sale

Number of Shares of

Common Stock

Aggregate Purchase Price ($)

 

 

 

 

Maze Holding ApS(1)

June 26, 2015

9,356(2)

$1,403

Chunmeilin Holding ApS (3)

June 26, 2015

9,356(2)

$1,403

M. Krarup Holding IVS (4)

June 26, 2015

9,356(2)

$1,403

F-Reklame A/S (5)

June 26, 2015

7,266(2)

$1,090

Mikkel Kessler

June 26, 2015

4,768(2)

$715

Jan Bech Anderson (6)

October 8, 2015

3,179(2)

$905,368

Brian P.S Mertz (7)

September, 2015

1,000

$67,500

Soren Jonassen (8)

September, 2015

1,000

$67,500

Ole Sigetty (9)

September, 2015

1,000

$67,500

Jan Bech Anderson

July 12, 2016

13,442

$370,999

Brian Mertz

Hugo Svaneeng Holding ApS

Jan Bech Anderson

December 21, 2016

December 21, 2016

December 21, 2016

2,384

4,769

23,844

$35,765

$71,531

$357,654

Brian Mertz (7)

December 8, 2016

8,334

$230,002

 

 

(1)

(2)

 

(3)

(4)

(5)

(6)

(7)

(8)

(9)

 

Owned by Michael Maze

Shares issued in NABUFIT Global, ApS, prior to the Share Exchange.  Does not reflect post share

exchange holdings or reverse stock split.

Owned and controlled by Ulrik Moll, former Chief Executive Officer

Owned and controlled by Morten Krarup, member of Board of Directors

Owned by Mads Fredericksen, Chairman of the Board of Director

Shares deemed beneficially owned by Morton Albaek, member of the Board of Directors

Chief Executive Officer

Former Director

Director

  

  

  

In connection with the organization of NABUFIT Denmark on June 26, 2015, the following persons subscribed for the following number of shares in NABUFIT Denmark (as adjusted to reflect subsequent issuance and transfers).


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Name

Number of Shares of

Common Stock

Aggregate Purchase Price ($)

Maze Holding ApS

          9,356

1,403

Chunmeilin Holding ApS

          9,356

1,403

M. Krarup Holding IVS

          9,356

1,403

F-Reklame A/S

          7,266

1,090

Mikkel Kessler

          4,768

715

Ole Krebs

          1,727

259

Anders Fredsborg

             120

18

Lars Weibom

             874

131

GD Investments ApS

             874

131

 

On October 8, 2015, NABUFIT Denmark issued an aggregate of 6,303 shares of NABUFIT Denmark at a price per share of $284.77 (DKK 1,888) for the aggregate gross consideration of approximately $1,795,000 to Danish investors Arne Nilsson, Jan Bech Anderson, Bent Østergaard and LF Investments.

 

Name

Number of Shares of

Common Stock

Aggregate Purchase Price ($)

LF Investments

2,649

$754,355

Bent Østergaard

264

$75,179

Arne Nilsson

211

$60,086

Jan Bech Anderson(1)

3,179

$905,283

 

 

(1)

Shares deemed beneficially owned by Morton Albaek, a member of the Board of Directors.

 

In September 2015, the Board of Directors approved the payment of $67,500 to each of Jonassen, Sigetty and Mertz for their service as directors and officers for the current year, which amounts were paid in the form of 30,000 (pre-reverse stock split) shares of common stock in the Company which were recorded for book purposes at the market price at the time of the award of $4.00 per share for total compensation of $360,000.

 

On September 30, 2015, the Company assumed the short-term auto lease of a member of management that ended January 8, 2016.  Monthly payments were approximately $435 and the deposit was $2,400.  The Company renewed the auto lease for an additional twelve months, through January 7, 2017 at $350 per month.  Actual payments are in the functional currency.

 

The Company entered into a six-month employment agreement with Brian Mertz, effective July 1, 2016 to December 31, 2016.  The agreement calls for the issuance of 1,389 shares of common stock per month (8,334 total), which were issued and fully expensed during 2016.  These shares were originally recorded at the market price of $27.60 per share but the share price was revised to $21.90 per share effective October 1, 2016 based on the public market price of the Company’s stock.  The full expense of $206,252 was recognized during 2016.

 

On August 24, 2016, the Board of Directors approved share-based compensation for the twelve month period ending June 30, 2017 for the directors, chairman and secretary and also approved payments for services to Soren Jonassen and Ole Sigetty.  For the twelve month period, the directors receive 725 shares ($20,000), the chairman receives 1,087 ($30,000), and the secretary receives 272 shares ($7,500).  Expense of $52,682 was recognized during 2016 pursuant to these agreements.

 

In addition, the Board approved payments for services to Soren Jonassen and Ole Sigetty for the twelve month period ending June 30, 2017 of 1,034 shares ($28,520) and 2,138 shares ($59,000), respectively.  These shares were originally recorded at the market price of $27.60 per share but the share price was revised to $21.90 per share effective October 1, 2016 based on the public market price of the Company’s stock. Expense of $39,242 was recognized during 2016 pursuant to these agreements.


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For year ended December 31, 2016, the total share-based compensation recognized pursuant to these agreements was $91,924.

 

As of December 31, 2016 and 2015, the Company had a related party payable of $30,183 and $0 to its CEO for expenses related to the operation of the business.  This payable is on demand with no interest.

 

Employment Agreements and Offer Letters

 

The Company entered into a six-month employment agreement with Brian Mertz, effective July 1, 2016 to December 31, 2016.  The agreement calls for the issuance of 1,389 shares of common stock per month (8,334 total), which were issued and fully expensed during 2016.

During November 2016, the Board of Directors approved stock payments of 200 shares of common stock to each of ten employees.  The shares were issued December 14, 2016.

During August 2016, the Company entered into an agreement with Peter Holvad, effective September 1, 2016 to February 17, 2017.  The agreement called for the issuance of 500 shares of common stock.  The shares were issued December 14, 2016, and the stock compensation is being recognized ratably over the contract period.

During November 2016, the Board of Directors approved a stock payment of 356 shares of common stock to Helle Wittrup based on a consulting agreement.

As of December 31, 2016 and 2015, there were no outstanding options of the Company. 

 

Policies and Procedures for Related-Person Transactions

 

Our board of directors has adopted a written related-person transaction policy setting forth the policies and procedures for the review and approval or ratification of related-person transactions. This policy will cover, with certain exceptions set forth in Item 404 of Regulation S-K under the Securities Act, any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships in which we were or are to be a participant, where the amount involved exceeds $120,000 and a related person had or will have a direct or indirect material interest, including, without limitation, purchases of goods or services by or from the related person or entities in which the related person has a material interest, indebtedness, guarantees of indebtedness and employment by us of a related person. In reviewing and approving any such transactions, our audit committee is tasked to consider all relevant facts and circumstances, including, but not limited to, whether the transaction is on terms comparable to those that could be obtained in an arm’s-length transaction and the extent of the related person’s interest in the transaction. All of the transactions described in this section occurred prior to the adoption of this policy.

 

 

THE EQUITY PURCHASE TRANSACTION

 

General

 

On May 9, 2017, we entered into the Equity Purchase Agreement and the Registration Rights Agreement with Kodiak Capital. Pursuant to the terms of the Equity Purchase Agreement, Kodiak Capital has agreed to purchase from us up to $1million in aggregate purchase price of our common stock from time to time, until December 31, 2020. Pursuant to the terms of the Registration Rights Agreement, we have filed with the SEC the registration statement that includes this prospectus to register under the Securities Act the shares that we estimate may be issued to Kodiak Capital under the Purchase Agreement.

 

Purchase of Shares under the Purchase Agreement

 

We may, from time to time and at our sole discretion, direct, by delivery of a put notice, Kodiak Capital to purchase shares of our common stock. The purchase price per share will be $3.00. There is no minimum amount that we may


78


require Kodiak Capital to purchase at any one time. The closing of the sale of the shares will occur on the sixth trading day following our delivery of the put notice to Kodiak Capital to purchase the shares.

 

In consideration for entering into the Purchase Agreement, we issued to Kodiak Capital a commitment $50,000 promissory note dated March 23, 2017. Kodiak is entitled any time after March 23, 2017, subject to the provisions of the note, to convert all or a portion of the principal of the commitment note into shares of our common stock at a conversion price equal to $3.00.

 

We have agreed that we will not, without Kodiak Capital’s prior written consent, enter into any other equity line of credit agreement that has terms and conditions substantially comparable to the Equity Purchase Agreement during the commitment period of the Equity Purchase Agreement.

 

Other than as set forth above, there are no trading volume requirements or restrictions under the Equity Purchase Agreement, and we will control the timing and amount of any sales of our common stock to Kodiak Capital.

 

Conditions to Sales

 

Under the Eqaity Purchase Agreement, the following conditions must be satisfied in order for us to sell shares of our common stock to Kodiak Capital:

 

The registration statement of which this prospectus forms a part, and any amendment or supplement thereto, must be effective for the sale by Kodiak Capital of the shares to be purchased by Kodiak Capital, and: (i) neither we nor Kodiak Capital has received notice that the SEC has issued or intends to issue a stop order respecting the registration statement or that the SEC otherwise has suspended or withdrawn the effectiveness of the registration statement, either temporarily or permanently, or intends or has threatened to do so; and (ii) there is no other suspension of the use or withdrawal of the effectiveness of the registration statement or this prospectus.

 

 

Our representations and warranties contained in the Purchase Agreement must be true and correct in all material respects (except for representations and warranties specifically made as of a particular date), except for any conditions that have temporarily caused any representations or warranties to be incorrect and which have been corrected with no continuing impairment to us or Kodiak Capital.

