0001722969-20-000004.txt : 20200504
0001722969-20-000004.hdr.sgml : 20200504
20200504121854
ACCESSION NUMBER: 0001722969-20-000004
CONFORMED SUBMISSION TYPE: 1-A
PUBLIC DOCUMENT COUNT: 71
FILED AS OF DATE: 20200504
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: Atlis Motor Vehicles Inc
CENTRAL INDEX KEY: 0001722969
IRS NUMBER: 814380534
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 1-A
SEC ACT: 1933 Act
SEC FILE NUMBER: 024-11207
FILM NUMBER: 20843640
BUSINESS ADDRESS:
STREET 1: 7259 EAST POSADA AVE
CITY: MESA
STATE: AZ
ZIP: 85212
BUSINESS PHONE: 602-309-5425
MAIL ADDRESS:
STREET 1: 7259 EAST POSADA AVE
CITY: MESA
STATE: AZ
ZIP: 85212
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Atlis Motor Vehicles, Inc
Class A Common Stock
342355
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178212.63
Section 4(a)(2)
PART II AND III
2
atlispart2offeringcircular.txt
OFFERING CIRCULAR
PRELIMINARY OFFERING CIRCULAR APRIL 30, 2020, SUBJECT
TO COMPLETION
Atlis Motor Vehicles, Inc.
A Delaware Corporation
Maximum Offering Amount: $25,000,000
This is our initial public offering (the ?Offering?) of
securities of Atlis Motor Vehicles, Inc, a Delaware
corporation (?Atlis? or the ?Company?). We are
offering for sale 3,033,981 shares of our Class A Class
A common stock, $.0001 par value per share, at $8.24
per share (the ?Shares?) on a ?best efforts? basis.
This offering will terminate on the earlier of (i)
October 31, 2020, subject to extension for up to one
hundred-eighty (180) days in the sole discretion of the
Company; or (ii) the date on which the Maximum Offering
is sold (in either case, the ?Termination Date?). There
is no escrow established for this Offering. We will
hold closings upon the receipt of investors?
subscriptions and acceptance of such subscriptions by
the Company. If, on the initial closing date, we have
sold less than the Maximum Offering, then we may hold
one or more additional closings for additional sales,
until the earlier of: (i) the sale of the Maximum
Offering or (ii) the Termination Date. There is no
aggregate minimum requirement for the Offering to
become effective, therefore, we reserve the right,
subject to applicable securities laws, to begin
applying ?dollar one? of the proceeds from the Offering
towards our business strategy, development expenses,
offering expenses and other uses as more specifically
set forth in this offering circular (?Offering
Circular?). We expect to commence the sale of the
Shares as of the date on which the offering statement,
of which this Offering Circular is a part
(the ?Offering Statement?),is qualified by the United
States Securities and Exchange Commission (the ?SEC? or
the ?Commission?). The offering is made in reliance
upon an exemption from registration under the federal
securities laws provided by Rule 251 of Regulation A
(as promulgated by the SEC in 17 CFR 230.251 et seq.
under the Securities Act of 1933, as amended (the
?Securities Act? or the ?1933 Act?).
Investing in our Class A common stock involves a high
degree of risk. See ?Risk Factors? for a discussion of
certain risks that you should consider in connection
with an investment in Atlis.
THE U.S. SECURITIES AND EXCHANGE COMMISSION DOES NOT
PASS UPON THE MERITS OF OR GIVE ITS APPROVAL TO ANY
SECURITIES OFFERED OR THE TERMS OF THE OFFERING, NOR
DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF ANY
OFFERING CIRCULAR OR OTHER SOLICITATION MATERIALS.
THESE SECURITIES ARE OFFERED PURSUANT TO AN EXEMPTION
FROM REGISTRATION WITH THE COMMISSION; HOWEVER, THE
COMMISSION HAS NOT MADE AN INDEPENDENT DETERMINATION
THAT THE SECURITIES OFFERED ARE EXEMPT FROM
REGISTRATION.
Price to
Public
Sales
Commissions (1)
Proceeds to
the Company (2)
Per share of
Class A common
stock
$8.24
$1.65
$6.59
Maximum
Offering
$25,000,000
$5,000,000.00
$20,000,000
GENERALLY, NO SALE MAY BE MADE TO YOU IN THIS OFFERING
IF THE AGGREGATE PURCHASE PRICE YOU PAY IS MORE THAN
TEN PERCENT (10%) OF THE GREATER OF YOUR ANNUAL INCOME
OR YOUR NET WORTH. DIFFERENT RULES APPLY TO ACCREDITED
INVESTORS AND NON-NATURAL PERSONS. BEFORE MAKING ANY
REPRESENTATION THAT YOUR INVESTMENT DOES NOT EXCEED
APPLICABLE THRESHOLDS, WE ENCOURAGE YOU TO REVIEW RULE
251(D)(2)(I)(C) OF REGULATION A. FOR GENERAL
INFORMATION ON INVESTING, WE ENCOURAGE YOU TO REFER TO
WWW.INVESTOR.GOV.
(1) Includes up to a maximum of five percent (5%) of the
gross proceeds of this Offering for sales commissions,
provided that at this time the Company has not
determined if it will require these services or such
selected service providers. The Company reserves the
right to engage one or more FINRA-member broker-dealers
or placement agents in its discretion.
(2) Does not include expenses of the Offering, including
but not limited to, fees and expenses for marketing and
advertising of the Offering, media expenses, fees for
administrative, accounting, audit and legal services,
FINRA filing fees, fees for EDGAR document conversion
and filing, and website posting fees, estimated to be
as much as $1,000,000.
THE SECURITIES UNDERLYING THIS OFFERING STATEMENT MAY
NOT BE SOLD UNTIL QUALIFIED BY THE SECURITIES AND
EXCHANGE COMMISSION. THIS OFFERING CIRCULAR IS NOT AN
OFFER TO SELL, NOR SOLICITING AN OFFER TO BUY, ANY
SHARES OF OUR CLASS A COMMON STOCK IN ANY STATE OR
OTHER JURISDICTION IN WHICH SUCH SALE IS PROHIBITED.
INVESTMENT IN SMALL BUSINESS INVOLVES A HIGH DEGREE OF
RISK, AND INVESTORS SHOULD NOT INVEST ANY FUNDS IN THIS
OFFERING UNLESS THEY CAN AFFORD TO LOSE THEIR ENTIRE
INVESTMENT. SEE ?RISK FACTORS? FOR A DISCUSSION OF
CERTAIN RISKS YOU SHOULD CONSIDER BEFORE PURCHASING ANY
SHARES IN THIS OFFERING.
AN OFFERING STATEMENT PURSUANT TO REGULATION A RELATING
TO THESE SECURITIES HAS BEEN FILED WITH THE U.S.
SECURITIES AND EXCHANGE COMMISSION, WHICH WE REFER TO
AS THE COMMISSION. INFORMATION CONTAINED IN THIS
PRELIMINARY OFFERING CIRCULAR IS SUBJECT TO COMPLETION
OR AMENDMENT. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED BEFORE THE OFFERING STATEMENT
FILED WITH THE COMMISSION IS QUALIFIED. THIS
PRELIMINARY OFFERING CIRCULAR SHALL NOT CONSTITUTE AN
OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
NOR MAY THERE BE ANY SALES OF THESE SECURITIES IN ANY
STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD
BE UNLAWFUL BEFORE REGISTRATION OR QUALIFICATION UNDER
THE LAWS OF ANY SUCH STATE. WE MAY ELECT TO SATISFY OUR
OBLIGATION TO DELIVER A FINAL OFFERING CIRCULAR BY
SENDING YOU A NOTICE WITHIN TWO (2) BUSINESS DAYS AFTER
THE COMPLETION OF OUR SALE TO YOU THAT CONTAINS THE URL
WHERE THE FINAL OFFERING CIRCULAR OR THE OFFERING
STATEMENT IN WHICH SUCH FINAL OFFERING CIRCULAR WAS
FILED MAY BE OBTAINED.
THE DATE OF THIS OFFERING CIRCULAR IS APRIL 30, 2020.
TABLE OF CONTENTS
TABLE OF CONTENTS???????????????????????????????..3
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS?????...4
OFFERING SUMMARY???????????????????????????????.5
REGULATION A + OFFERING????????????????????????????.8
RISK FACTORS??????????????????????????????????..9
USE OF PROCEEDS????????????????????????????????.32
DILUTION????????????????????????????????????.33
MANAGEMENT?S DISCUSSION AND
ANALYSIS???????????????????.36
OUR BUSINESS??????????????????????????????????45
PROPERTY???????????????????????????????????....48
MANAGEMENT?????????????????????????????????...49
EXECUTIVE COMPENSATION???????????????????????????.49
SECURITY OWNERSHIP OF MANAGEMENT?????????????????????49
DESCRIPTION OF SECURITIES???????????????????????????50
PENNY STOCK REGULATION???????????????????????????.50
DIVIDEND POLICY????????????????????????????????.51
OFFERING INCENTIVES?????????????????????????????....51
PLAN OF DISTRIBUTION?????????????????????????????...51
ADDITIONAL INFORMATION ABOUT THIS
OFFERING????????????????.52
OFFERING PERIOD AND EXPIRATION
DATE????????????????????...53
EXPERTS????????????????????????????????????...54
CERTIFICATION?????????????????????????????????..55
INDEPENDENT AUDITOR?S
REPORT????????????????????????..56
FINANCIAL STATEMENTS?????????????????????????????59
AUDIT NOTES??????????????????????????????????..67
We are offering to sell, and seeking offers to buy, our
securities only in jurisdictions where such offers and
sales are permitted. You should rely only on the
information contained in this Offering Circular. We
have not authorized anyone to provide you with any
information other than the information contained in
this Offering Circular. The information contained in
this Offering Circular is accurate only as of its date,
regardless of the time of its delivery or of any sale
or delivery of our securities. Neither the delivery of
this Offering Circular nor any sale or delivery of our
securities shall, under any circumstances, imply that
there has not been a change in our affairs since the
date of this Offering Circular. This Offering Circular
will be updated and made available for delivery to the
extent required by the federal securities laws.
Unless otherwise indicated, data contained in this
Offering Circular concerning the business of the
Company are based on information from various public
sources. Although we believe that these data are
generally reliable, such information is inherently
imprecise, and our estimates and expectations based on
these data involve a number of assumptions and
limitations. As a result, you are cautioned not to give
undue weight to such data, estimates or expectations.
In this Offering Circular, unless the context indicates
otherwise, references to ?Atlis Motor Vehicles,?
?Atlis,? ?we,? the ?Company,? ?our,? and ?us? refer to
the activities of and the assets and liabilities of the
business and operations of Atlis Motor Vehicles, Inc.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS
Some of the statements under ?Summary,? ?Risk Factors,?
?Management?s Discussion and Analysis of Financial
Condition and Results of Operations,? "Our Business"
and elsewhere in this Offering Circular constitute
forward-looking statements. Forward-looking statements
relate to expectations, beliefs, projections, future
plans and strategies, anticipated events or trends and
similar matters that are not historical facts. In some
cases, you can identify forward-looking statements by
terms such as ?anticipate?, ?believe,? ?could,?
?estimate,? ?expect,? ?intend,? ?may,? ?plan,?
?potential,? ?should,? ?will? and ?would? or the
negatives of these terms or other comparable
terminology.
You should not place undue reliance on forward looking
statements. The cautionary statements set forth in this
Offering Circular, including in ?Risk Factors? and
elsewhere, identify important factors which you should
consider in evaluating our forward-looking statements.
These factors include, among other things:
-
Our ability to effectively execute our business
plan, including without limitation our ability to
fully develop our XP Platform, XT Pickup Truck,
subscription model, mass production, and respond to
the highly competitive and rapidly evolving
marketplace and regulatory environment in which we
intend to operate;
-
Our ability to manage our research, development,
expansion, growth and operating expenses;
-
Our ability to evaluate and measure our business,
prospects and performance metrics, and our ability
to differentiate our business model and products;
-
Our ability to compete, directly and indirectly,
and succeed in the highly competitive and evolving
electric vehicle industry.
-
Our ability to respond and adapt to changes in
technology and customer behavior; and
-
Our ability to protect our intellectual property
and to develop, maintain and enhance a strong
brand.
Although the forward-looking statements in this
Offering Circular are based on our beliefs, assumptions
and expectations, taking into account all information
currently available to us, we cannot guarantee future
transactions, results, performance, achievements or
outcomes. No assurance can be made to any investor by
anyone that the expectations reflected in our forward-
looking statements will be attained, or that deviations
from them will not be material and adverse. We
undertake no obligation, other than as may be required
by law, to re-issue this Offering Circular or otherwise
make public statements updating our forward-looking
statements.
[This space intentionally left blank]
OFFERING SUMMARY
This summary highlights information contained elsewhere
in this Offering Circular, but might not contain all of
the information that is important to you. This summary
is not complete and does not contain all the
information that you should consider before deciding
whether to invest in our Class A common stock. As
such, before investing in our Class A common stock, you
should read the entire Offering Circular carefully,
including the ?Risk Factors? section and our historical
financial statements and the notes thereto attached as
part of this Offering Circular. For purposes of this
Offering Circular, unless otherwise indicated or the
context otherwise requires, all references herein to
?Atlis Motor Vehicles, Inc.,? ?Atlis,? the ?Company,?
?we,? ?us,? and ?our? refer to Atlis Motor Vehicles,
Inc., a Delaware corporation. Some of the statements in
this Offering Circular are forward-looking statements.
See the section entitled ?Cautionary Statement
Regarding Forward-Looking Statements.?
The Company
Atlis Motor Vehicles, Inc. was formed as a Delaware
corporation on November 9, 2016. Atlis Motor Vehicles
Inc is a development and manufacturing company of plug
in electric trucks. The Company can be best described
as a technology development company providing a Vehicle
as a Service platform for electric heavy duty and light
duty work vehicles. The company is developing
electrified vehicle, infrastructure, and software
platforms for work fleets. At the core of Atlis Motor
Vehicles? hardware platform is a revolutionary battery
technology capable of charging a full-size pickup truck
in 15 minutes, and a modular system architecture
capable of scaling to meet the specific vehicle or
equipment application needs. We want to build a truck
with unprecedented capabilities at a reasonable price.
We also want to change the customer experience from
sales, ordering, financing, and delivery to maintenance
and service.
Principal Product and its market
Atlis Motor Vehicles has several pillars of product
focus for our business. These pillars are:
- Battery technology. Our goal is to offer a superior
battery technology solution that offers
unparalleled performance in charging as well as
inclement weather and output performance, Atlis
Motor Vehicles is poised to become a major player
in the battery industry.
- XP Platform and connected vehicle technology. As we
look to the future of electrification, Atlis Motor
Vehicles XP Platform aims to provide a scalable
technology solution with a connected cloud, mobile,
service, and charging ecosystem that will provide
unprecedented workflows and customer experiences
moving forward. This platform of technology will be
leveraged to develop new vehicle solutions quickly
while minimizing costs and time The XP technology
platform will allow Atlis Motor Vehicles to work
quickly with strategic partners looking to develop
new vehicle solutions for niche and mass-market
opportunities while leveraging the vast network of
capabilities we look to provide.