 

 

We have performed in all material respects all covenants, agreements, and conditions required by the Purchase Agreement to be performed, satisfied, or complied with by us.

 

 

No statute, rule, regulation, executive order, decree, ruling, or injunction has been enacted, entered, promulgated, or adopted by any court or governmental authority of competent jurisdiction that prohibits or directly and materially adversely affects any of the transactions contemplated by the Purchase Agreement, and no proceeding has been commenced that may have the effect of prohibiting or materially adversely affecting any of the transactions contemplated by the Purchase Agreement.

 

 

The trading of our common stock has not been suspended by the SEC, the principal trading market for our common stock, or the Financial Industry Regulatory Authority, Inc., and our common stock has been approved for listing or quotation on and has not been delisted from such principal market.

 

 

The number of shares of our common stock to be purchased by Kodiak Capital at a particular closing may not exceed the number of shares that, when aggregated with all other shares of common stock then beneficially owned by Kodiak Capital, would result in it owning more than 9.99% of all of our outstanding common stock.

 

 

 

 

 

 

 

 

 

We have no knowledge of any event more likely than not to have the effect of causing the registration statement of which this prospectus forms a part to be suspended or otherwise ineffective.

 

The issuance of the shares would exceed the aggregate number of shares of Common Stock which the Company may issue without breaching the Company’s obligations under the rules or regulations of the Principal Market (the “Exchange Cap”).

 

Sixty five percent of the average trading price for our common shares is not less than $3.00 per share.

 

The shares issued to Kodiak must be DWAC Eligible.

 

No Short-Selling by Kodiak Capital

 

Kodiak Capital has agreed that neither it nor any of its respective affiliates will engage in any direct or indirect short-selling of our common stock during any time before the termination of the Purchase Agreement.

 

Effect of Performance of the Equity Purchase Agreement on Our Stockholders

 

All shares of common stock registered in this offering are expected to be freely tradable. It is anticipated that shares registered in this offering will be sold over a period commencing on the date that the registration statement, including this prospectus, became effective through December 31, 2020. The sale by Kodiak Capital of a significant amount of shares registered in this offering at any given time could cause the market price of our common stock to decline and to be highly volatile. Kodiak Capital may ultimately purchase all, some, or none of the shares of common stock not yet issued but registered in this offering. If we sell these shares to Kodiak Capital, it may sell all, some, or none of such shares. Therefore, sales to Kodiak Capital by us under the Equity Purchase Agreement may result in substantial dilution to the interests of other stockholders. In addition, if we sell a substantial number of shares to Kodiak Capital under the Equity Purchase Agreement, or if investors expect that we will do so, the actual sales of shares or the mere existence of our arrangement with Kodiak Capital may make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price at which we might otherwise wish to effect such sales. However, we have the right to control the timing and amount of any sales of our shares to Kodiak Capital, and the Equity Purchase Agreement may be terminated by us at any time at our discretion without any cost to us.

 

Pursuant to the terms of the Equity Purchase Agreement, we have the right, but not the obligation, to direct Kodiak Capital to purchase up to $1 million of our common stock. The number of shares ultimately purchased by Kodiak Capital is dependent upon the number of shares we direct Kodiak Capital to purchase under the Equity Purchase Agreement.

 

PLAN OF DISTRIBUTION

 

Kodiak Capital may be classified as an “underwriter,” within the meaning of the Securities Act. Kodiak Capital The and any of its pledgees, donees, assignees, and successors-in-interest may, from time to time,resell any or all of their shares of common stock being offered under this prospectus on any stock exchange, market, or trading facility on which shares of our common stock are traded or in private transactions. These sales may be at fixed or negotiated prices. Kodiak Capital may use any one or more of the following methods when disposing of shares:

 

ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

 

 

on the OTC Pink;

 

 

block trades in which the broker-dealer will attempt to sell the shares as agent, but may position and resell a portion of the block as principal to facilitate the transaction;

 

 

purchases by a broker-dealer as principal and resales by the broker-dealer for its account;

 

 

an exchange distribution in accordance with the rules of the applicable exchange;

 

 

privately negotiated transactions;

 

 

through agreement between a broker-dealer and the selling stockholder to sell a specified number of shares at a stipulated price per share;

 

 

a combination of any of these methods of sale; and

 

 

any other method permitted pursuant to applicable law.

 

 

Kodiak Capital has agreed not to engage in any direct or indirect short selling of our common stock during the term of the Purchase Agreement.

 

Broker-dealers engaged by selling stockholder may arrange for other broker-dealers to participate in sales. Broker-dealers may receive commissions or discounts from selling stockholder (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated, which commissions as to a particular broker or dealer may be in excess of customary commissions to the extent permitted by applicable law.

 

If sales of shares offered under this prospectus are made to broker-dealers as principals, we would be required to file a post-effective amendment to the registration statement of which this prospectus is a part. In the post-effective amendment, we would be required to disclose the names of any participating broker-dealers and the compensation arrangements relating to such sales.

 

Kodiak Capital may be classified as an “underwriter,” within the meaning of Section 2(11) the Securities Act in connection with these sales. Commissions received by these broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Any broker-dealers or agents that are deemed to be underwriters may not sell shares offered under this prospectus unless and until we set forth the names of the underwriters and the material details of their underwriting arrangements in a supplement to this prospectus or, if required, in a replacement prospectus included in a post-effective amendment to the registration statement of which this prospectus is a part.

 

Kodiak Capital and any other persons participating in the sale or distribution of the shares offered under this prospectus will be subject to applicable provisions of the Exchange Act and the rules and regulations under that act, including Regulation M. These provisions may restrict activities of and limit the timing of purchases and sales of any of the shares by the selling stockholder or any other person. Furthermore, under Regulation M, persons engaged in a distribution of securities are prohibited from simultaneously engaging in market making and other activities respecting those securities for a specified period of time before the commencement of such distributions, subject to specified exceptions or exemptions. All of these limitations may affect the marketability of the shares.

 

Kodiak Capital and the issuer have agreed to indemnify one another against certain losses, damages, and liabilities arising in connection with this prospectus, including liabilities under the Securities Act. Under the securities laws of certain states, the shares of common stock may be sold in such states only through registered or licensed brokers or dealers. Kodiak Capital has been advised to ensure that any brokers, dealers, or agents effecting transactions on its behalf are registered to sell securities in all 50 states. In addition, in certain states the shares of common stock may not be sold unless the shares have been registered or qualified for sale in such state or we qualify for an available exemption from registration or qualification.

 

State Securities Restrictions on Resale

 


79


If selling stockholder wants to sell shares of our common stock under this registration statement in the United States, the selling stockholder will also need to comply with state securities laws regarding secondary sales. All states offer a variety of exemptions from registration for secondary sales. Many states, for example, have an exemption for secondary trading of securities registered under Section 12(g) of the Exchange Act or for securities of issuers that publish continuous disclosure of financial and nonfinancial information in a recognized securities manual, such as Standard & Poor’s. The broker for the selling stockholder will be able to advise the selling stockholder in which states our common stock is exempt from registration with that state for secondary sales.

 

Any person who purchases shares of our common stock from selling stockholder under this registration statement who then wants to sell such shares will also have to comply with state securities laws regarding secondary sales.

 

Sales Through Agents

 

The Company has not engaged a placement agent for the sale of its securities.  Any placement agent may be deemed to be an underwriter within the meaning of Section 2(a)(11) of the Securities Act and any fees received by it and any profit realized on the sale of the securities by it while acting as principal might be deemed to be underwriting discounts or commissions under the Securities Act. A placement agent will be required to comply with the requirements of the Securities Act and the Exchange Act of 1934, as amended (the "Exchange Act"), including, without limitation, Rule 10b-5 and Regulation M under the Exchange Act. These rules and regulations may limit the timing of purchases and sales of our securities by the Placement Agent. Under these rules and regulations, a placement agent may not (i) engage in any stabilization activity in connection with our securities; and (ii) bid for or purchase any of our securities or attempt to induce any person to purchase any of our securities, other than as permitted under the Exchange Act, until they have completed their participation in the distribution.

 

If we engage additional placement agents, we will file an additional post-effective amendment which sets forth:

 

 

·

the any additional terms of the offering;

 

·

the names of any other placement agents;

 

·

the purchase price of the securities;

 

·

the net proceeds from the sale of the securities;

 

·

any commissions or agency fees and other items constituting agents’ compensation; and

 

·

any commissions paid to transfer agents.

 

Our securities are traded on the OTCQB, but are not listed or traded on the floor of an organized national or regional stock exchange. Instead, these securities transactions are conducted through a telephone and computer network connecting dealers in stocks. Over-the-counter stocks are traditionally smaller companies that do not meet the financial and other listing requirements of a regional or national stock exchange.

 

Offering Period and Expiration Date

 

This Offering will commence on the effective date of the registration statement of which this prospectus is a part, as determined by the Securities and Exchange Commission, and will continue for a period of 180 days. We may extend the Offering for an additional 90 days, at our sole discretion, unless the offering is completed or otherwise terminated by us at an earlier date.

 

Procedures for Subscribing

 

If you decide to subscribe for any shares in the offering, you must deliver a check or certified funds for acceptance or rejection. There are no minimum share purchase requirements for individual investors. All checks for subscriptions must be made payable to “NABUFIT Global, Inc.”

 

Right to Reject Subscriptions


80


We maintain the right to accept or reject subscriptions in whole or in part, for any reason or for no reason. All monies from rejected subscriptions will be returned immediately by us to the subscriber, without interest or deductions. Subscriptions for securities will be accepted or rejected within 48 hours of our having received them.

 

Penny Stock Rules

 

The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks.  Penny stocks are generally equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system).