- Advanced charging stations. The Atlis Motor
Vehicles Advanced Charging Station, or AAC,
technology represents the pinnacle of charging
infrastructure of the future. The goal is for this
technology to boast the highest power solution to
enter the market, a 1.5MW charging station, that's
as simple to operate as filling up your gas vehicle
today or plugging in a Tesla vehicle.
- The XT Pickup truck. The flagship vehicle product
offering. The XT Pickup truck aims to represent
every key piece of technology Atlis Motor Vehicles
is developing and how this technology can be
utilized to bring capable, non-compromising vehicle
solutions through electrification. The XT Pickup
truck is our market entry solution into the world
of work, and is just the beginning of a long line
of vehicle solutions built on our XP Platform.
How We Will Generate Revenue
Atlis Motor Vehicles is still in the research and
development stage and does not currently produce a
product for sale. Atlis will soon exit the early
stages of product and company development, whereupon it
will produce a working prototype. We expect to
finalize the production model and begin producing
truckes for delivery and generating sales in calendar
year 2021.
Atlis Motor Vehicles has received substantial interest
in its product ? resulting in over $1.5 billion in
sales worth of free product reservations for our XT
Pickup Truck. This projection was generated by
extrapolating the XT Pickup Truck?s predicted average
sales price of $59,968 by the number of electronic
reservations made on the Company's website. These
reservations are non-deposit and require no down
payment or reservation fee.. Atlis has foregone the
requirement for a refundable deposit in favor of
allowing reservation holders to become investors in
Atlis Motor Vehicles through our Regulation CF
offering.
Atlis Motor Vehicles is actively engaging with
potential customers for over $1 billion in reservations
for the XP Platform. Expressed interest for the XP
Platform is in relation to conversations currently
underway with potential customers who have expressed
interest in development of a specialized vehicle using
our XP Platform. This expressed interest should not be
taken as a guarantee of sale. Customer interest in the
XP Platform is currently confidential. Based upon the
interest shown in the XP Platform thus far, customers
have shown interest in 54,444 XP Platforms at
$27,000/platform for a total of $1.5B in reservation
interest.
Market
Industry
Pickup trucks have been the top three best-selling
vehicles in the US for the past five years. Altogether,
including the new and used truck market, vehicle up-
fitter market, and charging opportunity, the total
market opportunity for us is north of $241B, and we
have already received over $1.5B in reservations.
Currently there are no electric pickup trucks in the
market, and Atlis is focused on winning the electric
work truck market. Our proprietary battery technology
will allow us to deliver unprecedented range and charge
times, and our vertically integrated hardware,
software, and infrastructure business model will be the
first of its kind.
Target market demographics
We?re building technology that powers work. Our target
customers for the Atlis XT are work vehicle fleet
owners, and our target customers for the Atlis XP
Platform are work vehicle manufacturers. We?re adding
value for customers across multiple target industries,
including construction, agriculture, and logistics.
The Atlis XT pickup truck will be Atlis Motor Vehicles?
flagship product, capable of 500 miles of range, 35,000
lbs. fifth wheel towing capability, and 15 minute
charge time from 0-100%. The Atlis XT is the first
application of our core product offering, the Atlis XP
Platform, our electric vehicle technology platform
designed for applications with work vehicles: RVs, box
trucks, delivery vehicles, tractors, construction
equipment, and beyond. Our modular design allows the
Atlis XP Platform to easily accommodate the sizes,
shapes, and use cases of a variety of different work
vehicles.
Volume targets
We are taking a strategic approach to scale: first we
will bring the XP Platform to market to drive revenue
as we work toward the launch of the XT pickup truck. We
are in talks with multiple companies in construction,
agriculture, and logistics industries, and we are
working to create a proof of concept for one large
logistics company this summer. We will ship them
initial trial XP Platforms integrated with their
delivery vehicles. For calendar year 2021, our volume
targets are: 1000 XP Platforms and 100 XT Trucks. In
calendar year 2022 we?re targeting production of 4,000
XP Platforms and 1,000 XT Trucks.
Geographic sales territory
Ultimately, Atlis is building a technology platform
that will add value across the globe, and our long-term
vision includes expansion to the rest of the world. We
are manufacturing in the USA, and our initial sales
focus is in the USA. We?ve also had multiple
conversations with a Japanese logistics company, and
the opportunity is large enough to prioritize sales and
infrastructure in Japan.
Distribution Channels
Our hardware and services will be conducted online via
our website. Fleet and consumer customers will be able
to purchase the Atlis XP Platform, Atlis XT Pickup
Truck, and Atlis advanced charging solutions online.
Our advanced charging infrastructure will require users
to be able to purchase electricity at our charging
stations. This purchase will be conducted through our
cloud-based mobile application and website.
Growth Strategy
Our strategy for growth is to focus on execution. We
are completing the design work to deliver our
production prototype in the second half of 2020. From
there, we will stand up production and begin building
product. Once we have started production, we plan to
leverage influencer marketing and customer word of
mouth to generate additional interest in our products.
We will develop a dedicated sales team pursuing larger
fleet customers.
Risk Factors
Our business and our ability to execute our business
strategy are subject to a number of risks as more fully
described in the section titled ?Risk Factors.? These
risks include, among others:
-
Atlis is a fledgling company without having developed
any products in the past
-
Uncertainty exists as to whether Atlis will be able to
raise sufficient funds to continue developing the XP
platform and XT pickup truck
-
Future capital raises may dilute current stockholders?
ownership interests
-
Atlis will experience losses for the foreseeable
future
-
Development timelines are at risk of delays outside of
Atlis? control
-
Competition will be stiff
-
Scaling up manufacturing will be a challenge and
fraught with potential pitfalls
-
Product recall could cripple growth
-
Product liability could result in costly litigation
-
We may face regulatory challenges
-
We may not be able to successfully manage growth
-
We may not be successful in developing an effective
direct sales force
-
Raising capital may be costly
-
Atlis stock is not marketable and initial investors
should be aware that the investment is speculative
-
Lack of diversification could cause you to lose all or
some of your investment if initial products fail
-
Our executive officer and executive staff will retain
most of Atlis? voting rights
Corporate Information
Atlis Motor Vehicles, Inc. was incorporated under the
laws of the State of Delaware on November 9, 2016. Our
Chief Executive Officer, President and Secretary has
not been in bankruptcy, receivership or any similar
proceeding. Our principal executive offices are located
at 1828 North Higley Road, Mesa, AZ 85205. Our website
address is www.atlismotorvehicles.com. Information on
our web site is not part of this Offering Circular.
REGULATION A+
We are offering our Class A common stock pursuant to
recently adopted rules by the Securities and Exchange
Commission mandated under the Jumpstart Our Business
Startups Act of 2012, or the JOBS Act. These offering
rules are often referred to as ?Regulation A+.? We are
relying upon ?Tier 2? of Regulation A+, which allows us
to offer of up to $50 million in a 12-month period.
In accordance with the requirements of Tier 2 of
Regulation A+, we will be required to publicly file
annual, semiannual, and current event reports with the
Securities and Exchange Commission after the
qualification of the offering statement of which this
Offering Circular forms a part.
The Offering
Securities Offered:
3,033,981 shares of Class A
common stock at $8.24 per
share
Class A common stock
Outstanding:
Prior to the offering
17,151,882 shares
After the offering
20,185,863shares
(Assuming the sale of
all shares offered)
Use of Proceeds:
If we sell all of the
Shares being offered, our
net proceeds (after our
estimated commissions, if
any, but excluding our
estimated Offering
expenses) will be
approximately Twenty
Million Dollars
($20,000,000). We will use
these net proceeds for our
product research and
development, expenses
associated with the
marketing and advertising
of the Offering, working
capital and general
corporate purposes, and
such other purposes
described in the ?Use of
Proceeds? section of this
Offering Circular.
Risk Factors:
Investing in our Class A
common stock involves a
high degree of risk. See
?Risk Factors.?
No Market:
There is no market for our
Class A common stock and
there can be no assurance
that a market will develop.
RISK FACTORS
An investment in our Class A common stock involves a
high degree of risk. You should carefully consider the
risks described below, together with all of the other
information included in this Offering Circular, before
making an investment decision. If any of the following
risks actually occurs, our business, financial
condition or results of operations could suffer. In
that case, the trading price of our shares of Class A
common stock could decline and you may lose all or part
of your investment. See ?Cautionary Note Regarding
Forward Looking Statements? above for a discussion of
forward-looking statements and the significance of such
statements in the context of this Offering Circular.
RISKS RELATED TO OUR COMPANY
ATLIS IS A FLEDGLING COMPANY
Atlis Motor Vehicles is a relatively new company that
was incorporated on November 9th 2016. Atlis has no
history, no clients, no revenues. If you are investing
in this company, it's because you think the Atlis plug
in electric pickup truck is a good idea, that Atlis
will be able to successfully market, manufacture and
sell its plug in electric pickup truck, and that it
will be priced appropriately to sell sufficient units
to make Atlis profitable. We have yet to fully develop
or sell any electric vehicles. As of right now, aim to
develop an electric truck that has no commercial
contemporaries. In the meantime, other companies could
develop successful alternatives. We have never turned a
profit and there is no assurance that we will ever be
profitable.
We also have no history in the automotive industry.
Although Atlis has taken significant steps in building
brand awareness, Atlis is a new company and currently
has experience developing or selling motor vehicles. As
such, it is possible that Atlis Motor Vehicles lack of
history in the industry may impact our brand, business,
financial goals, operation performance, and products.
We should be considered a ?Development Stage Company,?
and our operations will be subject to all the risks
inherent in the establishment of a new business
enterprise, including, but not limited to, hurdles or
barriers to the implementation of our business plans.
Further, because there is no history of operations
there is also no operating history from which to
evaluate our executive management?s ability to manage
our business and operations and achieve our goals or
the likely performance of the Company. Prospective
investors should also consider the fact that our
management team has not previously developed or managed
similar companies. No assurances can be given that we
will be able to achieve or sustain profitability.
UNCERTAINTY EXISTS AS TO WHETHER OUR BUSINESS WILL HAVE
SUFFICIENT FUNDS OVER THE NEXT 12 MONTHS, THEREBY
MAKING AN INVESTMENT IN ATLIS SPECULATIVE.
We require additional financing to complete development
and marketing of our XP Platform until the vehicle is
in production and sufficient revenue can be generated
for us to be self-sustaining. Our management projects
that in order to effectively bring the products to
market, that it will require approximately
$20,000,000.00 over the next 12 months to cover costs
involved in completing the prototype and beginning to
develop a supply chain. In the event that we are
unable to generate sufficient revenues, and before all
of the funds now held by us and obtained by us through
this offering are expended, an investment made in Atlis
may become worthless.
If we cannot continue to raise further rounds of
funding, we cannot succeed. Atlis will require
additional rounds of funding to complete development
and begin shipments of the Atlis XT pickup truck. If
Atlis is unable to secure funding, we will be unable to
succeed in our goal of developing the world?s best
pickup truck. Atlis will require additional capital
infusion to sustain operations. We predict that we will
need to raise an additional $418 million dollars to
finalize the prototype, obtain regulatory approvals,
scale production, and continue lean production and
sales for the following 4 years to our point of
predicted profitability. If we are unable to raise
adequate financing, we will be unable to sustain
operations for a prolonged period of time.
We expect to significantly increase our spending to
advance the development of our products and services
and launch and commercialize the products for
commercial sale. We will require additional capital for
the further development and commercialization of our
products, as well as to fund our other operating
expenses and capital expenditures. We cannot be certain
that additional funding will be available on acceptable
terms, or at all. If we are unable to raise additional
capital in sufficient amounts or on terms acceptable to
us, we may have to significantly delay, scale back or
discontinue the development or commercialization of one
or more of our products and services. We may also seek
collaborators for the products at an earlier stage than
otherwise would be desirable or on terms that are less
favorable than might otherwise be available. Any of
these events could significantly harm our business,
financial condition and prospects.
The expected gross offering proceeds of a maximum of
$19,000,000 to $20,000,000 may never be realized. While
we believe that such proceeds will capitalize and
sustain us to allow for the continued development and
implementation of our business plan, if only a fraction
of this Offering is sold, or if certain assumptions
contained in the business plans prove to be incorrect,
we may have inadequate funds to fully develop our
business. Although we believe that the proceeds from
this Offering will be sufficient to help sustain our
development process and business operations, there is
no guarantee that we will raise all the funds needed to
adequately fund our business plan.
WE NEED TO RAISE ADDITIONAL CAPITAL TO MEET OUR FUTURE
BUSINESS REQUIREMENTS AND SUCH CAPITAL RAISING MAY BE
COSTLY OR DIFFICULT TO OBTAIN AND COULD DILUTE CURRENT
STOCKHOLDERS? OWNERSHIP INTERESTS.
We are seeking to raise $25,000,000 at $8.24 per share
in this offering on a best efforts basis to implement
our plan and meet our capital needs for the next 12
months of operations. Additionally, we may sell equity
shares in a private placement pursuant to Regulation D.
We will use the proceeds from these offerings to
complete a working prototype and prepare for
production. See the section entitled ?Use of Proceeds?
for a description of the manner in which we plan to use
proceeds from this offering.
We have relied upon cash from financing activities and
in the future, we expect to rely on the proceeds from
this Offering, future debt and/or equity financings,
and we hope to rely on revenues generated from
operations to fund all of the cash requirements of our
activities. However, there can be no assurance that we
will be able to generate any significant cash from our
operating activities in the future. Future financings
may not be available on a timely basis, in sufficient
amounts or on terms acceptable to us, if at all. Any
debt financing or other financing of securities senior
to the Class A common stock will likely include
financial and other covenants that will restrict our
flexibility.
Any failure to comply with these covenants would have a
material adverse effect on our business, prospects,
financial condition and results of operations because
we could lose our existing sources of funding and
impair our ability to secure new sources of funding.
However, there can be no assurance that the Company
will be able to generate any investor interest in its
securities. If we do not obtain additional financing,
our prototype will never be completed, in which case
you would likely lose the entirety of your investment
in us.
At this time, we have not secured or identified any
additional financing. We do not have any firm
commitments or other identified sources of additional
capital from third parties or from our officer and
director or from other shareholders. There can be no
assurance that additional capital will be available to
us, or that, if available, it will be on terms
satisfactory to us. Any additional financing will
involve dilution to our existing shareholders. If we
do not obtain additional capital on terms satisfactory
to us, or at all, it may cause us to delay, curtail,
scale back or forgo some or all of our product
development and/or business operations, which could
have a material adverse effect on our business and
financial results. In such a scenario, investors would
be at risk to lose all or a part of any investment in
our Company.
WE HAVE LOSSES WHICH WE EXPECT TO CONTINUE INTO THE
FUTURE. THERE IS NO ASSURANCE OUR FUTURE OPERATIONS
WILL RESULT IN A PROFIT. IF WE CANNOT GENERATE
SUFFICIENT REVENUES TO OPERATE PROFITABLY OR WE ARE
UNABLE TO RAISE ENOUGH ADDITIONAL FUNDS FOR OPERATIONS,
THE SHAREHOLDERS WILL EXPERIENCE A DECREASE IN VALUE
AND WE MAY HAVE TO CEASE OPERATIONS.
We are a development-stage technology company that
began operating and commenced research and development
activities in 2016. As a recently formed development-
stage company, we are subject to all of the risks and
uncertainties of a new business, including the risk
that we may never develop, complete development or
market any of our products or services and we may never
generate product or services related revenues.
Accordingly, we have only a limited history upon which
an evaluation of our prospects and future performance
can be made. We only have one product currently under
development, which will require further development,
significant marketing efforts and substantial
investment before it and any successors could provide
us with any revenue. As a result, if we do not
successfully develop, market and commercialize our XT
pickup truck on the XP platform, we will be unable to
generate any revenue for many years, if at all. If we
are unable to generate revenue, we will not become
profitable, and we may be unable to continue our
operations. Furthermore, our proposed operations are
subject to all business risks associated with new
enterprises. The likelihood of our success must be
considered in light of the problems, expenses,
difficulties, complications, and delays frequently
encountered in connection with the expansion of a
business, operation in a competitive industry, and the
continued development of advertising, promotions and a
corresponding customer base. There can be no assurances
that we will operate profitably.
We expect to incur operating losses in future periods
due to the high cost associated with developing an
electric vehicle from the ground up. We cannot be sure
that we will be successful in generating revenues in
the near future and in the event we are unable to
generate sufficient revenues or raise additional funds
we will analyze all avenues of business
opportunities. Management may consider a merger,
acquisition, joint venture, strategic alliance, a roll-
up, or other business combination to increase business
and potentially increase the liquidity of the
Company. Such a business combination may ultimately
fail, decreasing the liquidity of the Company and
shareholder value or cause us to cease operations, and
investors would be at risk to lose all or part of their
investment in us.
WE DO NOT EXPECT TO GENERATE REVENUE IN THE NEXT 24
MONTHS
We currently do not have a product ready for sale to
customers. To date, we have funded our operations from
sales of our securities and contributions from our
founders. We have not received, and do not expect to
receive any revenues from the sale of our vehicles for
at least 24 months. Such a time estimate may be
adversely affected by a number of factors, including
the inability prototype to operate properly, mechanical
hurdles, our lack of capital resources to commence an
effective marketing campaign, the success of this
Offering, competition and other factors, some of which
may be beyond our control. We may never succeed in
these activities, and may not generate sufficient
revenues to continue our business operations or achieve
profitability.
COMPETITION MAY CROWD THE MARKET
We face significant barriers in development of a
competitive EV in a crowded market space. Atlis Motor
Vehicles faces significant technical, resource, and
financial barriers in development of a battery electric
vehicle intended to compete in a crowded pickup truck
space. Incumbents, also known as legacy manufacturers,
have substantially deeper pockets, larger pools of
resources, and more significant manufacturing
experience. Atlis will need to contract with
development partners who may have existing
relationships with incumbent manufacturers, these
relationships may pose a significant risk in our
ability to successful develop this program. The Atlis
product is differentiated from all currently announced
electric trucks in that it will be a full-size, heavy-
duty truck with capabilities that match or exceed
internal combustion trucks of the same size. However,
we have a lot of work to do before we reach production.
There is a chance that other competitors may release
similar full-sized electric trucks before we exit the
research and development phase. If several competitors
release full-sized electric trucks before Atlis, it
will be exceedingly difficult to penetrate the market.
There are several potential competitors who are better
positioned than we are to take the majority of the
market. We will compete with larger, established
Automotive Manufacturers who currently have products on
the markets and/or various respective product
development programs. They have much better financial
means and marketing/sales and human resources than us.
They may succeed in developing and marketing competing
equivalent products earlier than us, or superior
products than those developed by us. There can be no
assurance that competitors will not render our
technology or products obsolete or that the plug in
electric pickup truck developed by us will be preferred
to any existing or newly developed technologies. It
should further be assumed that that competition will
intensify. Atlis Motor Vehicles' success depends on our
ability to continuously raise funding, keep cost under
control, and properly execute in our delivery of the
Atlis Motor Vehicles XT pickup truck, Atlis Motor
Vehicles XP truck platform, and Advanced Charging
Station.
In order to be competitive, we must have the ability to
respond promptly and efficiently to the ever-changing
marketplace. We must establish our name as a reliable
and constant source for professional conversion and
transmission services. Any significant increase in
competitors or competitors with better, more efficient
services could make it more difficult for us to gain
market share or establish and generate revenues. We
may not be able to compete effectively on these or
other factors.
RELIABLE SUPPLIERS MAY BE HARD TO FIND
As Atlis does not currently manufacture any products,
we will be starting from scratch in creating and
developing supplier relationships. Currently, most
major suppliers have agreements with legacy
manufacturers that far exceed the scale and volume at
which Atlis will operate. While we intend to make as
many components in-house as possible, we will have to
rely on third party suppliers to manufacture some of
our components and specifications. Without having
already developed these relationships, we may encounter
challenges in ensuring we receive the quality parts we
need at the price and volume required. These supplier
challenges may result in unintended delays and/or
product inferiority.
SCALING UP MANUFACTURING WILL BE A CHALLENGE
Electric Vehicle Technology is changing rapidly There
is significant development and investment into electric
vehicle technology being made today. Such rapidly
changing technology conditions may adversely affect
Atlis Motor Vehicles' ability to continuously remain a
market leader, provide superior
product performance, and an outstanding customer
experience. If we are unable to control the cost of
development, cost of manufacturing, and cost of
operations, Atlis may be substantially affected. If we
are unable to maintain substantially lower cost of
manufacturing, developing, design, distributing, and
maintaining our vehicles, we may incur significant cost
increases which can be material substantial to the
operation of our business. We have made, and will
continue to make substantial investments into the
development of Atlis Motor Vehicles, such investments
may have unforeseen costs that we have been unable to
accurately predict, which may significantly impact our
ability to execute our business as planned. Atlis will
face significant costs in development and purchasing of
materials required to build the XT pickup truck, XP
truck platform, and Advanced Charging Station through
external partnerships. These purchases are subject to
conditions outside the control of Atlis Motor Vehicles
and as such, these conditions may substantially affect
our business, product, brand, operational, and
financial goals.
Atlis will continuously and diligently work towards
obtaining multiple sources of materials and components
to mitigate risk in our supply chain. However, it is
possible that specific components or solutions required
to manufacturer an electric vehicle may be subject to
intellectual properly, material availability, or
expertise owned solely by a single supplier. A
condition such as a single source supplier may hinder
our ability to secure cost, schedule, and long term
viability of Atlis Motor Vehicles XT pickup truck, XP
truck platform, or Advanced Charging Station. We may be
inherently subjected to conditions which permit only a
single source supplier for specific components
necessary to develop and manufacture the Atlis Motor
Vehicles XT pickup truck, XP truck platform, and
Advanced Charging Station, magnifying this risk.
UNFORSEEN FACTORS MAY ADJUST TIMELINES
Any valuation of Atlis at this stage is pure
speculation. Atlis Motor Vehicles? business success,
timeline, and milestones are estimations. Atlis?
production projections, sales volume, and cost models
are only estimates. Atlis produced these valuations
based on existing business models of successful and
unsuccessful efforts of other companies within the
technology and automotive industries. All such
projections and timeline estimations may change as
Atlis continues in development of a plug in electric
vehicle, charging station and manufacturing facilities.
We are currently in the development phase of the Atlis
Motor Vehicles XT pickup truck and have not yet started
manufacturing and sales. Cost overruns, scheduling
delays, and failure to meet product performance goals
may be caused by, but not limited to, unidentified
technical hurdles, delays in
material shipments, and regulatory hurdles. We may
experience delays in design and manufacturing of the
Atlis XT pickup truck We may experience significant
delays in bringing the Atlis Motor Vehicles XT pickup
truck to market due to design considerations, technical
challenges, material availability, manufacturing
complications, and regulatory considerations. Such
delays could materially damage our brand, business,
financial goals, operation results, and product.
A PRODUCT RECALL COULD CRIPPLE GROWTH
If the Atlis Motor Vehicles' XT pickup truck, XP truck
platform, or Advanced Charging Station are unable to
meet performance and quality criteria, we may be
required to perform product recalls to address said
concerns. A product recall can have substantial cost
related to performing such corrective actions.
Although Atlis will perform significant internal
testing and qualifications, as well as external
qualifications through approved 3rd party vendors
against industry standards and regulatory requirements,
there will be unperceived conditions which may
negatively impact the customer or Company expected
performance and safety of our vehicles. As such, Atlis
may perform a corrective action such as a recall of
products, mandatory repairs of defective components, or
litigation settlements which can materially affect our
financial goals, operation results, brand, business,
and products. If we are unable to provide significant
charging stations, our business success may be
substantially affected.
A significant portion of our success is our ability to
deploy the appropriate number of charging stations, in
strategic locations relative to our customers and
customer behaviors. If Atlis is unable to deploy
charging stations to specified locations, this may
negatively affect our brand, business, financial goals,
operational results, and product success in the market.
As such, to meet said availability requirements, Atlis
will require significant capital investments to rapidly
deploy said Advanced Charging Stations, as well as
development of relationships with third party members
who can assist in deployment of said charging stations.
If we are unable to address service requirements, we
may negatively affect our customer experience. As such,
Atlis Motor Vehicles will require service capabilities
be stablished in locations within close proximity to
our XT pickup truck and XP truck platform owners. Atlis
Motor Vehicles ability to engage with 3rd party
operates service stations, as well as our ability to
established company operated locations, will be
critical to the success of developing a positive
customer experience.
PRODUCT LIABILITY
While Atlis will work diligently to meet all company
and regulatory safety requirements, there is a chance
that a component catastrophically fails. It is
possible that through unknown circumstances or
conditions out of our control, some person is injured
by our product. The risk of product liability claims
and adverse publicity can always occur when
manufacturing, developing, marketing, and selling a
brand new product that was developed from scratch. If a
customer or other party were to be injured by an Atlis
product, the ensuing litigation costs and reputational
damage could be irreparable.
WE MAY FACE REGULATORY CHALLENGES
We are substantially at risk of unfavorable
governmental regulations. Motor vehicles are subject to
substantial regulation under international, federal,
state, local and foreign laws regarding safety,
performance, and import regulations. Our vehicles will
need to comply with many governmental standards and
regulations relating to vehicle safety, fuel economy,
emissions control, noise control, and vehicle
recycling, among others. Compliance with all of these
requirements may delay our production launch, thereby
adversely affecting our business and financial
condition.
Additionally, there is a chance that some economically
advantageous governmental incentives or subsidies will
be removed or repealed before our product reaches
production. Such changes to the governmental
regulatory structure could have an adverse effect on
profitability.
IF WE CANNOT CONTINUE TO INNOVATE, OUR REVENUE GROWTH
RATE AND PROFITS MAY BE REDUCED
To successfully develop and grow our business, we must
develop, distribute and commercialize our products,
secure strategic partnerships with various businesses,
and bring our products to market on schedule and in a
profitable manner, as well as spend time and resources
on the development of future products, services and
business strategies that are complementary to our
initial electric vehicle and business plan. Delays or
failures in launch of the XT pickup could hurt our
ability to meet our growth objectives, which may affect
our financial projections and may impact our stock
price. Moreover, if we are unable to continually
develop and evolve our business strategy and launch
additional products and services in the future, our
business will be entirely dependent on the success of
the XT Pickup, which could hurt our ability to meet our
objectives. We cannot guarantee that the XT pickup will
be able to achieve our expansion goals alone. Our
ability to expand successfully will depend on a number
of factors, many of which are beyond our control.
WE MAY HAVE DIFFICULTY PROTECTING OUR INTELLECTUAL
PROPERTY
Our patents and other intellectual property could be
unenforceable or ineffective once patent reviews are
completed. For any company creating brand new products,
it is imperative to protect the proprietary
intellectual property to maintain a competitive
advantage. There is no doubt that a significant
portion of Atlis?s current value depends on the
strength and imperviousness of these patents. We
intend to continue to file additional patent
applications and build our intellectual property
portfolio as we discover new technologies related to
the development of plug in electric vehicles.
We believe that intellectual property will be critical
to our success, and that we will rely on trademark,
copyright and patent law, trade secret protection and
confidentiality and/or license agreements to protect
our proprietary rights. If we are not successful in
protecting our intellectual property, it could have a
material adverse effect on our business, results of
operations and financial condition. While we believe
that we will be issued trademarks, patents and pending
patent applications help to protect our business, there
can be no assurance that our operations do not, or will
not, infringe valid, enforceable third-party patents of
third parties or that competitors will not devise new
methods of competing with us that are not covered by
our anticipated patent applications. There can also be
no assurance that our patent applications will be
approved, that any patents issued will adequately
protect our intellectual property, or that such patents
will not be challenged by third parties or found to be
invalid or unenforceable or that our patents will be
effective in preventing third parties from utilizing a
copycat business model to offer the same service in one
or more categories. Moreover, it is intended that we
will rely on intellectual property and technology
developed or licensed by third parties, and we may not
be able to obtain or continue to obtain licenses and
technologies from these third parties at all or on
reasonable terms. Effective trademark, service mark,
copyright and trade secret protection may not be
available in every country in which our intended
services will be provided. The laws of certain
countries do not protect proprietary rights to the same
extent as the laws of the U.S. and, therefore, in
certain jurisdictions, we may be unable to protect our
proprietary technology adequately against unauthorized
third party copying or use, which could adversely
affect our competitive position. We expect to license
in the future, certain proprietary rights, such as
trademarks or copyrighted material, to third parties.
These licensees may take actions that might diminish
the value of our proprietary rights or harm our
reputation, even if we have agreements prohibiting such
activity. Also to the extent third parties are
obligated to indemnify us for breaches of our
intellectual property rights, these third parties may
be unable to meet these obligations. Any of these
events could have a material adverse effect on our
business, results of operations or financial condition.
The U.S. Patent and Trademark Office and various
foreign governmental patent agencies require compliance
with a number of procedural, documentary, fee payment
and other provisions during the patent process. There
are situations in which noncompliance can result in
abandonment or lapse of a patent or patent application,
resulting in partial or complete loss of patent rights
in the relevant jurisdiction. In such an event,
competitors might be able to enter the market earlier
than would otherwise have been the case, which could
have a material adverse effect on our business, results
of operations and financial condition.
INTELLECTUAL PROPERTY PROTECTION IS COSTLY.