 

The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document prepared by the SEC which:

contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; 

contains a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available to the customer with respect to violations of such duties or other requirements of federal securities laws; 

contains a brief, clear, narrative description of a dealer market, including “bid” and “ask” prices for penny stocks and the significance of the spread between the bid and ask prices; 

contains the toll-free telephone number for inquiries on disciplinary actions; 

defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and 

contains such other information, and is in such form (including language, type size, and format) as the SEC shall require by rule or regulation. 

 

Prior to effecting any transaction in a penny stock, a broker-dealer must also provide a customer with:

the bid and ask prices for the penny stock; 

the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; 

the amount and a description of any compensation that the broker-dealer and its associated salesperson will receive in connection with the transaction; and 

a monthly account statement indicating the market value of each penny stock held in the customer’s account. 

 

In addition, the penny stock rules require that prior to effecting any transaction in a penny stock not otherwise exempt from those rules, a broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive (i) the purchaser’s written acknowledgment of the receipt of a risk disclosure statement, (ii) a written agreement to transactions involving penny stocks, and (iii) a signed and dated copy of a written suitability statement.  These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our securities, and therefore our stockholders may have difficulty selling their shares. 

 

General Information

 

Agents and dealers may be entitled, under agreements entered into with us, to indemnification by us against certain liabilities, including liabilities under the Securities Act. Our agents and dealers, or their affiliates, may be customers of, engage in transactions with or perform services for us in the ordinary course of business.

 

The maximum consideration or discount to be received by any Financial Industry Regulatory Authority, or FINRA, member or independent broker dealer may not exceed 10.0% of the aggregate amount of the securities offered pursuant to this prospectus and any applicable post effective amendment.

  

Foreign Sales

 


81


United Kingdom

 

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”) an offer to the public of any securities which are the subject of the offering contemplated by this prospectus may not be made in that Relevant Member State except that an offer to the public in that Relevant Member State of any such securities may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State:

 

 

(a)

to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;

 

 

(b)

to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts;

 

 

(c)

by a placement agent to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive); or

 

 

(d)

in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of shares shall result in a requirement for the publication by the issuer or a placement agent of a prospectus pursuant to Article 3 of the Prospectus Directive.

 

For the purposes of this provision, the expression an “offer to the public” in relation to any security in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any securities to be offered so as to enable an investor to decide to purchase such securities, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression “Prospectus Directive” means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.

 

Any placement agent must represent, warrant and agree that:

 

 

(a)

it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000 (the FSMA)) received by it in connection with the issue or sale of any of our securities in circumstances in which section 21(1) of the FSMA does not apply to the issuer; and

 

 

(b)

it has complied with and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to our securities in, from or otherwise involving the United Kingdom.

 

European Economic Area

 

In particular, this document does not constitute an approved prospectus in accordance with European Commission’s Regulation on Prospectuses no. 809/2004 and no such prospectus is to be prepared and approved in connection with this offering. Accordingly, in relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (being the Directive of the European Parliament and of the Council 2003/71/EC and including any relevant implementing measure in each Relevant Member State) (each, a Relevant Member State), with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the Relevant Implementation Date) an offer of securities to the public may not be made in that Relevant Member State prior to the publication of a prospectus in relation to such securities which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance


82


with the Prospectus Directive, except that any placement agent may, with effect from and including the Relative Implementation Date, make an offer of securities to the public in that Relevant Member State at any time:

 

 

to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;

 

 

to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than 43,000,000 euros; and (3) an annual net turnover of more than 50,000,000 euros, as shown in the last annual or consolidated accounts; or

 

 

in any other circumstances which do not require the publication by the issuer of a prospectus pursuant to Article 3 of the Prospectus Directive.

 

 For the purposes of this provision, the expression an “offer of securities to the public” in relation to any common shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the securities to be offered so as to enable an investor to decide to purchase or subscribe such securities, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State. For these purposes the shares of common stock are “securities.”

 

Switzerland

 

The shares of our common stock may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange, or SIX, or on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the shares or the offering may be publicly distributed or otherwise made publicly available in Switzerland.

 

Neither this document nor any other offering or marketing material relating to the offering, us, or the shares have been or will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the offer of shares will not be supervised by, the Swiss Financial Market Supervisory Authority FINMA, and the offer of shares has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes, or CISA. The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of shares.

 

Denmark

 

This prospectus has not been filed with or approved by the Danish Financial Supervisory Authority or any other regulatory authority in Denmark. The common stock has not been offered or sold and may not be offered, sold or delivered directly or indirectly in Denmark by way of a public offering, unless in compliance with Chapter 6 or Chapter 12 of the Danish Act on Trading in Securities and Executive Orders issued pursuant thereto as amended from time to time, including, but not limited to exemptions from the prospectus delivery requirements set forth in Executive Order No. 222 of 10 March 2010 or in Executive Order No. 223 of 10 March 2010.


83


 

LEGAL MATTERS

 

Validity of the securities offered by this prospectus will be passed upon for us by Carman Lehnhof Israelsen, LP, Salt Lake City, Utah.

 

 

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

None.

 

EXPERTS

 

The audited consolidated financial statements of the Company as of December 31, 2016 included in this prospectus have been audited by Sadler, Gibb & Associates, LLC, who is an independent registered public accounting firm, as set forth in their report appearing elsewhere herein, and are included herein in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.

 

 

WHERE YOU CAN FIND MORE INFORMATION

 

We file annual, quarterly and special reports and other information with the SEC. These filings contain important information that does not appear in this prospectus. For further information about us, you may read and copy any reports, statements and other information filed by us at the SEC’s Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549-0102. You may obtain further information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Our SEC filings are also available on the SEC Internet site at http://www.sec.gov, which contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

 


84


NABUFIT GLOBAL, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

 

 

 

Page

 

 

Report of Independent Registered Public Accounting Firm

F2

 

 

Consolidated Financial Statements:

 

 

 

Consolidated Balance Sheet as of December 31, 2016

F3

 

 

Consolidated Statement of Operations and Comprehensive Loss for the Period from

 

    June 26, 2015 (Date of Inception) through December 31, 2016

F4

 

 

Consolidated Statement of Shareholders’ Equity for the Period from June 26, 2015

 

    (Date of Inception) through December 31, 2016

F5

 

 

Consolidated Statement of Cash Flows for the Period from June 26, 2015

 

    (Date of Inception) through December 31, 2016

F6

 

 

Notes to Consolidated Financial Statements

F7


F-1


Picture 26 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

 

To the Board of Directors and Shareholders

NABUFITNABUFIT Global, Inc.

 

We have audited the accompanying consolidated balance sheets of NABUFITNABUFIT Global, Inc. (“the Company”) as of December 31, 2016 and 2015, and the related consolidated statements of operations and comprehensive loss, shareholders’ equity and cash flows for the year ended December 31, 2016, and for the period from inception on June 26, 2015 through December 31, 2015. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.    

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits include consideration of internal control over financial reporting as a basis for designing 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 over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of NABUFITNABUFIT Global, Inc. as of December 31, 2016 and 2015, and the consolidated results of its operations and cash flows for the year ended December 31, 2016, and for the period from inception on June 26, 2015 through December 31, 2015, in conformity with U.S. generally accepted accounting principles.

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has generated no revenues from its business operations, has incurred operating losses since inception and will need additional working capital for its planned activity, which raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are described in Note 2 to the consolidated financial statements. These consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/ Sadler, Gibb & Associates, LLC

 

Salt Lake City, UT

April 5, 2017, except for footnote 11,

for which the date is July 28, 2017

 

Sadler Gibbs Letter Head Footer.jpg 


F-2


NABUFIT GLOBAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

 

 

   December 31,

 

   December 31,

 

 

2016

 

2015

 

 

 

 

 

ASSETS

 

 

 

 

Current Assets

 

 

 

 

Cash and cash equivalents

 

$1,402,626  

 

$1,133,247  

Prepaid expenses and other current assets

 

2,792,365  

 

172,939  

Deposits

 

14,528  

 

7,646  

Total current assets

 

4,209,519  

 

1,313,832  

 

 

 

 

 

Total Assets

 

$4,209,519  

 

$1,313,832  

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

Current Liabilities

 

 

 

 

Accounts payable

 

$264,089  

 

$19,082  

Accrued liabilities

 

2,304,938  

 

33,706  

Related party payables

 

30,183  

 

 

Total current liabilities

 

2,599,210  

 

52,788  

 

 

 

 

 

Total Liabilities

 

$2,599,210  

 

$52,788  

 

 

 

 

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

 

STOCKHOLDERS'  EQUITY

 

 

 

 

Preferred stock, $.0001 par value, 400,000 shares authorized; no shares issued and outstanding

 

 

 

 

Common stock $.0001 par value, 100,000,000 shares authorized; 854,338 and 647,908 shares issued and outstanding at December 31, 2016 and 2015, respectively.