Filing, prosecuting and defending patents related to
our products and software throughout the world is
prohibitively expensive. Competitors may use our
technologies in jurisdictions where we have not
obtained patent protection to develop their own
products and, further, may export otherwise infringing
products to territories where we have patent
protection, but where enforcement is not as strong as
that in the U.S. These products may compete with our
products in jurisdictions where we do not have any
issued or licensed patents and our patent claims or
other intellectual property rights may not be effective
or sufficient to prevent them from so competing. Many
companies have encountered significant problems in
protecting and defending intellectual property rights
in foreign jurisdictions. The legal systems of certain
countries, particularly certain developing countries,
do not favor the enforcement of patents and other
intellectual property protection, particularly those
relating to technology, which could make it difficult
for us to stop the infringement of our patents or
marketing of competing products in violation of our
proprietary rights generally. Proceedings to enforce
our patent rights in foreign jurisdictions could result
in substantial cost and divert our efforts and
attention from other aspects of our business.
CONFIDENTIALITY AGREEMENTS MAY NOT ADEQUATELY PREVENT
DISCLOSURE OF TRADE SECRETS AND OTHER PROPRIETARY
INFORMATION
We anticipate that a substantial amount of our
processes and technologies will be protected by trade
secret laws. In order to protect these technologies and
processes, we intend to rely in part on confidentiality
agreements with our employees, licensees, independent
contractors and other advisors. These agreements may
not effectively prevent disclosure of confidential
information, including trade secrets, and may not
provide an adequate remedy in the event of unauthorized
disclosure of confidential information. In addition,
others may independently discover our trade secrets and
proprietary information, and in such cases, we could
not assert any trade secret rights against such
parties. To the extent that our employees, contractors
or other third parties with which we do business use
intellectual property owned by others in their work for
us, disputes may arise as to the rights in related or
resulting know-how and inventions. Laws regarding trade
secret rights in certain markets in which we operate
may afford little or no protection to our trade
secrets. The loss of trade secret protection could make
it easier for third parties to compete with our
products and related future products and services by
copying functionality, among other things. In addition,
any changes in, or unexpected interpretations of, the
trade secret and other intellectual property laws in
any country in which we operate may compromise our
ability to enforce our trade secret and intellectual
property rights. Costly and time-consuming litigation
could be necessary to enforce and determine the scope
of our proprietary rights, and failure to obtain or
maintain trade secret protection could adversely affect
our business, revenue, reputation and competitive
position.
FAILURE TO COMPLY WITH FEDERAL AND STATE PRIVACY LAWS
COULD ADVERSELY AFFECT OUR BUSINESS
A variety of federal and state laws and regulations
govern the collection, use, retention, sharing and
security of consumer data. The existing privacy-related
laws and regulations are evolving and subject to
potentially differing interpretations. In addition,
various federal, state and foreign legislative and
regulatory bodies may expand current or enact new laws
regarding privacy matters. Several internet companies
have recently incurred penalties for failing to abide
by the representations made in their privacy policies
and practices. In addition, several states have adopted
legislation that requires businesses to implement and
maintain reasonable security procedures and practices
to protect sensitive personal information and to
provide notice to consumers in the event of a security
breach. Any failure, or perceived failure, by us to
comply with our posted privacy policies or with any
data-related consent orders, Federal Trade Commission
requirements or orders or other federal, state or
international privacy or consumer protection-related
laws, regulations or industry self-regulatory
principles could result in claims, proceedings or
actions against us by governmental entities or others
or other liabilities, which could adversely affect our
business. In addition, a failure or perceived failure
to comply with industry standards or with our own
privacy policies and practices could adversely affect
our business. Federal and state governmental
authorities continue to evaluate the privacy
implications inherent in the use of third-party web
?cookies? for behavioral advertising. The regulation of
these cookies and other current online advertising
practices could adversely affect our business
WE ARE DEPENDENT UPON OUR CEO FOR HIS SERVICES AND ANY
INTERRUPTION IN HIS ABILITY TO PROVIDE HIS SERVICES
COULD CAUSE US TO CEASE OPERATIONS.
The loss of the services of our CEO, Mr. Mark Hanchett,
could have a material adverse effect on us. We do not
maintain any key man life insurance on Mr.
Hanchett. The loss of Mr. Hanchett?s services could
cause investors to lose all or a part of their
investment. Our future success will also depend on our
ability to attract, retain and motivate other highly
skilled employees. Competition for personnel in our
industry is intense. We may not be able to retain our
key employees or attract, assimilate or retain other
highly qualified employees in the future. If we do not
succeed in attracting new personnel or retaining and
motivating our current personnel, our business will be
adversely affected.
WE HAVE NO LONG-TERM EMPLOYMENT AGREEMENTS IN PLACE
WITH OUR EXECUTIVE OFFICERS
As of the date of this Offering Circular we only have
short-term, interim employment arrangements with our
senior executive officers. We are negotiating
compensation packages and the terms of long-term formal
employment agreements with our executive officers and
we anticipate the any such employment agreement entered
into with our executive officers will be on terms no
less favorable to our executive officers than the terms
of their respective interim arrangement. There is a
risk that the Company and any one or more of our
executive officers will not reach an agreement with
respect to their employment agreements, in part because
we expect their compensation packages will be comprised
of cash compensation, equity compensation (e.g. stock
options, warrants or stock grants), as well as standard
benefits and other terms customary for executive
officers of similar experience and tenure. Although we
intend to finalize negotiations with respect to these
employment agreements with each of our executive
officers in the near future, if we fail to reach
mutually satisfactory agreements in this regard, any
one or more of such persons may terminate their
association with the Company. Additionally, we are also
highly dependent on certain consultants and service
providers, including our development partners and our
marketing and advertising service providers, some of
which are affiliates of the Company and our officers
and directors. The loss of any one or more of these
experienced executives, consultants, service providers
and/or development partners would have a material and
adverse effect on our Company and our business
prospects
WE ARE SIGNIFICANTLY INFLUENCED BY OUR OFFICERS AND
DIRECTORS
In the aggregate, ownership of the Company?s shares of
common stock by management and affiliated parties,
assuming the sale of the Maximum Offering, will
represent approximately 62.4% of the issued and
outstanding shares of common stock. These shareholders,
if acting together, will be able to significantly
influence all matters requiring approval by
shareholders, including the election of directors and
the approval of mergers or other business combinations
transactions. Please see ?Security Ownership of
Management & Certain Security Holders? below for more
information.
Our future performance is dependent on the ability to
retain key personnel. The Company?s performance is
substantially dependent on the performance of senior
management. The loss of the services of any of its
executive officers or other key employees could have a
material adverse effect on the Company's business,
results of operations and financial condition.
OUR BUSINESS COULD BE ADVERSELY AFFECTED BY A DOWNTURN
IN THE ECONOMY AND/OR MANUFACTURING.
We are dependent upon the continued demand for electric
vehicles, making our business susceptible to a downturn
in the economy or in manufacturing. For example, a
decrease in the number of individuals investing their
money in the equity markets could result in a decrease
in the number of companies deciding to become or remain
public. This downturn could have a material adverse
effect on our business, our ability to raise funds, our
production, and ultimately our overall financial
condition.
OUR BUSINESS WOULD BE ADVERSELY AFFECTED IF WE ARE NOT
ABLE TO CREATE AND DEVELOP AN EFFECTIVE DIRECT SALES
FORCE.
Because a significant component of our growth strategy
relates to increasing our revenues through sales to
companies and individuals subject to the SEC disclosure
and reporting requirements, our business would be
adversely affected if we were unable to develop and
maintain an effective sales force to market our
products directly to consumers. Further complicating
this matter, many states have prohibited direct to
consumer vehicle sales. Atlis will need to be
effective at converting online interest into hard
sales. We currently do not employ any sales staff to
sell our products, which could have a material adverse
effect on our business, results of operations and
financial condition.
WE MAY NOT BE ABLE TO SUCCESSFULLY MANAGE OUR GROWTH.
We could experience growth over a short period of time,
which could put a significant strain on our managerial,
operational and financial resources. We must implement
and constantly improve our certification processes and
hire, train and manage qualified personnel to manage
such growth. We have limited resources and may be
unable to manage our growth. Our business strategy is
based on the assumption that our customer base,
geographic coverage and service offerings will
increase. If this occurs it will place a significant
strain on our managerial, operational, and financial
resources. If we are unable to manage our growth
effectively, our business will be adversely affected.
As part of this growth, we may have to implement new
operational, manufacturing, and financial systems and
procedures and controls to expand, train and manage our
employees, especially in the areas of manufacturing and
sales. If we fail to develop and maintain our people
and processes as we experience our anticipated growth,
demand for our products and our revenues could
decrease.
WE MAY NOT BE ABLE TO KEEP UP WITH RAPID TECHNOLOGICAL
CHANGES
To remain competitive, we must continue to enhance our
products and software. The evolving nature of the
electric vehicle industry, which is characterized by
rapid technological change, c, frequent new product and
service introductions and the emergence of new industry
standards and practices, could render our existing
systems, software, and services obsolete. Our success
will depend, in part, on our ability to develop,
innovate, license or acquire leading technologies
useful in our business, enhance our existing solutions,
develop new solutions and technology that address the
increasingly sophisticated and varied needs of our
current and prospective customers, and respond to
technological advances and emerging industry and
regulatory standards and practices in a cost-effective
and timely manner. Future advances in technology may
not be beneficial to, or compatible with, our business.
Furthermore, we may not successfully use new
technologies effectively or adapt our proprietary
technology and hardware to emerging industry standards
on a timely basis. Our ability to remain
technologically competitive may require substantial
expenditures and lead time. If we are unable to adapt
in a timely manner to changing market conditions or
user requirements, our business, financial condition
and results of operations could be seriously harmed
IF WE DO NOT SUCCESSFULLY ESTABLISH AND MAINTAIN OUR
COMPANY AS A HIGHLY TRUSTED AND RESPECTED NAME FOR
ELECTRIC VEHICLES, WE COULD SUSTAIN LOSS OF REVENUES,
WHICH COULD SIGNIFICANTLY AFFECT OUR BUSINESS,
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
In order to attract and retain a client base and
increase business, we must establish, maintain and
strengthen our name and the services we provide. In
order to be successful in establishing our reputation,
clients must perceive us as a trusted source for
quality services. If we are unable to attract and
retain clients with our current marketing plans, we may
not be able to successfully establish our name and
reputation, which could significantly affect our
business, financial condition and results of
operations.
SMALL PUBLIC COMPANIES ARE INHERENTLY RISKY AND WE MAY
BE EXPOSED TO MARKET FACTORS BEYOND OUR CONTROL. IF
SUCH EVENTS WERE TO OCCUR IT MAY RESULT IN A LOSS OF
YOUR INVESTMENT.
Managing a small public company involves a high degree
of risk. Few small public companies ever reach market
stability and we will be subject to oversight from
governing bodies and regulations that will be costly to
meet. Our present officer has limited experience in
managing a fully reporting public company, so we may be
forced to obtain outside consultants to assist us with
meeting these requirements. These outside consultants
are expensive and can have a direct impact on our
ability to be profitable. This will make an investment
in our Company a highly speculative and risky
investment.
LIMITATIONS OF DIRECTOR LIABILITY AND DIRECTOR AND
OFFICER INDEMNIFICATION
Our Certificate of Incorporation limits the liability
of directors to the maximum extent permitted by
Delaware law. Delaware law provides that directors of a
corporation will not be personally liable for monetary
damages for breach of their fiduciary duties as
directors, except for liability for any:
-
breach of their duty of loyalty to us or our
stockholders;
-
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
-
Transactions for which the directors derived an
improper personal benefit.
These limitations of liability do not apply to
liabilities arising under the federal or state
securities laws and do not affect the availability of
equitable remedies such as injunctive relief or
rescission. Our corporate bylaws (?Bylaws?) provide
that we will indemnify our directors, officers and
employees to the fullest extent permitted by 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.
We believe that these Bylaw provisions are necessary to
attract and retain qualified persons as directors and
officers. The limitation of liability in our
Certificate of Incorporation and Bylaws 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 provide a benefit to us and our
stockholders. Our results of operations and financial
condition may be harmed to the extent we pay the costs
of settlement and damage awards against directors and
officers pursuant to these indemnification provisions.
RISKS OF BORROWING
As of the date of this Offering Circular, we have
incurred certain debt obligations in the ordinary
course of our business. While we don?t intend to incur
any additional debt from the equity commitments
provided in this Offering, should we obtain secure bank
debt in the future, possible risks could arise. If we
incur additional indebtedness, a portion of our future
revenues will have to be dedicated to the payment of
principal and interest on such indebtedness. Typical
loan agreements also might contain restrictive
covenants, which may impair our operating flexibility.
Such loan agreements would also provide for default
under certain circumstances, such as failure to meet
certain financial covenants. A default under a loan
agreement could result in the loan becoming immediately
due and payable and, if unpaid, a judgment in favor of
such lender which would be senior to our rights. A
judgment creditor would have the right to foreclose on
any of our assets resulting in a material adverse
effect on our business, ability to generate revenue,
operating results or financial condition.
UNANTICIPATED OBSTACLES
Our business plan may change significantly. Many of our
potential business endeavors are capital intensive and
may be subject to statutory or regulatory requirements.
Our Board of Directors believes that the chosen
activities and strategies are achievable in light of
current economic and legal conditions with the skills,
background, and knowledge of our principals and
advisors. Our Board of Directors reserve the right to
make significant modifications to our stated strategies
depending on future events.
RISKS OF OPERATIONS
Our future operating results may be volatile, difficult
to predict and may fluctuate significantly in the
future due to a variety of factors, many of which may
be outside of our control. Due to the nature of our
target market, we may be unable to accurately forecast
our future revenues and operating results. Furthermore,
our failure to generate revenues would prevent us from
achieving and maintaining profitability. There are no
assurances that we can generate significant revenue or
achieve profitability. We anticipate having a sizeable
amount of fixed expenses, and we expect to incur losses
due to the execution of our business strategy,
continued development efforts and related expenses. As
a result, we will need to generate significant revenues
while containing costs and operating expenses if we are
to achieve profitability. We cannot be certain that we
will ever achieve sufficient revenue levels to achieve
profitability.
WE WILL INCUR INCREASED COSTS AS A RESULT OF BECOMING A
PUBLIC COMPANY.
We have plans to become a publicly traded company in
the U.S. As a public company, we will incur significant
legal, accounting and other expenses that we did not
incur as a private company. We will incur costs
associated with our public company reporting
requirements. We also anticipate that we will incur
costs associated with recently adopted corporate
governance requirements, including requirements under
the Sarbanes-Oxley Act of 2002, as well as new rules
implemented by the SEC and the National Association of
Securities Dealers (the ?NASD?). We expect these rules
and regulations to increase our legal and financial
compliance costs and to make some activities more time-
consuming and costly. We also expect these new rules
and regulations may make it more difficult and more
expensive for us to obtain director and officer
liability insurance, if we can obtain such insurance at
all. We may be required to accept reduced policy
limits and coverage or incur substantially higher costs
to obtain the same or similar liability coverage. As a
result, it may be more difficult for us to attract and
retain qualified individuals to serve on our board of
directors or as executive officers. We are currently
evaluating and monitoring developments with respect to
these new rules, and we cannot predict or estimate the
amount of additional costs we may incur or the timing
of such costs.