 

85  

 

65  

Additional paid-in capital

 

6,055,755  

 

1,673,753  

Accumulated deficit

 

(4,411,001) 

 

(372,396) 

Accumulated other comprehensive loss

 

(34,530) 

 

(40,378) 

Total stockholders' equity

 

1,610,309  

 

1,261,044  

 

 

 

 

 

Total Liabilities and Stockholders' Equity

 

$4,209,519  

 

$1,313,832  

 

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


F-3


NABUFIT GLOBAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS

 

 

 

 

For the Period

 

 

 

from Inception

 

For the Year

 

(June 26, 2015)

 

Ended

 

through

 

December 31,

 

December 31,

 

2016

 

2015

Operating Expenses:

 

 

 

Selling, general and administrative

$3,665,216 

 

$371,746 

Marketing

373,366 

 

- 

        Total Operating Expenses

4,038,582 

 

371,746 

 

 

 

 

Loss from Operations

(4,038,582) 

 

(371,746) 

 

 

 

 

Other income (expense)

 

 

 

Interest income

140  

 

 

Interest expense

(163) 

 

(650) 

Total Other Income (Expense)

(23) 

 

(650) 

 

 

 

 

Net Loss

$(4,038,605) 

 

$(372,396) 

 

 

 

 

Net loss per common share - basic and diluted

$(5.92) 

 

$(0.69) 

 

 

 

 

Weighted average common shares

 

 

 

outstanding - basic and diluted

682,517  

 

538,888  

 

 

 

 

Comprehensive Loss:

 

 

 

Net Loss

$(4,038,605) 

 

$(372,396) 

 

 

 

 

Other Comprehensive Income

 

 

 

Translation adjustments

5,848  

 

(40,378) 

Total Comprehensive Loss

$(4,032,757) 

 

$(412,774) 

 

 

 

 

 

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


F-4


NABUFIT GLOBAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

Additional

 

 

 

Other

 

 

 

 

Common Stock

 

Paid-in

 

Accumulated

 

Comprehensive

 

 

 

 

Shares

Amount

 

Capital

 

Deficit

 

Loss

 

Total

Balance at June 26, 2015 (Date of Inception)

 

$ - 

 

$ - 

 

$ - 

 

$ - 

 

$ - 

 

 

 

 

 

 

 

 

 

 

 

 

Stock issued for cash - June 26, 2015

 

516,667 

52 

 

7,483 

 

 

 

7,535 

Stock issued for cash - September 30, 2015

 

14,798 

 

1,419,134 

 

 

 

1,419,135 

Treasury stock, purchased and retired

 

-14,798

(1)

 

(1,431)

 

 

 

(1,432)

Recapitalization - November 30, 2015

 

131,242 

13 

 

248,567 

 

 

 

248,580 

Foreign currency translation adjustments

 

 

 

 

(40,378)

 

(40,378)

Net loss

 

 

 

(372,396)

 

 

(372,396)

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2015

 

647,909 

$ 65 

 

$ 1,673,753 

 

$ (372,396)

 

$ (40,378)

 

$ 1,261,044 

 

 

 

 

 

 

 

 

 

 

 

 

Stock issued for cash

 

157,160 

16 

 

3,139,429 

 

 

 

3,139,445 

Stock issued for services

 

34,723 

 

889,154 

 

 

 

889,157 

Stock issued for share-based compensation

 

14,548 

 

353,419 

 

 

 

353,420 

Foreign currency translation adjustments

 

 

 

 

5,848 

 

5,848 

Net loss

 

 

 

(4,038,605)

 

 

(4,038,605)

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2016

 

854,340 

$ 85 

 

$ 6,055,755 

 

$ (4,411,001)

 

$ (34,530)

 

$ 1,610,309 

 

 

 

 

 

 

 

 

 

 

 

 

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

 


F-5


NABUFIT GLOBAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

 

 

 

 

 

 

 

 

For the Period

 

 

 

 

 

from Inception

 

 

 

For the Year

 

(June 26, 2015)

 

 

 

Ended

 

through

 

 

 

December 31,

 

December 31,

 

 

 

2016

 

2015

 

 

 

 

 

 

Net loss

 

 

$(4,038,605) 

 

$(372,396) 

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

Share-based compensation

 

 

353,420  

 

 

Shares issued for services

 

 

820,407  

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

Prepaid expenses and other current assets

 

 

(2,552,028) 

 

(13,468) 

Deposit

 

 

(7,123) 

 

(7,740) 

Accounts payable

 

 

245,475  

 

(16,845) 

Accrued liabilities

 

 

2,272,227  

 

31,941  

Related party payables

 

 

30,183  

 

 

       Net Cash Used in Operating Activities

 

 

(2,876,044) 

 

(378,508) 

 

 

 

 

 

 

Cash Flows From Investing Activities

 

 

 

 

 

Cash acquired in acquisition

 

 

 

 

126,843  

      Net Cash Provided by Investing Activities

 

 

 

 

126,843  

 

 

 

 

 

 

Cash Flows From Financing Activities

 

 

 

 

 

 Proceeds from issuance of common stock for cash

 

 

3,139,445  

 

1,775,383  

Cash paid to acquire Treasury Stock

 

 

 

 

(377,250) 

      Net Cash Provided by Financing Activities

 

 

3,139,445  

 

1,398,133  

Effect of exchange rate changes on cash

 

 

5,978  

 

(13,221) 

 

 

 

 

 

 

Net Increase in Cash

 

 

269,379  

 

1,133,247  

Cash at Beginning of Period

 

 

1,133,247  

 

 

Cash at End of Period

 

 

$1,402,626  

 

$1,133,247  

 

 

 

 

 

 

Noncash Investing and Financing Information:

 

 

 

 

 

Stock issued for prepaid expenses

 

 

$68,750  

 

$ 

Fair value of assets acquired

 

 

 

 

167,535  

Fair value of liabilities assumed

 

 

 

 

38,263  

Shares issued in reverse recapitalization

 

 

 

 

256,115  

 

 

 

 

 

 

Supplemental Disclosures of Cash Flow Information:

 

 

 

 

Cash Paid for Interest

 

 

$161  

 

$641  

Cash Paid for Taxes

 

 

 

 

 

 

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


F-6


NABUFIT GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1 — THE COMPANY AND BASIS OF PRESENTATION

 

Organization — The accompanying consolidated financial statements are presented in conformity with accounting principles generally accepted in the United States of America and include the operations and balances of NABUFIT Global, Inc. (“NABUFIT Global”) and its wholly-owned subsidiaries NABUFIT Global ApS (“NABUFIT Denmark”) a company organized in Denmark on June 26, 2015, NABUFIT China Limited (“NABUFIT China”) a company organized in Hong Kong on October 26, 2016, and NABUFIT IP ApS (“NABUFIT IP”) a company organized in Denmark on January 3, 2017 (collectively “NABUFIT,” “we”, or “the Company”).  NABUFIT Global was incorporated in May 1983 in the State of Colorado and re-incorporated in the State of Delaware in April 2008.  Effective June 20, 2014 the Company sold its prior subsidiary and became a shell company.  

 

On November 30, 2015, we consummated the transaction evidenced by an Agreement and Plan of Share Exchange (the "Share Exchange Agreement") dated October 8, 2015 by and among NABUFIT Global and NABUFIT Denmark, pursuant to which NABUFIT Global acquired from the NABUFIT Denmark shareholders (“NABUFIT Shareholders”) all of the issued and outstanding equity interests of NABUFIT Denmark in exchange for 516,667 shares of NABUFIT Global (the “Share Exchange”).  As a result of the Share Exchange, the NABUFIT Shareholders, as the former shareholders of NABUFIT Denmark, became the controlling shareholders of the Company and NABUFIT Denmark became a subsidiary of the Company.  The Share Exchange was accounted for as a reverse merger/recapitalization effected by a share exchange, wherein NABUFIT Denmark is considered the acquirer for accounting and financial reporting purposes.  The capital, share price, and earnings per share amount in the consolidated financial statements for the period prior to the reverse merger were restated to reflect the recapitalization in accordance with the exchange ratio established in the merger.

 

As a result of the Share Exchange, we discontinued our pre-exchange business, acquired the business of NABUFIT Denmark and will continue the existing business operations of NABUFIT Denmark as a publicly traded company under the name “NABUFIT Global, Inc.”

 

In accordance with “reverse merger” or “reverse acquisition” accounting treatment, the historical financial statements of NABUFIT Global for periods ended prior to the Share Exchange have been replaced with the historical financial statements of NABUFIT Denmark, and will be, in all future filings with the Securities and Exchange Commission (“SEC”).

 

Nature of Operations — The Company designs, manufactures and markets the NABUFIT virtual training and fitness products and services, a state-of-the-art online fitness portal (“NABUFIT” or, the “Product”) with the option of connecting existing and future monitoring devices (wearables, etc.) to the Portal. The Product incorporates interaction and input through Microsoft® Kinect® and other technologies and the option for personal data collection, coaching and teaching through mentor services.

 

Customers obtain access to the Portal through the purchase of monthly or annual memberships and the downloading of the software or mobile device application.  The Product provides custom designed training plans, diet plans and access to mentors and coaching.

 

Through Microsoft® Kinect®, the NABUFIT technology collects data and measures each exercise relatively to a set standard and past performances.  Based on the data collection and registration in the Kinect® module the user will receive immediate feedback, e.g. as a percentage, a graphic or an emoticon depending on how well the exercise has been performed. This provides a unique quality assurance ensuring maximum effect of the training. The quick feedback will also reduce the risk of injuries and streamline time spent on training.  Users can access training data, statistics and results online or through mobile device applications.

 

Membership of the portal will be divided into two levels – a basic membership and a VIP membership.  The difference between the levels of membership will be primarily based upon the access to features and to mentors.

 


F-7


The portal also offers a social forum for its users, where users can interact with like-minded members and train with them virtually. Some people will experience increased motivation by being part of a group. The member can allow others to see all or part of his profile. The personal profiles of the members can be matched, so the portal will suggest network and training mates, and thereby helping to ensure the optimum composition. It will be possible to do real-time training with training mates by sharing the screen in a videoconference on the portal.

 

NOTE 2 – GOING CONCERN

 

The accompanying consolidated financial statements have been prepared with the recognition that there is considerable doubt about whether the Company can continue as a going concern.  As shown in the accompanying consolidated financial statements, the Company incurred a net loss of $4,038,605 for the year ended December 31, 2016 and has an accumulated deficit of $4,411,001 at December 31, 2016.  The Company also used cash in operating activities of $2,876,044 during the year ended December 31, 2016.  At December 31, 2016, the Company had working capital of $1,610,309.  These factors raise substantial doubt about the Company’s ability to continue as a going concern.

 

In order for us to continue as a going concern, we will need to obtain additional debt or equity financing. We are regularly and continually seeking additional funding from investors and from time to time we are in various stages of negotiations.  Nonetheless, to date we have not accomplished a financing of the size needed to put the Company on a stable operating basis. There can be no assurance that we will be able to secure additional debt or equity financing, that we will be able to attain positive cash flow operations, or that, if we are successful in any of those actions, those actions will produce adequate cash flow to enable us to meet our future obligations. All of our existing financing arrangements are short-term. If we are unable to obtain additional debt or equity financing, we may be required to cease operations.

 

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Principles of Consolidation — The accompanying consolidated financial statements are presented in conformity with accounting principles generally accepted in the United States of America and include operations and balances of NABUFIT Global, Inc. and its wholly-owned subsidiaries NABUFIT Denmark and NABUFIT China.  Intercompany balances and transactions have been eliminated in consolidation.

 

Use of Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.  Actual results could differ from those estimates.  

 

Fair Value – The fair values of the Company’s financial assets and liabilities approximate their carrying amounts at the reporting date.

 

Foreign Currency Transactions and Translations – The functional currency of NABUFIT Denmark is the Danish Krone (DKK), the functional currency of NABUFIT China is the China Yuan Renminbi (CNY), and the functional currency of NABUFIT Global and the reporting currency is U.S. dollars (USD).  The Company translates the assets and liabilities of NABUFIT Denmark and NABUFIT China from the functional currency to U.S. dollars at the appropriate spot rates as of the balance sheet date. Equity balances are translated using historical exchange rates. Changes in the carrying value of these assets and liabilities attributable to fluctuations in spot rates are recognized in foreign currency translation adjustment, a component of accumulated other comprehensive income. Income statement accounts are translated using the average exchange rate during the period.

 

Monetary assets and liabilities denominated in a currency that is different from the functional currency must first be remeasured from the applicable currency to the functional currency. The effect of this remeasurement process is recognized translation adjustments in our statement of comprehensive loss.


F-8


The Company had no foreign currency transaction gains or losses during the period from June 26, 2015 (date of inception) through December 31, 2016.

 

Cash and Cash Equivalents – The balance in cash and cash equivalents consists of cash reserves held in bank accounts. The Company maintains cash balances in bank accounts that, at times, exceed federally insured limits.  The Company has not experienced any losses in these accounts and believes it is not exposed to any significant risk with respect to cash. As of December 31, 2016 and 2015, cash deposits per bank statements exceeded the federally insured limits by $1,392,919 and $1,073,107, the balance of cash in the NABUFIT Global, ApS accounts.

 

Revenue Recognition – The Company recognizes revenue when persuasive evidence of an arrangement exists, performance of the service has occurred, the sales price charged is fixed or determinable, and collectability is reasonably assured.  Revenue is net of taxes and discounts and is recorded on an accrual basis.  

 

Software Development Costs – The Company expenses software development costs until the Company has a working business model for the software.

 

Advertising Costs – Advertising costs are expensed as incurred. Advertising costs were $279,088 and $5,878 for the year ended December 31, 2016 and for the period ended December 31, 2015, respectively.

 

Income Taxes – The Company accounts for income taxes pursuant to Accounting Standards Codification (ASC) 740, Income Taxes, which requires the use of the asset and liability method of accounting for deferred income taxes.  We recognize deferred tax liabilities and assets based on the differences between the tax basis of assets and liabilities and their reported amounts in the financial statements that will result in taxable or deductible amounts in future years.

 

All allowances against deferred income tax assets are recorded in whole or in part, when it is more likely than not those deferred income tax assets will not be realized.  Deferred tax assets and liabilities are measured using enacted tax rates expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

A valuation allowance is required to the extent it is more-likely-than-not that a deferred tax asset will not be realized. ASC 740 also requires reporting of taxes based on tax positions that meet a more-likely-than-not standard and are measured at the amount that is more-likely-than-not to be realized. Differences between financial and tax reporting which do not meet this threshold are required to be recorded as unrecognized tax benefits.

 

Basic and Diluted Loss Per Share – Basic loss per common share is calculated by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted loss per common share is calculated by dividing net loss by the weighted-average number of common shares outstanding during the period giving effect to potentially dilutive common stock equivalents.  As of December 31, 2016 and 2015, the Company had no common stock equivalents outstanding.  

 

New Accounting Pronouncements – In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842) (“ASU 2016-02”).  ASU 2016-02 changes the accounting for leases.  In particular, lessees will recognize lease assets and lease liabilities for operating leases.  ASU 2016-02 is not effective until 2019. The Company is currently assessing the impact on its financial reporting of implementing this guidance.

In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740) (“ASU 2015-17”).  ASU 2015-17 requires that all deferred income tax assets and liabilities be classified as non-current.  ASU 2015-17 is not effective until the 2017 fiscal year.  The Company is currently assessing the impact on its financial reporting of implementing this guidance.


F-9


In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"). ASU 2014-09 provides for a single, principles-based model for revenue recognition that replaces existing revenue recognition guidance. ASU 2014-09 is effective for the Company on January 1, 2018. It permits the use of either a retrospective or cumulative effect transition method and early adoption is not permitted. The Company has not yet selected a transition method and is in the process of evaluating the effect ASU 2014-09 will have on its consolidated financial statements and related disclosures.  During 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers: Deferral of the Effective Date (“ASU 2015-14”), which deferred the date of ASU 2014-09 by one year.

 

NOTE 4 – LEASES

 

On December 1, 2015, the Company signed a new lease on their office in Fredericia Denmark, which replaced the prior lease and allowed the Company to move to larger office space (159 square meters) within the same building. The new rent is DKK 13,184 per month ($1,900) and the security deposit increased to DKK 80,685 ($12,250).  The lease can be terminated with a six month notice, but not before December 1, 2017.  Rent will increase annually on January 1 based on the consumer price index, with a minimum increase of 2% per year.  Effective March 1, 2016, the Company signed Appendix 1 to the Fredericia lease agreement moving the office to a 190 square meter office located on the first floor of the building.  The rent and security deposit were not changed by the Appendix.  Once the Company utilizes the additional 31 square meters, the rent will increase proportionately.  

 

The Company also leased some office space for approximately $875 per month on a month-to-month contract. The Company paid a deposit of approximately $900 in December 2015.  Monthly rent started in January 2016 and ended in March 2016.  

 

On September 30, 2015, the Company assumed the short-term auto lease of a member of management that ended January 8, 2016.  Monthly payments were approximately $435 and the deposit was $2,400.  The Company renewed the auto lease for an additional twelve months, through January 7, 2017 at $350 per month.  Actual payments are in the functional currency.

 

As of December 31, 2016, total lease deposits were approximately $12,250.  Rent expense was $39,727 and $4,826 for year ended December 31, 2016 and for the period ended December 31, 2015, respectively.  Minimum annual lease payments are approximately $23,000, which are all due within one year.

 

NOTE 5 – ACCRUED LIABILITIES

 

As of December 31, 2016 and 2015, the Company had accrued liabilities of $2,304,938 and $33,706, respectively. The accrued liabilities as of December 31, 2016 consist mainly of $2,115,890 due over the next 24 months on the Neymar contract (see Note 9).

 

NOTE 6 – LINE-OF-CREDIT

 

On September 15, 2015, the Company entered into a 600,000 DKK (approximately $90,000) line-of-credit agreement with a bank.  The agreement bears interest at a variable rate of 6.021%, which is renegotiated annually on June 1.  The line of credit is unsecured.  Default interest rate of 19% goes into effect from the first late payment and is calculated on the balance of the outstanding debt.  During 2016 and 2015 the Company utilized the full credit line but then paid it down to zero by year end both years.  The Company paid $138 and $650 in interest during the year ended December 31, 2016 and during the period ended December 31, 2015, respectively.  

 

NOTE 7 – SHAREHOLDERS’ EQUITY

 

We have authorized capital stock consisting of 100,000,000 shares of $0.0001 par value common stock and 400,000 shares of $0.0001 par value preferred stock. As of December 31, 2016, we had 854,338 shares of common stock issued and outstanding, and no shares of preferred stock issued and outstanding.


F-10


On November 30, 2015, the Company consummated the transaction evidenced by the agreement and plan of share exchange dated October 8, 2015 pursuant to which NABUFIT Global, Inc. issued 516,667 common shares of the Company in exchange for the 1,667 issued and outstanding capital stock of NABUFIT Global, ApS.  The net result of this reverse merger transaction was an increase in common shares of 646,242 for $248,580.  The 646,242 consists of 516,667 new shares issued, plus 131,242 shares that were issued to prior shareholders of NABUFIT Global, Inc. that came over as part of the reverse merger, less the 1,667 shares that the Company gave up in exchange.  The reverse merger effectively changed the Company’s capital structure from 50,000 common shares, $0.1507 par value, to 647,908 common shares, $0.0001 par value.

 

Stock Issued for Cash

 

On July 15, 2016, the Company announced the closing of the sale of 50,135 shares of its common stock for $1,383,726 or $27.60 per share. The sale of the Shares was registered pursuant to the Registration Statement on Form S-1 (File No. 333-210325) declared effective on June 13, 2016 and was made pursuant to subscription agreements dated on or about June 29, 2016.

 

During September 2016, the Company issued 11,934 shares of common stock to investors and service providers at $27.60 per share for a total of $329,373.  Rounded for partial shares as a result of the 1 for 30 stock split.