NO MINIMUM CAPITALIZATION
We do not have a minimum capitalization and we may use
the proceeds from this Offering immediately following
our acceptance of the corresponding subscription
agreements. It is possible we may only raise a minimum
amount of capital, which could leave us with
insufficient capital to implement our business plan,
potentially resulting in greater operating losses
unless we are able to raise the required capital from
alternative sources. There is no assurance that
alternative capital, if needed, would be available on
terms acceptable to us, or at all.
MINIMAL EMPLOYEES AND INFRASTRUCTURE
We currently only have a small number of employees and
are in the process of establishing our human resources
procedures, policies, processes and registrations,
which are not yet complete. However, we expect to hire
additional employees upon receipt of the proceeds from
this Offering. We also have minimal operational
infrastructure and no prior operating history. We
intent to rely on our management team, our advisors,
third-party consultants, third-party developers,
service providers, technology partners, outside
attorneys, advisors, accountants, auditors, and other
administrators. The loss of services of any of such
personnel may have a material adverse effect on our
business and operations and there can be no assurance
that if any or all of such personnel were to become
unavailable, that qualified successors can be found, on
acceptable terms.
LIMITATION ON REMEDIES; INDEMNIFICATION
Our Certificate of Incorporation, as amended from time
to time, provides that officers, directors, employees
and other agents and their affiliates shall only be
liable to the Company and its shareholders for losses,
judgments, liabilities and expenses that result from
the fraud or other breach of fiduciary obligations.
Additionally, we intend to enter into corporate
indemnification agreements with each of our officers
and directors consistent with industry practice. Thus,
certain alleged errors or omissions might not be
actionable by the Company. Our governing instruments
also provide that, under the broadest circumstances
allowed under law, we must indemnify its officers,
directors, employees and other agents and their
affiliates for losses, judgments, liabilities, expenses
and amounts paid in settlement of any claims sustained
by them in connection with the Company, including
liabilities under applicable securities laws.
FORCE MAJEURE
Our business is uniquely susceptible to unforeseen
delays or failures that are caused by forces of nature
and related circumstances. These factors are outside
and beyond our control. The delay or failure to
complete the development and testing of our XP Platform
or XT Pickup and the commercial release of related
services may be due to any act of God, fire, war,
terrorism, flood, strike, labor dispute, disaster,
transportation or laboratory difficulties or any
similar or dissimilar event beyond our control. We will
not be held liable to any shareholder in the event of
any such failure.
COVID-19 GLOBAL PANDEMIC
Similar to force majeure, our company is susceptible to
the effects of the COVID-19 pandemic. As a result of
the pandemic, our workforce may have to work remotely
for an extended period of time. Being forced to work
remotely may cause unforeseen delays in development.
In particular, our engineering teams often rely heavily
on hands-on collaboration. Extended pandemic concerns
will likely result in decreased productivity and
efficiency throughout the Company,
Additionally, an extended pandemic may wreak havoc on
international automotive supply chains. If the
pandemic makes it difficult for us to source components
from suppliers, we may be forced to develop and
manufacture certain components ourselves, which would
likely result in further delays and cost overruns. We
will not be held liable to any shareholder in the event
of any delays or catastrophic failures proximately
caused by the COVID-19 pandemic.
RISKS ASSOCIATED WITH THIS OFFERING
THERE IS NO FIRM COMMITMENT TO PURCHASE THE CLASS A
SHARES OF CLASS A COMMON STOCK BEING OFFERED, AND AS A
RESULT INITIAL INVESTORS ASSUME ADDITIONAL RISK.
This is a best effort, no minimum offering of Class A
shares of our Class A common stock being conducted
solely by certain members of our management. There is
no commitment by anyone to purchase any of the Class A
shares being offered. We cannot give any assurance
that any or all of the Class A shares will be
sold. There is no minimum and we will retain any
amount of proceeds received from the sale of the Class
A shares. Moreover, there is no assurance that our
estimate of our liquidity needs is accurate or that new
business development or other unforeseen events will
not occur, resulting in the need to raise additional
funds. As this offering is a best efforts financing,
there is no assurance that this financing will be
completed or that any future financing will be
affected. Initial investors assume additional risk on
whether the offering will be fully subscribed and how
the Company will utilize the proceeds.
THE SECURITIES BEING OFFERED ARE RESTRICTED CLASS A
SHARES OF OUR CLASS A COMMON STOCK AND AN INVESTMENT IN
OUR CLASS A COMMON STOCK WILL BE ILLIQUID.
We are offering Class A shares of our Class A common
stock pursuant to an exemption from registration under
the Securities Act which imposes substantial
restrictions on the transfer of such securities. All
certificates which evidence the Class A shares will be
inscribed with a printed legend which clearly describes
the applicable restrictions on transfer or resale by
the owner thereof. Accordingly, each investor should
be aware of the long-term illiquid nature of his
investment. In no event may such securities be sold,
pledged, hypothecated, assigned or otherwise
transferred unless such securities are registered under
the Securities Act and applicable state securities laws
or we received an opinion of counsel that an exemption
from registration is available with respect
thereto. Rule 144, the primary exemption for resales
of restricted securities is only available for
securities of issuers providing current information to
the public. While we will be required to make such
information available should we conduct an initial
public offering, and assuming such public offering is
in fact successfully carried out, we do not currently
make such information available precluding reliance on
Rule 144. Thus, each investor should be prepared to
bear the risk of such investment for an indefinite
period of time. See the sections entitled ?Description
of Securities? and ?Placement of the Offering?.
THERE IS CURRENTLY NO MARKET FOR OUR CLASS A COMMON
STOCK, AND WE DO NOT EXPECT THAT A MARKET WILL DEVELOP
IN THE FORESEEABLE FUTURE MAKING AN INVESTMENT IN OUR
CLASS A COMMON STOCK ILLIQUID.
Prior to this Offering, there has been no public market
for our Class A common stock. We cannot predict the
extent to which an active market for our Class A common
stock will develop or be sustained after this Offering,
or how the development of such a market might affect
the market price of our Class A common stock. The
initial offering price of our Class A common stock in
this offering is based on a number of factors,
including market conditions in effect at the time of
the offering, and it may not be in any way indicative
of the price at which our shares will trade following
the completion of this offering.
We anticipate that we will apply for quoting of our
Class A common stock on the OTC Markets or an approved
secondary marketplace upon the qualification of the
offering statement of which this Offering Circular
forms a part. However, there can no assurance that our
Class A common stock shares will be quoted. If no
active trading market for our Class A common stock
develops or is sustained following this Offering, you
may be unable to sell your shares when you wish to sell
them or at a price that you consider attractive or
satisfactory. The lack of an active market may also
adversely affect our ability to raise capital by
selling securities in the future, or impair our ability
to license or acquire other product candidates,
businesses or technologies using our shares as
consideration.
Investors may not be able to resell their shares at or
above the initial offering price. We do not expect that
a market for our stock will develop at any time in the
foreseeable future. The lack of a market may impair
the ability to sell Class A shares at the time
investors wish to sell them or at a price considered to
be reasonable. As such, Atlis investors should not
expect to have the ability to liquidate their positions
in Atlis any time in the near future.
EVEN IF A MARKET DEVELOPS FOR OUR CLASS A SHARES, OUR
CLASS A SHARES MAY BE THINLY TRADED WITH WIDE SHARE
PRICE FLUCTUATIONS, LOW SHARE PRICES AND MINIMAL
LIQUIDITY. WE MAY UTILIZE AN ALTERNATIVE TRADING
SYSTEM.
If a market for our Class A shares develops, the share
price may be volatile with wide fluctuations in
response to several factors, including:
-
Potential investors? anticipated feeling
regarding our results of operations;
-
Increased competition;
-
Our ability or inability to generate
future revenues; and
-
Market perception of the future of
development of electric vehicles.
Our Class A common stock may not be freely quoted for
trading on any stock exchange or through any other
traditional trading platform. Our common stock may be
issued, available for purchase and may be traded
exclusively on a specific trading system that is
registered with the SEC as an alternative trading
system (an ?ATS?). We do not currently have any plans
to trade our common stock on a specific ATS. Any
disruption to the operations of an ATS or a broker-
dealer's customer interface with an ATS would
materially disrupt trading in, or potentially result in
a complete halt in the trading of, our common stock.
Because our common stock may be traded exclusively on a
closed trading system, it is a possibility that there
will be a limited number of holders of our common
stock. In addition, an ATS is likely to experience
limited trading volume with a relatively small number
of securities trading on the ATS platform as compared
to securities trading on traditional securities
exchanges or trading platforms. As a result, this novel
trading system may have limited liquidity, resulting in
a lower or higher price or greater volatility than
would be the case with greater liquidity. You may not
be able to resell your common stock on a timely basis
or at all.
While we understand that many ATS platforms have
adopted policies and procedures such that security
holders are not free to manipulate the trading price of
securities contrary to applicable law, and while the
risk of market manipulation exists in connection with
the trading of any securities, the risk may be greater
for our Class A common stock because the ATS we choose
may be a closed system that does not have the same
breadth of market and liquidity as the national market
system. There can be no assurance that the efforts by
an ATS to prevent such behavior will be sufficient to
prevent such market manipulation.
Unlike the more expansive listing requirements,
policies and procedures of the Nasdaq Global Market and
other trading platforms, there are no minimum price
requirements and limited listing requirements for
securities to be traded on an ATS. As a result, trades
of our Class A common stock on an ATS may not be at
prices that represent the national best bid or offer
prices of securities that could be considered similar
securities.
WE ARBITRARILY DETERMINED THE OFFERING PRICE AND THERE
HAS BEEN NO INDEPENDENT VALUATION OF THE STOCK, WHICH
MEANS THAT THE STOCK MAY BE WORTH LESS THAN THE
PURCHASE PRICE.
The offering price of the Class A shares of Class A
common stock has been arbitrarily determined without
independent valuation, based on estimates of the price
that purchasers of speculative securities, such as our
Class A common stock, will be willing to pay
considering our nature and capital structure, the
experience of the officers and directors and the market
conditions for the sale of equity securities in similar
companies. The offering price of the Class A shares
bears no relationship to our assets, earnings or book
value, or any other objective standard of value and
thus the Class A shares may have a value significantly
less than the offering price and the shares may never
obtain a value equal to or greater than the offering
price. See the section entitled ?Placement of the
Offering? elsewhere in this memorandum.
THE MARKET PRICE OF OUR CLASS A CLASS A COMMON STOCK
SHARES MAY FLUCTUATE, AND YOU COULD LOSE ALL OR PART OF
YOUR INVESTMENT
The offering price for our Class A Class A common stock
shares is based on a number of factors. The price of
these shares may decline following this Offering. The
stock market in general, and the market price of our
shares will likely be subject to fluctuation, whether
due to, or irrespective of, our operating results,
financial condition and prospects. Our financial
performance, our industry?s overall performance,
changing consumer preferences, technologies and
advertiser requirements, government regulatory action,
tax laws and market conditions in general could have a
significant impact on the future market price of our
Class A common stock. Some of the other factors that
could negatively affect our share price or result in
fluctuations in our share price includes:
-
actual or anticipated variations in our periodic
operating results;
-
increases in market interest rates that lead
purchasers of our shares to demand a higher yield;
-
changes in earnings estimates;
-
changes in market valuations of similar companies;
-
actions or announcements by our competitors;
-
adverse market reaction to any increased
indebtedness we may incur in the future;
-
additions or departures of key personnel;
-
actions by stockholders;
-
speculation in the press or investment community; and
-
listing our shares on a national securities exchange
YOU WILL INCUR SUBSTANTIAL AND IMMEDIATE DILUTION OF
THE PRICE YOU PAY FOR YOUR CLASS A SHARES IN THIS
OFFERING.
The offering price of our Class A common stock is
substantially higher than the net tangible book value
per share of the outstanding Class A common stock
issued after this offering. Therefore, if you purchase
Class A shares of our Class A common stock in this
offering, you will incur substantial immediate dilution
in the net tangible book value per share of Class A
common stock from the price you pay for such share.
WE DO NOT ANTICIPATE DIVIDENDS TO BE PAID ON OUR CLASS
A COMMON STOCK AND INVESTORS MAY LOSE THE ENTIRE AMOUNT
OF THEIR INVESTMENT.
A dividend has never been declared or paid in cash on
our Class A common stock and we do not anticipate such
a declaration or payment for the foreseeable future. We
expect to use future earnings, if any, to fund business
growth. Therefore, stockholders will not receive any
funds absent a sale of their Class A shares. We cannot
assure stockholders of a positive return on their
investment when they sell their Class A shares nor can
we assure that stockholders will not lose the entire
amount of their investment. Any payment of dividends on
our capital stock will depend on our earnings,
financial condition and other business and economic
factors affecting us at such time as the board of
directors may consider relevant. If we do not pay
dividends, our Class A common stock may be less
valuable because a return on your investment will only
occur if the common stock price appreciates.
OUR LACK OF BUSINESS DIVERSIFICATION COULD CAUSE YOU TO
LOSE ALL OR SOME OF YOUR INVESTMENT IF WE ARE UNABLE TO
GENERATE REVENUES FROM OUR PRIMARY PRODUCTS.
Our business consists of developing and manufacturing
electric vehicles and charging infrastructure. We do
not have any other lines of business or other sources
of revenue if we are unable to compete effectively in
the marketplace. This lack of business diversification
could cause you to lose all or some of your investment
if we are unable to generate revenues since we do not
expect to have any other lines of business or
alternative revenue sources.
SALES OF OUR CLASS A CLASS A COMMON STOCK UNDER RULE
144 COULD REDUCE THE PRICE OF OUR STOCK
In general, persons holding ?restricted securities,?
including affiliates, must hold their shares for a
period of at least six (6) months, may not sell more
than one percent (1%) of the total issued and
outstanding shares in any ninety (90) day period, and
must resell the shares in an unsolicited brokerage
transaction at the market price.
However, Rule 144 will only be available for resale in
the ninety (90) days after the Company files its semi-
annual reports on Form 1-SA and annual reports on Form
1-K, unless the Company voluntarily files interim
quarterly reports on Form 1-U, which the Company has
not yet decided to do. The availability for sale of
substantial amounts of Class A common stock under Rule
144 could reduce prevailing market prices for our
securities.
WE DO NOT HAVE ANY CORPORATE GOVERNANCE COMMITTEES, SO
SHAREHOLDERS WILL HAVE TO RELY ON OUR DIRECTORS, NONE
OF WHOM ARE INDEPENDENT, TO PERFORM THESE FUNCTIONS
We do not have an audit committee, compensation
committee or any form of corporate governance
committees comprised of an independent director. The
Board performs these functions as a whole and no
members of the Board are an independent director.
However, until such corporate governance committees and
controls are formally established, there is a
significant risk that certain members of the Board of
Directors, executive management and/or our controlling
shareholder could thwart such plans and prevent such
committees and controls from being implemented. Thus,
there is a potential conflict in that board members who
are also part of management will participate in
discussions concerning management compensation and
audit issues that may affect management decisions.