 

On December 21, 2016, the Company issued 95,091 shares of common stock to various parties at $15.00 per share for a total of $1,426,346.  Rounded for partial shares as a result of the 1 for 30 stock split.  The sale of the Shares was registered pursuant to the Registration Statement on Form S-1 (File No. 333-210325) declared effective on June 13, 2016.  

 

Stock was issued for cash of $3,139,445 and $1,426,670 for the year ended December 31, 2016 and for the period from inception (June 26, 2015) through December 31, 2015, respectively.

 

Stock Issued for Services

 

Between August 18, 2016 and September 26, 2016, the Company issued 13,355 shares of common stock to investors and service providers at $27.60 per share for a total of $368,600.  Rounded for partial shares as a result of the 1 for 30 stock split.  The services have been classified as investor relations expense.  

 

Effective September 30 2016, the Company issued 13,961 shares of common stock to NR Sports in connection to the Neymar contract.  The shares were valued at $27.60 per share, which was the market price of the stock on the effective issuance date.  Rounded for partial shares as a result of the 1 for 30 stock split. The expense of $385,361 was recorded as marketing expense.

 

On December 14, 2016, the Company issued 2,408 shares of common stock to third parties.  The shares were valued at $21.88 per share, which was the market price of the stock on the issuance date.  Rounded for partial shares as a result of the 1 for 30 stock split.  The expense of $52,696 was recorded as consulting expense.

 

During December 2016, the Company issued 5,000 shares of common stock to a service provider at $16.50 per share for a total of $82,500, which was expensed as investor relations.  

 

Total stock issued for services was $889,157 and $0 for the years ended December 31, 2016 and for the period from inception (June 26, 2015) through December 31, 2015, respectively.

 

Stock Issued for Share-Based Compensation


F-11


On September 30, 2015, the Company issued 1,000 shares of its common stock to two outside directors: Soren Jonassen and Ole Sigetty for their services through June 30, 2016. The shares issued were valued at $120.00 per share for a total of $240,000, which was the market price of the stock on the issuance date. Of the total amount $80,000 was expensed prior to the reverse merger and $20,000 was recorded as share-based compensation for the period from November 30, 2015 through December 31, 2015; the balance of $120,000 was recorded as a share-based compensation ratably over the first six months of 2016.

 

On July 1, 2016, the Company entered into a management agreement with Brian Mertz.  Pursuant to the agreement, the Company agreed to issue 8,334 shares of common stock as partial compensation for the six-month period ending December 31, 2016.  The Company issued 8,334 shares and recognized share-based compensation of $206,252 for the year ended December 31, 2016.  

 

On August 24, 2016, the Board of Directors approved share-based compensation for the twelve month period ending June 30, 2017 for the directors, chairman and secretary and also approved payments for services to Soren Jonassen and Ole Sigetty.  For the twelve month period, the directors receive 725 shares ($20,000), the chairman receives 1,087 shares ($30,000), and the secretary receives 272 shares ($7,500).  In addition, the Board approved payments for services to Soren Jonassen and Ole Sigetty for the twelve month period ending June 30, 2017 of 1,034 shares ($28,520) and 2,138 shares ($59,000), respectively.  For year ended December 31, 2016, the total share-based compensation recognized pursuant to these agreements was $91,925.

 

On December 14, 2016, the Company issued 2,000 shares at $21.90 per share to 10 employees.  The expense of $43,800 was recognized in December 2016.  The Company also issued 500 shares to one employee based on a six-month employment agreement that began September 1, 2016 of which $11,444 was expensed during the year ended December 31, 2016, after foreign exchange translation adjustments.

 

Total share-based compensation of $473,420 and $20,000 was recorded for the year ended December 31, 2016 and for the period from inception (June 26, 2015) to December 31, 2015, respectively. As of December 31, 2016, the Company had $84,990 of unrecognized share-based compensation that was expensed over the first six months of 2017.

 

NOTE 8 – RELATED PARTY TRANSACTIONS

 

As discussed in Note 3, the Company assumed the auto lease of its former CEO on September 30, 2015.

 

As of December 31, 2016 and 2015, the Company had a related party payable of $30,183 and $0 to its CEO for expenses related to the operation of the business.  This payable is on demand with no interest.

 

NOTE 9 – MARKETING AGREEMENTS

 

The Company signs marketing agreements with professional trainers and athletes to help promote the Company’s products and services.  Effective September 1, 2016, the Company entered into a three-year marketing agreement with Neymar Jr, a professional soccer player out of Brazil.  Under the marketing agreement, the Company is required to pay 2,500,000 EUR (approximately $2,715,000 USD) in semiannual payments of 500,000 EUR (approximately $543,000) plus 2% royalty payments.  The Company also agreed to issue 13,961 shares to Neymar Jr. during the contract period.  The Company recorded the full amount of the agreement, including the issuance of shares, during the quarter ended September 30, 2016. As of December 31, 2016, the Company amortized approximately $411,000 and had a remaining prepaid of approximately $2,336,000.

 

During November 2016, the Company commenced a three-year agreement with Mo Farah, a world-class runner, that required payments of $50,000 in year one and $100,000 in years two and three, for a total of $250,000.  Approximately $8,300 was expensed during 2016.

 

Total marketing expense from athlete contracts was approximately $419,000 for the year ended December 31, 2016.

 

NOTE 10 – INCOME TAXES


F-12


Operating loss for the year ended December 31, 2016 was $4,038,582, of which $2,644,723 related to foreign operations.  Operating loss for the period from June 26, 2015 (date of inception) through December 31, 2015 was $371,746, of which $306,981 related to foreign operations.

 

As of December 31, 2016 the Company had $646,910 of net operating loss carry forwards related to its operations in Denmark, which do not expire and $1,704,789 of net operating loss carryforwards relating to its USA operations, which are comprised of $4,447,829 of U.S. federal and $5,834,170 state net operating losses, respectively, which begin to expire in 2032 if unused.  As of December 31, 2015 the Company had $66,016 of net operating loss carry forwards related to its operations in Denmark, which do not expire and $1,184,880 of net operating loss carryforwards relating to its USA operations, which are comprised of $3,053,970 of U.S. federal and $4,440,311 state net operating losses, respectively, which begin to expire in 2032 if unused.

 

A change in our ownership of more than 50% occurred during the period ended December 31, 2015 triggering certain utilization limitations under Section 382 of the Internal Revenue Code of 1986, as amended, and other limitations under state tax laws.  As a result, the provisions of Section 382 caused net operating losses under state tax laws of $1,274,626 to become permanently restricted.

 

The temporary differences and carry forwards which give rise to the deferred income tax assets for the year ended December 31, 2016 and for the period from June 26, 2015 (date of inception) through December 31, 2015 are as follows:

 

 

 

2016

 

2015

Net operating loss carry forwards

 

$1,704,789  

 

$1,250,896  

Valuation allowance

 

(1,704,789) 

 

(1,250,896) 

Net long-term deferred tax asset

 

$ 

 

$ 

 

A reconciliation of income taxes at the federal statutory rate to actual income tax expense for the year ended December 31, 2016 and for the period from June 26, 2015 (date of inception) through December 31, 2015 is as follows:

 

 

 

2016

 

2015

Income tax benefit at the statutory rate

 

$(1,373,126) 

 

$(89,699) 

State income taxes, net of federal benefit

 

(45,998) 

 

(2,237) 

Foreign rate differential

 

316,851  

 

 

Change in valuation allowance

 

1,100,803  

 

87,572  

Change in net operating loss carry forwards

 

 

 

66  

Other

 

1,470  

 

4,298  

Income tax expense

 

$ 

 

$ 

 

 

NOTE 11 – SUBSEQUENT EVENT

 

Effective June 27, 2017, the Company filed an Amended and Restated Certificate of Incorporation (“Restated Certificate”) with the Delaware Secretary of State whereby the Company effected a reverse stock split to reduce the number of shares of outstanding common stock at a rate of 1 share for every 30 shares of common stock then outstanding (“Reverse Split”).  The approval of the Restated Certificate was approved by written consent of holders of a majority of the Company’s common stock.  Each stockholder owning fewer than 30 shares of common stock immediately before the effective time of the Reverse Stock Split received from the Company $0.10 in cash, without interest, for each of such shares of common stock; and (b) each stockholder owning of record 30 or more shares of common stock immediately before the effective time of the Reverse Split held, after the Reverse Split, the number


F-13


of shares of common stock equal to 1/30th of the number held prior to the Reverse Split.  On June 28, 2017 the Company filed with the Securities and Exchange Commission, and the Company’s stockholders were furnished with a Definitive Information Statement filed on Schedule 14(c) to advise the stockholders of the corporate actions.  All share and per-share amounts included in these financial statements have been restated to reflect the 1 for 30 reverse stock split.


F-14


NABUFIT GLOBAL, INC.

CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2017

 

 

 

Page

Condensed Consolidated Balance Sheets as of

  March 31, 2017 (Unaudited) and December 31, 2016

2

 

 

Condensed Consolidated Statement of Operations (Unaudited) for the

 

three months ended March 31, 2017 and 2016

3

 

 

Condensed Consolidated Statement of Cash Flows (Unaudited) for the

 

three months ended March 31, 2017 and 2016

4

 

 

Notes to Condensed Financial Statements

5


F-15


Picture 25 


F-16


Picture 26 


F-17


Picture 28 


F-18


NABUFIT GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 1 — THE COMPANY AND BASIS OF PRESENTATION

 

Financial Statement Presentation The accompanying condensed consolidated financial statements for NABUFIT Global, Inc. (“NABUFIT Global”) and its wholly-owned subsidiaries NABUFIT Global ApS (“NABUFIT Denmark”), NABUFIT China Limited (“NABUFIT China”) and NABUFIT IP ApS (“NABUFIT IP”) (collectively “NABUFIT,” “we”, or “the Company”) are presented in conformity with accounting principles generally accepted in the United States of America.

 

Nature of Operations — The Company designs, manufactures and markets the NABUFIT virtual training and fitness products and services, a state-of-the-art online fitness portal (“NABUFIT” or, the “Product”) with the option of connecting existing and future monitoring devices (wearables, etc.) to the Portal. The Product incorporates interaction and input through Microsoft® Kinect® and other technologies and the option for personal data collection, coaching and teaching through mentor services.

 

Customers obtain access to the Portal through the purchase of monthly or annual memberships and the downloading of the software or mobile device application.  The Product provides custom designed training plans, diet plans and access to mentors and coaching.

 

Through Microsoft® Kinect®, the NABUFIT technology collects data and measures each exercise relatively to a set standard and past performances.  Based on the data collection and registration in the Kinect® module the user will receive immediate feedback, e.g. as a percentage, a graphic or an emoticon depending on how well the exercise has been performed. This provides a unique quality assurance ensuring maximum effect of the training. The quick feedback will also reduce the risk of injuries and streamline time spent on training.  Users can access training data, statistics and results online or through mobile device applications.

 

Membership of the portal will be divided into two levels – a basic membership and a VIP membership.  The difference between the levels of membership will be primarily based upon the access to features and to mentors.

 

The portal also offers a social forum for its users, where users can interact with like-minded members and train with them virtually. Some people will experience increased motivation by being part of a group. The member can allow others to see all or part of his profile. The personal profiles of the members can be matched, so the portal will suggest network and training mates, and thereby helping to ensure the optimum composition. It will be possible to do real-time training with training mates by sharing the screen in a videoconference on the portal.

 

NOTE 2 – GOING CONCERN

 

The accompanying condensed consolidated financial statements have been prepared with the recognition that there is considerable doubt about whether the Company can continue as a going concern.  As shown in the accompanying condensed consolidated financial statements, the Company incurred a net loss of $1,166,181 for the three months ended March 31, 2017 and has an accumulated deficit of $5,577,182 at March 31, 2017.  The Company also used cash in operating activities of $1,470,228 during the three months ended March 31, 2017.   These factors raise substantial doubt about the Company’s ability to continue as a going concern.

 

In order for us to continue as a going concern, we will need to obtain additional debt or equity financing. We are regularly and continually seeking additional funding from investors and from time to time we are in various stages of negotiations.  Nonetheless, to date we have not accomplished a financing of the size needed to put the Company on a stable operating basis. There can be no assurance that we will be able to secure additional debt or equity financing, that we will be able to attain positive cash flow operations, or that, if we are successful in any of those actions, those actions will produce adequate cash flow to enable us to meet our future obligations. All of our existing


F-19


financing arrangements are short-term. If we are unable to obtain additional debt or equity financing, we may be required to cease operations.

 

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Interim Financial Information – The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”).  Accordingly, they are condensed and do not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements.  In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal recurring nature.  The results of operations for the three months ended March 31, 2017, may not be indicative of the results that may be expected for the year ending December 31, 2017.

 

These financial statements should be read in conjunction with the financial statements and notes thereto which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. The accounting policies set forth in those annual financial statements are the same as the accounting policies utilized in the preparation of these financial statements, except as modified for appropriate interim financial statement presentation.

 

Principles of Consolidation – The accompanying consolidated financial statements are presented in conformity with accounting principles generally accepted in the United States of America and include operations and balances of NABUFIT Global, Inc. and its wholly-owned subsidiaries NABUFIT Denmark, NABUFIT China and NABUFIT IP.  Intercompany balances and transactions have been eliminated in consolidation.

 

Use of Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.  Actual results could differ from those estimates.  

 

Fair Value – The fair values of the Company’s financial assets and liabilities approximate their carrying amounts at the reporting date.

 

Foreign Currency Transactions and Translations – The functional currency of NABUFIT Denmark is the Danish Krone (DKK), the functional currency of NABUFIT China is the China Yuan Renminbi (CNY), and the functional currency of NABUFIT Global and the reporting currency is U.S. dollars (USD).  The Company translates the assets and liabilities of NABUFIT Denmark and NABUFIT China from the functional currency to U.S. dollars at the appropriate spot rates as of the balance sheet date. Equity balances are translated using historical exchange rates. Changes in the carrying value of these assets and liabilities attributable to fluctuations in spot rates are recognized in foreign currency translation adjustment, a component of accumulated other comprehensive income. Income statement accounts are translated using the average exchange rate during the period.

 

Monetary assets and liabilities denominated in a currency that is different from the functional currency must first be remeasured from the applicable currency to the functional currency. The effect of this remeasurement process is recognized translation adjustments in our statement of comprehensive loss.

 

The Company had no foreign currency transaction gains or losses during the three months ended March 31, 2017.

 

Cash and Cash Equivalents – The balance in cash and cash equivalents consists of cash reserves held in bank accounts. The Company maintains cash balances in bank accounts that, at times, exceed federally insured limits.  The Company has not experienced any losses in these accounts and believes it is not exposed to any significant risk with respect to cash.


F-20


Revenue Recognition – The Company recognizes revenue when persuasive evidence of an arrangement exists, performance of the service has occurred, the sales price charged is fixed or determinable, and collectability is reasonably assured.  Revenue is net of taxes and discounts and is recorded on an accrual basis.  

 

Software Development Costs – The Company expenses software development costs until the Company has a working business model for the software.

 

Income Taxes – The Company accounts for income taxes pursuant to Accounting Standards Codification (ASC) 740, Income Taxes, which requires the use of the asset and liability method of accounting for deferred income taxes.  We recognize deferred tax liabilities and assets based on the differences between the tax basis of assets and liabilities and their reported amounts in the financial statements that will result in taxable or deductible amounts in future years.

 

All allowances against deferred income tax assets are recorded in whole or in part, when it is more likely than not those deferred income tax assets will not be realized.  Deferred tax assets and liabilities are measured using enacted tax rates expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

A valuation allowance is required to the extent it is more-likely-than-not that a deferred tax asset will not be realized. ASC 740 also requires reporting of taxes based on tax positions that meet a more-likely-than-not standard and are measured at the amount that is more-likely-than-not to be realized. Differences between financial and tax reporting which do not meet this threshold are required to be recorded as unrecognized tax benefits.

 

Basic and Diluted Loss Per Share – Basic loss per common share is calculated by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted loss per common share is calculated by dividing net loss by the weighted-average number of common shares outstanding during the period giving effect to potentially dilutive common stock equivalents.  As of March 31, 2017, the Company had no common stock equivalents outstanding.  

 

NOTE 4 – ACCRUED LIABILITIES

 

As of March 31, 2017 and December 31, 2016, the Company had accrued liabilities of $1,727,753 and $2,304,938, respectively. The accrued liabilities as of March 31, 2017 and December 31, 2016 consist mainly of $1,613,348 and $2,115,890 due over the next 21 months on the Neymar contract.

 

NOTE 5 – CONVERTIBLE NOTES PAYABLE

 

On March 23, 2017, the Company issued four convertible notes payable for total cash proceeds of 1,000,000 DKK ($145,034 as of March 23, 2017).  The notes bore no interest and matured on May 1, 2017 and automatically converted into shares of the Company’s common stock at $3.00 per share on the maturity date.  The fair value of the stock on March 23, 2017 was $4.80 so the Company recognized a beneficial conversion feature and debt discount of $87,020.  The discount is amortized over the term of the notes.   

 

NOTE 6 – SHAREHOLDERS’ EQUITY

 

We have authorized capital stock consisting of 100,000,000 shares of $0.0001 par value common stock and 400,000 shares of $0.0001 par value preferred stock. As of March 31, 2017 and December 31, 2016, we had 856,195 and 854,338 shares of common stock issued and outstanding, and no shares of preferred stock issued and outstanding.

 

During March 2017, the Company recorded a credit to additional paid-in capital of $87,020 for the beneficial conversion feature described in Note 5.

 

Total share-based compensation of $40,670 was recognized during the three months ended March 31, 2017.  As of March 31, 2017, the Company had $40,664 of unrecognized share-based compensation that will be expensed over the second quarter of 2017.


F-21


Effective June 27, 2017, the Company filed an Amended and Restated Certificate of Incorporation (“Restated Certificate”) with the Delaware Secretary of State whereby the Company effected a reverse stock split to reduce the number of shares of outstanding common stock at a rate of 1 share for every 30 shares of common stock then outstanding (“Reverse Split”). The approval of the Restated Certificate was approved by written consent of holders of a majority of the Company’s common stock.  Each stockholder owning fewer than 30 shares of common stock immediately before the effective time of the Reverse Stock Split received from the Company $0.10 in cash, without interest, for each of such shares of common stock; and (b) each stockholder owning of record 30 or more shares of common stock immediately before the effective time of the Reverse Split held, after the Reverse Split, the number of shares of common stock equal to 1/30th of the number held prior to the Reverse Split.  On June 28, 2017 the Company filed with the Securities and Exchange Commission, and the Company’s stockholders were furnished with a Definitive Information Statement filed on Schedule 14(c) to advise the stockholders of the corporate actions.  All share and per-share amounts included in these financial statements have been restated to reflect the 1 for 30 reverse stock split.

 

NOTE 7 – RELATED PARTY TRANSACTIONS

 

As of March 31, 2017 and December 31, 2016, the Company had related party payables of $8,783 and $30,183 to its CEO and Board Chairman for expenses related to the operation of the business.  These payables are on demand with no interest.