FAILURE TO MAINTAIN INTERNAL CONTROLS OVER FINANCIAL
REPORTING WOULD HAVE AN ADVERSE IMPACT ON US
We are required to establish and maintain appropriate
internal controls over financial reporting. Failure to
establish those controls, or any failure of those
controls once established, could adversely impact our
public disclosures regarding our business, financial
condition or results of operations. In addition,
management's assessment of internal controls over
financial reporting may identify weaknesses and
conditions that need to be addressed in our internal
controls over financial reporting or other matters that
may raise concerns for investors. Any actual or
perceived weaknesses and conditions that need to be
addressed in our internal control over financial
reporting, disclosure of management's assessment of our
internal controls over financial reporting or
disclosure of our public accounting firm's attestation
to or report on management's assessment of our internal
controls over financial reporting may have an adverse
impact on the price of our Class A Class A common
stock.
MANAGEMENT HAS ULTIMATE DISCRETION OVER THE ACTUAL USE
OF PROCEEDS DERIVED FROM THIS OFFERING
The net proceeds from this Offering will be used for
the purposes described under ?Use of Proceeds.?
However, we reserve the right to use the funds obtained
from this Offering for other similar purposes not
presently contemplated which we deem to be in the best
interests of the Company and our shareholders in order
to address changed circumstances or opportunities. As a
result of the foregoing, our success will be
substantially dependent upon the discretion and
judgment of the Board of Directors with respect to
application and allocation of the net proceeds of this
Offering. Investors who purchase our Class A common
stock will be entrusting their funds to our Board of
Directors, upon whose judgment and discretion the
investors must depend. The failure of our management
to apply these funds effectively could harm our
business. Pending their use, we may also invest the
net proceeds from this offering in a manner that does
not produce income or that loses value.
OUR EXECUTIVE OFFICER AND MAJORITY STOCKHOLDER MAY
SIGNIFICANTLY INFLUENCE MATTERS TO BE VOTED ON AND
THEIR INTERESTS MAY DIFFER FROM, OR BE ADVERSE TO, THE
INTERESTS OF OUR OTHER STOCKHOLDERS.
The Company?s executive officer and majority
stockholder, Mark Hanchett, controls 84.11 % of our
outstanding Class D stock prior to this Offering. As a
Majority stockholder, Mark Hanchett controls 84.11% of
the voting rights for Atlis Motor Vehicles.
Accordingly, the Company?s executive officer and
majority stockholder possesses significant influence
over the Company on matters submitted to the
stockholders for approval, including the election of
directors, mergers, consolidations, the sale of all or
substantially all of our assets, and also the power to
prevent or cause a change in control. This amount of
control gives them substantial ability to determine the
future of our Company, and as such, they may elect to
close the business, change the business plan or make
any number of other major business decisions without
the approval of shareholders. The interest of our
majority stockholders may differ from the interests of
our other stockholders and could therefore result in
corporate decisions that are adverse to other
stockholders.
GENERAL SECURITIES INVESTMENT RISKS
All investments in securities involve the risk of loss
of capital. No guarantee or representation is made that
an investor will receive a return of its capital. The
value of our Class A common stock can be adversely
affected by a variety of factors, including development
problems, regulatory issues, technical issues,
commercial challenges, competition, legislation,
government intervention, industry developments and
trends, and general business and economic conditions.
MULTIPLE SECURITIES OFFERINGS AND POTENTIAL FOR
INTEGRATION OF OUR OFFERINGS
We are currently and will in the future be involved in
one or more additional offers of our securities in
other unrelated securities offerings. Any two or more
securities offerings undertaken by us could be found by
the SEC, or a state securities regulator, agency, to be
?integrated? and therefore constitute a single offering
of securities, which finding could lead to a
disallowance of certain exemptions from registration
for the sale of our securities in such other securities
offerings. Such a finding could result in disallowance
of one or more of our exemptions from registration,
which could give rise to various legal actions on
behalf of a federal or state regulatory agency and the
Company.
THIS OFFERING WAS NOT REVIEWED BY INDEPENDENT
PROFESSIONALS
We have not retained any independent professionals to
review or comment on this Offering or otherwise protect
the interest of the investors hereunder. Although we
have retained our own counsel, neither such counsel nor
any other counsel has made, on behalf of the investors,
any independent examination of any factual matters
represented by management herein. Therefore, for
purposes of making a decision to purchase our Class A
common stock, you should not rely on our counsel with
respect to any matters herein described. Prospective
investors are strongly urged to rely on the advice of
their own legal counsel and advisors in making a
determination to purchase our Class A common stock.
WE HAVE NOT UNDERGONE UNDERWRITING DUE DILIGENCE, AND
WE CANNOT GUARANTEE THAT WE WILL SELL ANY SPECIFIC
NUMBER OF COMMON STOCK SHARES IN THIS OFFERING
There is no commitment by anyone to purchase all or any
part of the Class A Shares offered hereby and,
consequently, we can give no assurance that all of the
Class A shares in this Offering will be sold.
Additionally, there is no underwriter for this
Offering; therefore, you will not have the benefit of
an underwriter's due diligence efforts that would
typically include the underwriter being involved in the
preparation of this Offering Circular and the pricing
of our Class A common stock shares offered hereunder.
Therefore, there can be no assurance that this Offering
will be successful or that we will raise enough capital
from this Offering to further our development and
business activities in a meaningful manner. Finally,
prospective investors should be aware that we reserve
the right to withdraw, cancel, or modify this Offering
at any time without notice, to reject any subscription
in whole or in part, or to allot to any prospective
purchaser fewer Class A common stock Shares than the
number for which he or she subscribed.
INVESTORS IN THIS OFFERING WILL LIKELY EXPERIENCE
ADDITIONAL DILUTION
If you purchase our Class A common stock in this
Offering, you will experience immediate and substantial
dilution because the price you pay will be
substantially greater than the net tangible book value
per share of the shares you acquire. Since we will
require funds in addition to the proceeds of this
Offering to conduct our planned business, we will raise
such additional funds, to the extent not generated
internally from operations, by issuing additional
equity and/or debt securities, resulting in further
dilution to our existing stockholders (including
purchasers of our Class A common stock in this
Offering).
WE MAY TERMINATE THIS OFFERING AT ANY TIME
We reserve the right to terminate this Offering at any
time, regardless of the number of Class A common stock
shares sold. In the event that we terminate this
Offering at any time prior to the sale of all of the
Class A common stock shares offered hereby, whatever
amount of capital that we have raised at that time will
have already been utilized by the Company and no funds
will be returned to subscribers.
WE MAY BE UNABLE TO MEET OUR CAPITAL REQUIREMENTS
Our capital requirements depend on numerous factors,
including but not limited to the rate and success of
our research and development efforts, marketing
efforts, market acceptance of our products, our ability
to establish and maintain our agreements with
suppliers, our ability to ramp up production, product
demand and other factors. The capital requirements
relating to development of our technology and the
implementation of our business plan will be
significant. We cannot accurately predict the timing
and amount of such capital requirements. However, we
are dependent on the proceeds of this Offering as well
as additional financing that will be required in order
to develop our products and fully implement our
proposed business plans.
However, in the event that our plans change, our
assumptions change or prove to be inaccurate, or if the
proceeds of this Offering prove to be insufficient to
implement our business plan, we would be required to
seek additional financing sooner than currently
anticipated. There can be no assurance that any such
financing will be available to us on commercially
reasonable terms, or at all. Furthermore, any
additional equity financing may dilute the equity
interests of our existing shareholders (including those
purchasing shares pursuant to this Offering), and debt
financing, if available, may involve restrictive
covenants with respect to dividends, raising future
capital and other financial and operational matters. If
we are unable to obtain additional financing as and
when needed, we may be required to reduce the scope of
our operations or our anticipated business plans, which
could have a material adverse effect on our business,
future operating results and financial condition.
IF WE PURSUE STRATEGIC INVESTMENTS, THEY MAY RESULT IN
LOSSES
We may elect periodically to make strategic investments
in various public and private companies with businesses
or technologies that may complement our business. The
market values of these strategic investments may
fluctuate due to market conditions and other conditions
over which we have no control. Other-than-temporary
declines in the market price and valuations of the
securities that we hold in other companies would
require us to record losses related to our investment.
This could result in future charges to our earnings. It
is uncertain whether or not we will realize any long-
term benefits associated with these strategic
investments.
THE MARKET PRICE OF OUR COMMON STOCK MAY FLUCTUATE AND
OUR SHAREHOLDERS MAY LOSE ALL OR PART OF THEIR
INVESTMENT
If a market for our Class A common stock develops
following this Offering, the trading price of our Class
A common stock could be subject to wide fluctuations in
response to various factors, some of which are beyond
our control. The market prices for securities of
startup companies have historically been highly
volatile, and the market has from time to time
experienced significant price and volume fluctuations
that are unrelated to the operating performance of
particular companies. The market price of our Class A
common stock may fluctuate significantly in response to
numerous factors, some of which are beyond our control,
such as:
-
actual or anticipated adverse results or delays in
our research and development efforts;
-
our failure to commercialize our XP Platform and XT
pickup;
-
unanticipated serious safety concerns related to the
use of our products;
-
adverse regulatory decisions;
-
legal disputes or other developments relating to
proprietary rights, including patents, litigation
matters and our ability to obtain patent protection
for our intellectual property, government
investigations and the results of any proceedings or
lawsuits, including patent or stockholder
litigation;
-
changes in laws or regulations applicable to the
electric vehicle industry;
-
our dependence on third party suppliers;
-
announcements of the introduction of new products by
our competitors;
-
market conditions in the electric vehicle industry;
-
announcements concerning product development results
or intellectual property rights of others;
-
future issuances of our common stock or other
securities;
-
the addition or departure of key personnel;
-
actual or anticipated variations in quarterly
operating results;
-
announcements of significant acquisitions, strategic
partnerships, joint ventures or capital commitments
by us or our competitors;
-
our failure to meet or exceed the estimates and
projections of the investment community;
-
issuances of debt or equity securities;
-
trading volume of our common stock;
-
sales of our Class A common stock by us or our
stockholders in the future;
-
overall performance of the equity markets and other
factors that may be unrelated to our operating
performance or the operating performance of our
competitors, including changes in market valuations
of similar companies;
-
failure to meet or exceed any financial guidance or
expectations regarding development milestones that
we may provide to the public;
-
ineffectiveness of our internal controls;
-
general political and economic conditions;
-
effects of natural or man-made catastrophic events;
-
scarcity of raw materials necessary for battery
production;
-
other events or factors, many of which are beyond
our control.
Further, price and volume fluctuations may result in
volatility in the price of our Class A common stock,
which could cause a decline in the value of our stock.
Price volatility of our Class A common stock might
worsen if the trading volume of our shares is low. The
realization of any of the above risks or any of a broad
range of other risks, including those described in
these ?Risk Factors,? could have a dramatic and
material adverse impact on the market price of our
Class A common stock.
A SALE OF A SUBSTANTIAL NUMBER OF SHARES OF THE CLASS A
COMMON STOCK MAY CAUSE THE SHARE PRICES TO DECLINE
If our stockholders sell, or the market perceives that
our stockholders intend to sell for various reasons,
substantial amounts of our Class A common stock in the
public market, including shares issued in connection
with the exercise of outstanding options or warrants,
the market price of our shares could fall. Sales of a
substantial number of shares of our common stock may
make it more difficult for us to sell equity or equity-
related securities in the future at a time and price
that we deem reasonable or appropriate. We may become
involved in securities class action litigation that
could divert management?s attention and harm our
business. The stock markets have from time to time
experienced significant price and volume fluctuations
that have affected the market prices for the common
stock of pharmaceutical companies. These broad market
fluctuations may cause the market price of our common
stock to decline. In the past, securities class action
litigation has often been brought against a company
following a decline in the market price of a company?s
securities. We may become involved in this type of
litigation in the future. Litigation often is expensive
and diverts management?s attention and resources, which
could adversely affect our business.
OUR QUARTERLY OPERATING RESULTS MAY FLUCTUATE
We expect our operating results to be subject to
quarterly fluctuations. Our net loss and other
operating results will be affected by numerous factors,
including:
-
variations in the level of expenses related to our
development programs;
-
any intellectual property infringement lawsuit in
which we may become involved;
-
regulatory developments affecting our products and
related services; and
-
our execution of any collaborative, licensing or
similar arrangements, and the timing of payments we
may make or receive under these arrangements.
If our quarterly operating results fall below the
expectations of investors or securities analysts, the
price of our Class A common stock could decline
substantially. Furthermore, any quarterly fluctuations
in our operating results may, in turn, cause the price
of our Class A common stock to fluctuate substantially.
OUR DIRECTORS AND OFFICERS HAVE A SUBSTANTIAL AMOUNT OF
VOTING POWER
As of the date of this Offering Circular, our
directors, executive officers and principal
stockholders beneficially owned, in the aggregate,
substantially all of our outstanding voting securities.
As a result, if some or all of them acted together,
they would have the ability to exert significant
influence over the election of our board of directors
and the outcome of issues requiring approval by our
stockholders. This concentration of ownership may also
have the effect of delaying or preventing a change in
control of our company that may be favored by other
stockholders. This could prevent transactions in which
stockholders might otherwise recover a premium for
their shares over current market prices.
OUR ABILITY TO UTILIZE LOSS CARRY FORWARDS MAY BE
LIMITED
Generally, a change of more than fifty percent (50%) in
the ownership of a company?s stock, by value, over a
three-year period constitutes an ownership change for
U.S. federal income tax purposes. An ownership change
may limit our ability to use our net operating loss
carryforwards attributable to the period prior to the
change. As a result, if we earn net taxable income, our
ability to use our pre-change net operating loss
carryforwards to offset U.S. federal taxable income may
become subject to limitations, which could potentially
result in increased future tax liability for us.
WE MAY BE REQUIRED TO EXPEND FUNDS TO INDEMNIFY
OFFICERS AND DIRECTORS
Our Certificate of Incorporation, as amended, Bylaws
and applicable Delaware law provide for the
indemnification of our directors, officers, employees,
and agents, under certain circumstances, against
attorney?s fees and other expenses incurred by them in
any litigation to which they become a party arising
from their association with or activities on our
behalf. We will also bear the expenses of such
litigation for any of our directors, officers,
employees, or agents, upon such person?s promise to
repay us, therefore if it is ultimately determined that
any such person shall not have been entitled to
indemnification. This indemnification policy could
result in substantial expenditures by us, which we will
be unable to recover. Insofar as indemnification for
liabilities arising under the Securities Act of 1933,
as amended, may be permitted to directors, officers and
controlling persons of our Company 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.
In the event that a claim for indemnification against
such liabilities (other than the payment by us of
expenses incurred or paid by a director, officer, or
controlling person of our Company in the successful
defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in
connection with the securities being registered, the
registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the
question of whether such indemnification by it is
against public policy as expressed in the Securities
Act and will be governed by the final adjudication of
such issue.
THE REQUIREMENTS OF BEING A PUBLIC COMPANY MAY STRAIN
OUR RESOURCES AND DIVERT MANAGEMENT?S ATTENTION FROM
OPERATIONS
As a public company, we will incur significant legal,
accounting and other expenses that we have not incurred
as a private company, including costs associated with
public company reporting requirements. We also will
incur costs associated with the Sarbanes-Oxley Act of
2002, or the Sarbanes-Oxley Act, the Dodd-Frank Act and
related rules implemented or to be implemented by the
SEC. The expenses incurred by public companies
generally for reporting and corporate governance
purposes have been increasing. We expect the rules and
regulations associated with being a public company to
increase our legal and financial compliance costs and
to make some activities more time-consuming and costly,
although we are currently unable to estimate these
costs with any degree of certainty. These laws and
regulations could also make it more difficult or costly
for us to obtain certain types of insurance, including
director and officer liability insurance, and we may be
forced to accept constraints on policy limits and
coverage or incur substantially higher costs to obtain
coverage. These laws and regulations could also make it
more difficult for us to attract and retain qualified
persons to serve on our Board, our board committees or
as our executive officers and may divert management?s
attention. Furthermore, if we are unable to satisfy our
obligations as a public company, we could be subject to
delisting of our common stock, fines, sanctions and
other regulatory action and potentially civil
litigation.
THE PREPARATION OF OUR FINANCIAL STATEMENTS REQUIRES
ESTIMATES, JUDGMENTS, AND ASSUMPTIONS THAT ARE
INHERENTLY UNCERTAIN
Financial statements prepared in accordance with
accounting principles generally accepted in the United
States of America (?GAAP?) typically require the use of
estimates, judgments and assumptions that affect the
reported amounts. Often, different estimates, judgments
and assumptions could reasonably be used that would
have a material effect on such financial statements,
and changes in these estimates, judgments and
assumptions may occur from period to period over time.
These estimates, judgments and assumptions are
inherently uncertain and, if our estimates were to
prove to be wrong, we would face the risk that charges
to income or other financial statement changes or
adjustments would be required. Any such charges or
changes could harm our business, including our
financial condition and results of operations and the
price of our securities. See ?Management?s Discussion
and Analysis of Financial Condition and Results of
Operations? for a discussion of the accounting
estimates, judgments and assumptions that we believe
are the most critical to an understanding of our
consolidated financial statements and our business.
UNFAVORABLE SECURITIES INDUSTRY REPORTS COULD HAVE A
NEGATIVE EFFECT ON OUR SHARE PRICE
Any trading market for our Class A common stock will be
influenced in part by any research reports that
securities industry analysts publish about us. We do
not currently have and may never obtain research
coverage by securities industry analysts. If no
securities industry analysts commence coverage of us,
the market price and market trading volume of our Class
A common stock could be negatively affected. In the
event we are covered by analysts, and one or more of
such analysts downgrade our securities, or otherwise
reports on us unfavorably, or discontinues coverage or
us, the market price and market trading volume of our
Class A common stock could be negatively affected.
USE OF PROCEEDS
Assuming the sale by us of the Maximum Offering of
$25,000,000 and estimated commissions and offering
related expenses of $5,000,000, the total net proceeds
to us would be $20,000,000 which we currently intend to
use as set forth below.
We expect from time to time to evaluate the acquisition
of businesses, products and technologies for which a
portion of the net proceeds may be used, although we
currently are not planning or negotiating any such
transactions. As of the date of this Offering Circular,
we cannot specify with certainty all of the particular
uses for the net proceeds to us from the sale of Class
A common stock. Accordingly, we will retain broad
discretion over the use of these proceeds, if any. The
following table represents management?s best estimate
of the uses of the net proceeds received from the sale
of Class A common stock assuming the sale of,
respectively, 100%, 67%, and 33% of the Class A common
stock shares offered for sale in this Offering.
% of Offering
Sold
100%
67%
33%
Equipment and
Machinery
$
10,800,
000
$
7,236,0
00
$
3,564,0
00
Research and
Development (1)
$
6,700,0
00
$
4,489,0
00
$
2,211,0
00
Facilities
$
900,000
$
603,000
$
297,000
SG&A Expenses (2)
$
1,400,0
00
$
938,000
$
462,000
Other Opex
$
200,000
$
134,000
$
66,000
Commissions &
Offering
Expenses
$
5,000,0
00
$
3,350,0
00
$
1,650,0
00
TOTAL OFFERING
SALES
$
25,000,
000
$
16,750,
000
$
8,250,0
00
(1)
Once research and development has been completed,
we will need to invest significant funds to acquire
or build a factory, purchase machinery and
robotics, and equip it for mass production.
(2)
Includes up to $100,000 that will be used to pay
salaries and related compensation of executive
officers and directors of the Company during 2020-
2021, pursuant to employment offer letters and
contemplated employment agreements with such
persons. See ?Management ? Executive
Compensation? elsewhere in this offering Circular.
The amounts set forth above are estimates, and we
cannot be certain that actual costs will not vary from
these estimates. Our management has significant
flexibility and broad discretion in applying the net
proceeds received in this Offering. We cannot assure
you that our assumptions, expected costs and expenses
and estimates will prove to be accurate or that
unforeseen events, problems or delays will not occur
that would require us to seek additional debt and/or
equity funding, which may not be available on favorable
terms, or at all. See ?Risk Factors.?
This expected use of the net proceeds from this
Offering represents our intentions based upon our
current financial condition, results of operations,
business plans and conditions. As of the date of this
Offering Circular, we cannot predict with certainty all
of the particular uses for the net proceeds to be
received upon the closing of this Offering or the
amounts that we will actually spend on the uses set
forth above. The amounts and timing of our actual
expenditures may vary significantly depending on
numerous factors. As a result, our management will
retain broad discretion over the allocation of the net
proceeds from this Offering.
We may also use a portion of the net proceeds for the
investment in strategic partnerships and possibly the
acquisition of complementary businesses, products or
technologies, although we have no present commitments
or agreements for any specific acquisitions or
investments. Pending our use of the net proceeds from
this Offering, we intend to invest the net proceeds in
a variety of capital preservation investments,
including short-term, investment grade, interest
bearing instruments and U.S. government securities.
DILUTION
If you purchase shares in this Offering, your ownership
interest in our Class A common stock will be diluted
immediately, to the extent of the difference between
the price to the public charged for each share in this
Offering and the net tangible book value per share of
our Class A common stock after this Offering.
On December 31, 2019 there were an aggregate of
16,055,117 shares of Class A and Class D common stock
issued and outstanding. In addition, between December
2019 and March 31st, 2020, we received subscriptions for
$888,698 of our Class A common stock shares from 1194
investors in our Regulation CF campaign, that, by their
terms, automatically convert into 225,576 shares of our
Class A common stock as of the date of this Offering
Circular (at a conversion price of $3.94 per share). In
addition we have awarded 817,862 shares to employees
and contractors. Accordingly, as at date of this
Offering Circular, an aggregate of 17,151,882 shares of
our Class A and Class D common stock are issued and
outstanding.
Our net tangible book value as of December 31, 2019,
was ($33,022) or ($0.002)per then-outstanding share of
our common stock, based on 16,055,117 outstanding
shares of common stock at December 31, 2019. Our net
tangible book value as of the date of this Offering
Circular was $$61,950.61
or $0.0036 per share of our common stock, based on
17,151,882 outstanding shares of Class A and Class D
common stock as at the date of this Offering Circular.
Net tangible book value per share equals the amount of
our total tangible assets less total liabilities,
divided by the total number of shares of our Class A
and Class D common stock outstanding, all as of the
date specified.
If the maximum 3,033,981 shares of Class A common stock
in this Offering at the initial public offering price
of $8.24 per share, after deducting approximately
$5,000,000 in maximum sales commissions and other
offering expenses payable by us, our pro forma as
adjusted net tangible book value would have been
approximately $20,061,950.60 ($0.994 per share) as at
December 31, 2019. This amount represents an immediate
increase in pro forma net tangible book value of $0.994
per share to our existing stockholders at the date of
this Offering Circular, and an immediate dilution in
pro forma net tangible book value of approximately
$7.24 per share to new investors purchasing shares of
Class A common stock in this Offering at a price of
$8.24 per share.
The following table illustrates the per share dilution
to new investors discussed above, assuming the sale of,
respectively, 100%, 67% and 33% of the shares offered
for sale in this offering (after our estimated offering
expenses of $5,000,000, $3,350,000 and $1,650,000,
respectively)
The following tables set forth, assuming the sale of,
respectively, 100%, 67%, and 33% of the shares offered
for sale in this offering (after our estimated offering
expenses of $5,000,000, $3,350,000,and $1,650,000,
respectively), the total number of shares previously
sold to existing stockholders, the total consideration
paid for the foregoing and the respective percentages
applicable to such purchased shares and consideration
paid based on an average price of $0.0001 per share
paid by existing stockholders and $8.24 per share paid
by investors in this Offering.
Funding
Level
$25,000,000
$13,400,000
$6,600,000
Offering
Price
$
8.24
$
8.24
$
8.24
Pro forma
net tangible
book value
per Class A
common stock
share before
the Offering
$
0.0036
$
0.0036
$
0.0036
Increase per
common share
attributable
to investors
in this
Offering
$
8.2364
$
8.2364
$
8.2364
Pro forma
net tangible
book value
per Class A
common stock
share after
the Offering
$
0.994
$
0.702
$
0.367
Dilution
to investors
$
7.243
$
7.535
$
7.869
Dilution as
a percentage
of Offering
Price
87.89%
%
91.4%
%
95.50%
%
Shares
Purchased
Total
Consideration
Assuming
100% of
Shares Sold:
Number
Percentage
Amount
Percentage
Existing
stockholders
17,151,882
84.97%
$1,715
0.01%
New
Investors
3,033,981
15.03%
$25,000,000
99.9%
Total
20,185,863
100.00%
$25,001,715
100.00%
Shares
Purchased
Total
Consideration
Assuming 67%
of Shares
Sold:
Number
Percentage
Amount
Percentage
Existing
stockholders
17,151,882
89.40%
$1,715
0.01%
New
Investors
2,032,767
10.60%
$13,400,000
99.9%
Total
19,184,649
100.00%
$13,401,715
100.00%
Shares
Purchased
Total
Consideration
Assuming 33%
of Shares
Sold:
Number
Percentage
Amount
Percentage
Existing
stockholders
17,151,882
94.48%
$1,715
0.03%
New
Investors
1,001,214
5.52%
$6,600,000
99.7%
Total
18,153,096
100.00%
$6,601,715
100.00%
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MANAGEMENT?S DISCUSSION & ANALYSIS OF
FINANCIAL CONDITION & RESULTS OF OPERATIONS
You should read the following discussion and analysis
of our financial condition and results of our
operations together with our consolidated financial
statements and the notes thereto appearing elsewhere in
this Offering Circular. This discussion contains
forward-looking statements reflecting our current
expectations, whose actual outcomes involve risks and
uncertainties. Actual results and the timing of events
may differ materially from those stated in or implied
by these forward-looking statements due to a number of
factors, including those discussed in the sections
entitled ?Risk Factors,? ?Cautionary Statement
regarding Forward-Looking Statements? and elsewhere in
this Offering Circular. Please see the notes to our
Financial Statements for information about our
Significant Accounting Policies and Recent Accounting
Pronouncements
Statement of Operations
Fiscal year 2019
Revenues. Atlis is a pre-revenue development stage
company purposed to design, develop, and produce
electric vehicles. The design and research phases are
very protracted. No significant revenues have been
generated since inception and no revenues are expected
in the 2020 fiscal year.
Cost of Goods Sold. The Company remains in
developmental stage and, in conjunction with having
minimal operational revenue, it has incurred limited
Cost of Goods Sold.
Salaries. Salaries in 2019 were $182,176.
Legal and Professional expenses were $89,159 in 2019.
General and Administrative expenses totaled $89021 in
2019.
Selling and Marketing Expenses. Selling and marketing
expenses for fiscal year 2019 were $34,141.
Product Development. Product development expenses for
the fiscal year 2019 were $50,428.
Net Loss. For the foregoing reasons, our net loss from
fiscal year 2019 was $464,159
Liquidity, Capital Resources and Plan of Operations
Going Concern
Our financial statements appearing elsewhere in this
Offering Circular have been prepared on a going concern
basis, which contemplates the realization of assets and
the satisfaction of liabilities in the normal course of
business. Atlis Motor Vehicles? ability to continue as
a going concern is contingent upon its ability to raise
additional capital as required. In fiscal year 2019, we
reported a net loss of $750,000. Initially, we intend
to finance our operations through equity and debt
financings.
As of December 31, 2019, our cash and cash equivalents
(immediately marketable securities) was $5,075.
Unless we receive additional private financing or we
receive a minimum of $5,000,000 from the proceeds of
this Offering, we will not be able to conduct our
planned operations. We estimate that if we receive a
minimum of $5,000,000 of private financing or from the
proceeds of this Offering, our existing capital
resources will permit us to conduct our planned
operations for only approximately 180 days following
the date of this Offering Circular. Development of an
electric vehicle on this scale is a very cash intensive
proposition. Accordingly, our business plan is
dependent on our raising sufficient proceeds from this
Offering. In addition, we may have to raise additional
interim capital from other private sources. There can
be no assurance that such needed capital will be
available or even if available that it will not be
extremely dilutive to the equity of potential investors
in this Offering.
Our auditors have indicated that these conditions raise
substantial doubt about the Company?s ability to
continue as a going concern. These financial statements
do not include any adjustments relating to the
recoverability and classification of recorded asset
amounts, or amounts and classification of liabilities
that might result from this uncertainty.
Financings and Securities Offerings
Name of person: Mark Hanchett
Relationship to company: Officer
Nature / amount of interest in the transaction: Mark
Hanchett loaned money to Atlis Motor Vehicles to ensure
continued operations in the business.
Material terms of transaction: There are no material
terms. Loan will be paid back as appropriate to ensure
continued operation of the business. As of December 31,
2019, the company owes Mark Hanchett $10,483.49.
We have made the following issuances of securities
within the last three years:
Date of offering: February 28, 2018
Type of security sold: Common Stock
Final dollar amount sold: $2,000.13
Use of proceeds: Stock Purchase
Offering exemption relied upon: Section 4(a)(2)
Shares Sold: 6897
Date of offering: February 28, 2018
Type of security sold: Common Stock
Final dollar amount sold: $4,995.25
Use of proceeds: Continued Operations
Offering exemption relied upon: Section 4(a)(2)
Shares Sold: 17225
Date of offering: February 28, 2019
Type of security sold: Common Stock
Final dollar amount sold: $1,066,607.53
Use of proceeds: Product Development Develop the
prototype Atlis Motor Vehicles Advanced Charging
Station Develop the prototype Atlis Motor Vehicles
100T pickup truck Facilities and Location Establish
a permanent residence and prototype facility will
be established. Two locations are currently in the
running. Team Members Atlis Motor Vehicles will
bring on full-time team members who have previously
worked part time on efforts Atlis Motor Vehicles
will lean on industry experts to assist in
developing prototype components and final vehicle
assembly. Seed Funding Campaign Continue social
media campaign to raise funding Create campaign
video for Startengine.com page. Vehicle interest
campaign Launch marketing campaign to take pre-
order interest for the Atlis Motor Vehicles PEV
Pickup truck.