 

NOTE 8 – MARKETING AGREEMENTS

 

The Company signs marketing agreements with professional trainers and athletes to help promote the Company’s products and services.  The Company did not sign additional marketing agreements during 2017.

 

NOTE 9 – SUBSEQUENT EVENT

 

Effective June 27, 2017, the Company filed an Amended and Restated Certificate of Incorporation (“Restated Certificate”) with the Delaware Secretary of State whereby the Company effected a reverse stock split to reduce the number of shares of outstanding common stock at a rate of 1 share for every 30 shares of common stock then outstanding (“Reverse Split”).  The approval of the Restated Certificate was approved by written consent of holders of a majority of the Company’s common stock.  Each stockholder owning fewer than 30 shares of common stock immediately before the effective time of the Reverse Stock Split received from the Company $0.10 in cash, without interest, for each of such shares of common stock; and (b) each stockholder owning of record 30 or more shares of common stock immediately before the effective time of the Reverse Split held, after the Reverse Split, the number of shares of common stock equal to 1/30th of the number held prior to the Reverse Split.  On June 28, 2017 the Company filed with the Securities and Exchange Commission, and the Company’s stockholders were furnished with a Definitive Information Statement filed on Schedule 14(c) to advise the stockholders of the corporate actions.  All share and per-share amounts included in these financial statements have been restated to reflect the 1 for 30 reverse stock split.


F-22


Up to 270,877 Shares

 

NABUFIT Global, Inc.

 

Common Stock

 

PROSPECTUS DATED   July __, 2017

 


F-23


 

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

 

 

PROSPECTUS

 

Dated July __, 2017

 

NABUFIT GLOBAL, INC.

 

Up to 270,877 Shares of Common Stock

 

This prospectus relates to the offering and resale by the selling stockholders (“Selling Stockholders”) identified herein of up to 270,877 shares of common stock, par value $0.0001 per share, of NABUFIT Global, Inc. (the “Company”).

The Selling Stockholders may sell the shares of common stock (“Resale Shares”) on any national securities exchange or quotation service on which the securities may be listed or quoted at the time of sale, in the over-the-counter market, in one or more transactions otherwise than on these exchanges or systems, such as privately negotiated transactions, or using a combination of these methods, and at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale, or at negotiated prices. See the disclosure under the heading “Plan of Distribution” elsewhere in this prospectus for more information about how the Selling Stockholders may sell or otherwise dispose of their shares of common stock hereunder.

The Selling Stockholders may sell any, all or none of the securities offered by this prospectus and we do not know when or in what amount, the Selling Stockholders may sell their shares of common stock hereunder following the effective date of this registration statement.

We will not receive any proceeds from the sale of our common stock by the Selling Stockholders in the offering described in this prospectus.

Our common stock is quoted for trading on the OTC Bulletin Board (OTCQB) under the symbol “NBFTD”.

 

Because all of the shares being offered under this prospectus are being offered by the Selling Shareholders, we cannot currently determine the price or prices at which our shares of common stock may be sold under this prospectus. We expect that the Selling shareholders initially sell their shares at prevailing market. See “Plan of Distribution.”

 

In connection with the Resale, we have an offering (the “Public Offering”) of our common stock that will have a dilutive effect on any purchaser of common stock under this prospectus and the registration statement of which it is a part. We are conducting an offering pursuant to another prospectus (the “Public Offering Prospectus”), which registers the sale by the Company of up to 1,150,000 shares (the “Public Offering Shares”) of our common stock on a best efforts basis. We have not engaged a placement agent in connection with the sale of the Public Offering Shares; however, if we sell all of the Public Offering Shares we are offering, we may pay a placement agent up to 10.0%, of the gross proceeds received in the Public Offering; provided, however, that a placement agent will only receive commissions based on the gross proceeds raised from U.S. investors. The sales of the Public Offering Shares are not covered by this prospectus. As such, there are a total of 607,426 shares of our common stock registered for sale or resale under this and the other prospectus referred to above, although there is no guarantee that all of the shares will be sold or resold.


1


 

We are an “emerging growth company” under the federal securities laws and will have the option to use reduced public company reporting requirements. Investing in our common stock involves a high degree of risk. You should review carefully the risks and uncertainties described under the heading “Risk Factors” beginning on page 18 of the Public Offering Prospectus, and under similar headings in any amendments or supplements to this prospectus.

 


2


 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

 

The date of this prospectus is July __, 2017.

 


3


 

 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

 

 

 

USE OF PROCEEDS

 

5

SHARES REGISTERED FOR RESALE

 

5

SELLING STOCKHOLDERS

 

6

PLAN OF DISTRIBUTION

 

8

LEGAL MATTERS

 

11

EXPERTS

 

11

WHERE YOU CAN FIND MORE INFORMATION

 

11

 

This prospectus is part of a shelf registration statement that we have filed with the SEC using a “shelf” registration process. Under this shelf registration process, the selling stockholders may, from time to time, offer and sell the shares described in this prospectus in one or more offerings.

This prospectus provides you with a general description of the shares the selling stockholders may offer. Each time the selling stockholders sell our shares using this prospectus, to the extent necessary, we will provide a prospectus supplement or, to the extent necessary, a post-effective amendment, that will contain specific information about the terms of that offering, including the number of shares being offered, the manner of distribution, the identity of any underwriters or other counterparties and other specific terms related to the offering. The prospectus supplement or post-effective amendment may also add, update or change information contained in this prospectus. To the extent that any statement made in an accompanying prospectus supplement or post-effective amendment is inconsistent with statements made in this prospectus, the statements made in this prospectus will be deemed modified or superseded by those made in the accompanying prospectus supplement. You should read both this prospectus, any post-effective amendment and any prospectus supplement together.

Neither we nor the selling stockholders have authorized anyone to provide any information other than that contained in this prospectus or in any free writing prospectus prepared by or on behalf of us or to which we may have referred you. Neither we nor the selling stockholders take any responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. Neither we nor the selling stockholders have authorized any other person to provide you with different or additional information, and neither of us are making an offer to sell the shares in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus, regardless of the time of delivery of the prospectus or any sale of the ordinary shares. Our business, financial condition, results of operations and prospects may have changed since the date on the front cover of this prospectus.

For investors outside of the United States, neither we nor the selling stockholders have done anything that would permit the offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about and to observe any restrictions relating to the offering and the distribution of this prospectus outside of the United States.

 

 


4


USE OF PROCEEDS

 

There will not be any proceeds from the sale of the Resale Shares by the Selling Stockholders. All proceeds from the sale of the Resale Shares will be paid directly to the selling Selling Stockholders.

 

 

SHARES REGISTERED FOR RESALE

 

As part of this prospectus, we are registering 270,877 shares of common stock for resale. The shares described in the following table consist of shares of common stock that were issued in connection with one or more private placements and shares held by past and current officers and directors and the remaining shareholders.

 

Concurrently with the filing of this Resale Prospectus, we are filing the Public Offering Prospectus for a public offering of our common stock.

 

The following table provides certain information with respect to the Selling Stockholders’ ownership of our securities as of June 27, 2019, the total number of securities each Selling Stockholder may distribute under this prospectus from time to time, and the number of securities such Selling Stockholder will own thereafter assuming no other acquisitions or dispositions of our securities. The Selling Stockholders may distribute all, some or none of their respective securities, thus we have no way of determining the number the Selling Stockholders it will hold after the Resale. Therefore, we have prepared the table below on the assumption that the Selling Stockholders will sell all shares covered by this prospectus.

 

The Selling Stockholders may dividend or distribute their respective shares from time to time to their shareholders or affiliates. The Selling Stockholders may also transfer shares they own by gift, and upon any such transfer the donee would have the same right of resale as the Selling Stockholders.

 

See our discussion titled “Plan of Distribution” for further information regarding the Selling Stockholders’ method of distribution of these shares.


5


SELLING STOCKHOLDERS

 

The relationship between the Company and the selling security holders within the last three years are disclosed below. There is no known other relationships that exist between the registrant and the selling security holders other than the relationships disclosed. The selling security holders listed below possess issued but unregistered shares. The significance of registering their shares is to allow the selling security holders to sell their shares to the public.

 

The following table shows the following information about the Selling Stockholders:

 

1.the number of shares of our common stock that the Selling Stockholders beneficially owned as of the business day immediately prior to the filing of our Registration Statement; 

2.the number of shares covered by this Resell Prospectus; and 

3.the number of shares to be retained after this offering, if any. 

 

All figures in this table assume the issuance and subsequent disposition of all shares. As represented to us by the Selling Shareholders, none of the Selling Shareholders are broker-dealers or affiliates of broker-dealers. The numbers in the “% Beneficial Ownership After Offering” assumes that no shares are sold in the primary offering.

 

Selling Stockholder Table

 

Name(1)

 

Securities Beneficially Owned Prior to Offering

 

Securities Being Offered

Securities Beneficially Owned After Offering (2)

 

 

% Beneficial Ownership After Offering

Brian Mertz (3)(4)

 

8,333

 

 

8,333

0

 

0%

Mikael Nygaard (3)

 

200

 

 

200

0

 

0%

Glenn Vestergaard(3)

 

200

 

 

200

0

 

0%

Martin H. Clausen(3)

 

200

 

 

200

0

 

0%

Ole Dormann(3)

 

200

 

 

200

0

 

0%

Kenneth S. Jakobsen (3)

 

200

 

 

200

0

 

0%

Line D. Hansen(3)

 

200

 

 

200

0

 

0%

Peter Holvad(3)

 

200

 

 

200

0

 

0%

Rafal Jakubowski (3)

 

200

 

 

200

0

 

0%

Bernadino B. Coque (3)

 

200

 

 

200

0

 

0%

Stefan Dall (3)

 

200

 

 

200

0

 

0%