Offering exemption relied upon: Regulation CF
Shares Sold: 3677957
Date of offering: May 2, 2019
Type of security sold: Common Stock
Final dollar amount sold: $58,000.00
Use of proceeds: Continued Operations
Offering exemption relied upon: Section 4(a)(2)
Shares Sold: 200000
Date of offering: May 21, 2019
Type of security sold: Common Stock
Final dollar amount sold: $4,350.00
Use of proceeds: Stock Purchase
Offering exemption relied upon: Section 4(a)(2)
Shares Sold: 15000
Date of offering: May 21, 2019
Type of security sold: Common Stock
Final dollar amount sold: $6,090.00
Use of proceeds: Stock Purchase
Offering exemption relied upon: Section 4(a)(2)
Shares Sold: 21000
Date of offering: September 17, 2019
Type of security sold: Common Stock
Final dollar amount sold: $1,500.17
Use of proceeds: Continued Operations
Offering exemption relied upon: Section 4(a)(2)
Shares Sold: 5173
Date of offering: September 17, 2019
Type of security sold: Common Stock
Final dollar amount sold: $10,000.07
Use of proceeds: Continued Operations
Offering exemption relied upon: Section 4(a)(2)
Shares Sold: 34483
Date of offering: September 18, 2019
Type of security sold: Common Stock
Final dollar amount sold: $5,000.18
Use of proceeds: Continued Operations
Offering exemption relied upon: Section 4(a)(2)
Shares Sold: 17242
Date of offering: September 17, 2019
Type of security sold: Common Stock
Final dollar amount sold: $2,000.13
Use of proceeds: Continued Operations
Offering exemption relied upon: Section 4(a)(2)
Shares Sold: 6897
Date of offering: September 18, 2019
Type of security sold: Common Stock
Final dollar amount sold: $4,500.22
Use of proceeds: Continued Operations
Offering exemption relied upon: Section 4(a)(2)
Shares Sold: 15518
Date of offering: September 18, 2019
Type of security sold: Common Stock
Final dollar amount sold: $1,100.26
Use of proceeds: Continued Operations
Offering exemption relied upon: Section 4(a)(2)
Shares Sold: 3794
Date of offering: September 18, 2019
Type of security sold: Common Stock
Final dollar amount sold: $3,000.15
Use of proceeds: Continued Operations
Offering exemption relied upon: Section 4(a)(2)
Shares Sold: 10345
Date of offering: October 30, 2019
Type of security sold: Common Stock
Final dollar amount sold: $19,999.85
Use of proceeds: Investment - Private
Offering exemption relied upon: Section 4(a)(2)
Shares Sold: 6896547,269
Date of offering: March 10 , 2020
Type of security sold: Common Stock
Final dollar amount sold: $32,551.65
Use of proceeds: Product Development Develop the
prototype Atlis Motor Vehicles Advanced Charging
Station Develop the prototype Atlis Motor Vehicles
XT pickup truck Facilities and Location Establish a
permanent residence and prototype facility will be
established
Shares sold: 6,684
Date of offering: April 10 , 2020
Type of security sold: Common Stock
Final dollar amount sold: $30,119.95
Use of proceeds: Product Development Develop the
prototype Atlis Motor Vehicles Advanced Charging
Station Develop the prototype Atlis Motor Vehicles
XT pickup truck Facilities and Location Establish a
permanent residence and prototype facility will be
established
Shares sold: 6,219
The Company presently intends to raise additional
capital to fund its research, development and operating
expenses prior to the commencement of this Offering
under Regulation A+, and plans to conduct a private
placement of its Common Stock pursuant to Regulation D
and/or Regulation S prior to the qualification of this
Offering by the SEC. The Company must raise additional
equity or debt financing, both now and in the future
following this Offering. However, no assurances can be
made that the Company will be successful obtaining
additional equity or debt financing, or that ultimately
the Company will achieve profitable operations and
positive cash flow.
Since inception, our principal sources of operating
funds have been proceeds from equity financing
including Regulation CF crowdfunding equity financing
and including the sale of our Common Stock to initial
investors known to management and principal
shareholders of the Company. We do not expect that our
current cash on hand will fund our existing operations.
We will need to raise additional capital in order
execute our business plan and growth goals for at least
the next twelve-month period thereafter. If Atlis is
unable to raise sufficient additional funds, it will
have to execute a slower than planned growth path,
reduce overhead and scale back its business plan until
sufficient additional capital is raised to support
further operational expansion and growth. There can be
no assurance that such a plan will be successful.
Current Plan of Operations
Our plan of operations is currently focused on the
development of our XP platform and XT pickup. We expect
to incur substantial expenditures in the foreseeable
future for the extended development and testing of our
technology and the potential commercialization of the
products. At this time, we cannot reliably estimate the
nature, timing or aggregate amount of such costs. Our
products will require extensive technical evaluation,
potential regulatory review and approval, significant
marketing efforts and substantial investment before it
or any successors could provide us with any revenue.
Further, we intend to continue to build our corporate
and operational infrastructure and to build interest in
our products with the goal of becoming the market
leader in electric trucks.
As noted above, the continuation of our current plan of
operations requires us to raise significant additional
capital immediately. If we are successful in raising
capital through the sale of shares offered for sale in
this Offering Circular we believe that the Company will
have sufficient cash resources to fund its plan of
operations for the next twelve months. If we are unable
to do so, our ability to continue as a going concern
will be in jeopardy, likely causing us to curtail and
possibly cease operations.
We continually evaluate our plan of operations
discussed above to determine the manner in which we can
most effectively utilize our limited cash resources.
The timing of completion of any aspect of our plan of
operations is highly dependent upon the availability of
cash to implement that aspect of the plan and other
factors beyond our control. There is no assurance that
we will successfully obtain the required capital or
revenues, or, if obtained, that the amounts will be
sufficient to fund our ongoing operations. The
inability to secure additional capital would have a
material adverse effect on us, including the
possibility that we would have to sell or forego a
portion or all of our assets or cease operations. If we
discontinue our operations, we will not have sufficient
funds to pay any amounts to our stockholders. If in the
future we are not able to demonstrate adequate progress
in the development of our product, we will not be able
to raise the capital we need to continue our then
current business operations and business activities,
and we will likely not have sufficient liquidity or
cash resources to continue operating.
Because our working capital requirements depend upon
numerous factors there can be no assurance that our
current cash resources will be sufficient to fund our
operations. At present, we have no committed external
sources of capital, and do not expect any significant
product revenues for the foreseeable future. Thus, we
will require immediate additional financing to fund
future operations. There can be no assurance, however,
that we will be able to obtain funds on acceptable
terms, if at all.
Capital Expenditures
We will require significant capital expenditures to
secure the facilities and equipment necessary to
complete development and begin producing our products.
Due to the size and scope of the operations, it will be
necessary to expand facilities and equipment as
production operations ramp. This will require
exponentially more capital.
Contractual Obligations, Commitments and Contingencies
Atlis Motor Vehicles has signed a 5 year and 3 month
lease agreement with Majestic Mesa Partners, to occupy
a 42,828 Sq. Ft industrial facility at 1828 North
Higley Road, Suite 100, Mesa AZ , commencing on April
1st, 2020. Base rent obligation for Months 1 through 7
is $14,133, Months 8-12 is $28,266.48 with subsequent
annual increase of 3% for Years 2-5. In addition to
Base rent, Atlis Motor Vehicles is responsible for
Property Taxes, utilities and maintenance costs related
to the property, which are estimated at a monthly rate
of $7,265 for 2020, are commencing from Month 1 of the
lease obligation and will be annually adjusted as
needed.
Off-Balance Sheet Arrangements
We did not have during the periods presented, and we do
not currently have, any off-balance sheet arrangements.
Quantitative and Qualitative Disclosures about Market
Risk
In the ordinary course of our business, we are not
exposed to market risk of the sort that may arise from
changes in interest rates or foreign currency exchange
rates, or that may otherwise arise from transactions in
derivatives. We do not currently invest in any
securities as all capital is being diverted to
developing our products.
Contingencies
Certain conditions may exist as of the date the
financial statements are issued, which may result in a
loss to the Company, but which will only be resolved
when one or more future events occur or fail to occur.
Atlis Motor Vehicles? Management, in consultation with
its legal counsel as appropriate, assesses such
contingent liabilities, and such assessment inherently
involves an exercise of judgment. In assessing loss
contingencies related to legal proceedings that are
pending against Atlis or unasserted claims that may
result in such proceedings, Atlis, in consultation with
legal counsel, evaluates the perceived merits of any
legal proceedings or unasserted claims, as well as the
perceived merits of the amount of relief sought or
expected to be sought therein. If the assessment of a
contingency indicates it is probable that a material
loss has been incurred and the amount of the liability
can be estimated, then the estimated liability would be
accrued in the Atlis Motor Vehicles? financial
statements. If the assessment indicates a potentially
material loss contingency is not probable, but is
reasonably possible, or is probable, but cannot be
estimated, then the nature of the contingent liability,
together with an estimate of the range of possible
loss, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not
disclosed unless they involve guarantees, in which case
the guarantees would be disclosed.
Relaxed Ongoing Reporting Requirements
Upon the completion of this Offering, we may elect to
become a public reporting company under the Exchange
Act. If we elect to do so, we will be required to
publicly report on an ongoing basis as an ?emerging
growth company? (as defined in the Jumpstart Our
Business Startups Act of 2012, which we refer to as the
?JOBS Act?) under the reporting rules set forth under
the Exchange Act. As defined in the JOBS Act, an
emerging growth company is defined as a company with
less than $1.0 Billion in revenue during its last
fiscal year. An emerging growth company may take
advantage of specified reduced reporting and other
burdens that are otherwise applicable generally to
public companies.
For so long as we remain an ?emerging growth company,?
we may take advantage of certain exemptions from
various reporting requirements that are applicable to
other Exchange Act reporting companies that are not
?emerging growth companies,? including but not limited
to:
-
not being required to comply with the auditor
attestation requirements of Section 404 of the
Sarbanes-Oxley Act;
-
taking advantage of extensions of time to comply
with certain new or revised financial accounting
standards;
-
being permitted to comply with reduced disclosure
obligations regarding executive compensation in our
periodic reports and proxy statements; and
-
being exempt from the requirement to hold a non-
binding advisory vote on executive compensation and
stockholder approval of any golden parachute
payments not previously approved.
If we are required to publicly report under the
Exchange Act as an ?emerging growth company?, we expect
to take advantage of these reporting exemptions until
we are no longer an emerging growth company. We would
remain an ?emerging growth company? for up to five
years, though if the market value of our Common Stock
that is held by non-affiliates exceeds $700 million, we
would cease to be an ?emerging growth company?.
If we elect not to become a public reporting company
under the Exchange Act, we will be required to publicly
report on an ongoing basis under the reporting rules
set forth in Regulation A for Tier 2 issuers. The
ongoing reporting requirements under Regulation A are
more relaxed than for ?emerging growth companies? under
the Exchange Act. The differences include, but are not
limited to, being required to file only annual and
semi-annual reports, rather than annual and quarterly
reports. Annual reports are due within one hundred
twenty (120) calendar days after the end of the
issuer's fiscal year, and semi-annual reports are due
within ninety (90) calendar days after the end of the
first six (6) months of the issuer's fiscal year
OUR BUSINESS
Overview
ATLIS AND INDUSTRY BACKGROUND
Atlis Motor Vehicles is a technology development
company providing a Vehicle as a Service platform for
electric heavy duty and light duty work vehicles. The
company is developing electrified vehicle,
infrastructure, and software platforms for work fleets.
At the core of Atlis Motor Vehicles? hardware platform
is a revolutionary battery technology capable of
charging a full-size pickup truck in 15 minutes, and a
modular system architecture capable of scaling to meet
the specific vehicle or equipment application needs. We
want to build a truck with unprecedented capabilities at
a reasonable price. We also want to change the customer
experience from sales, ordering, financing, and delivery
to maintenance and service.
Principal Product and its market
Atlis Motor Vehicles has several pillars of product
focus for our business. These pillars are:
Battery technology. Our goal is to offer a superior
battery technology solution that offers unparalleled
performance in charging as well as inclement weather
and output performance, Atlis Motor Vehicles is
poised to become a major player in the battery
industry.
XP Platform and connected vehicle technology. As we
look to the future of electrification, Atlis Motor
Vehicles XP Platform aims to provide a scalable
technology solution with a connected cloud, mobile,
service, and charging ecosystem that will provide
unprecedented workflows and customer experiences
moving forward. This platform of technology will be
leveraged to develop new vehicle solutions quickly
while minimizing costs and time The XP technology
platform will allow Atlis Motor Vehicles to work
quickly with strategic partners looking to develop
new vehicle solutions for niche and mass-market
opportunities while leveraging the vast network of
capabilities we look to provide.
Advanced charging stations. The Atlis Motor Vehicles
Advanced Charging Station, or AAC, technology
represents the pinnacle of charging infrastructure of
the future. The goal is for this technology to boast
the highest power solution to enter the market, a
1.5MW charging station, that's as simple to operate
as filling up your gas vehicle today or plugging in a
Tesla vehicle.
The XT Pickup truck. The flagship vehicle product
offering. The XT Pickup truck aims to represent every
key piece of technology Atlis Motor Vehicles is
developing and how this technology can be utilized to
bring capable, non-compromising vehicle solutions
through electrification. The XT Pickup truck is our
market entry solution into the world of work, and is
just the beginning of a long line of vehicle
solutions built on our XP Platform.
How We Will Generate Revenue
Atlis Motor Vehicles does not current generate sales
for our software and hardware services. Atlis Motor
Vehicles is in the early stages of the product and
company development. Atlis Motor Vehicles? expects to
begin generating sales by June 2020.
Atlis Motor Vehicles has received over $1.5 billion in
projected reservation interest for our XT Pickup Truck
and XP Platform. This projection is based on a
predicted average sales price of Atlis XT Truck of
$59,968 and average sales price of Atlis XP Platofrm of
$27,000, using electronic reservations made on the
Company's website. These reservations are non-deposit
and require no down payment to place. Atlis Motor
Vehicles has chosen to forego the requirement for a
refundable deposit in favor of allowing reservation
holders to become a potential investor in Atlis Motor
Vehicles through our Regulation CF offering.
Atlis Motor Vehicles is actively engaging in contact
development with potential customers for interest for
the XP Platform. Expressed interest for the XP Platform
is in relation to conversations currently underway with
potential customers who have expressed interest in
development of a specialized vehicle using our XP
Platform. This expressed interest should not be taken
as a guarantee of sale. Customer interest here is
anonymous until further public disclosure agreements
have been put in place.
Distribution Channels
Our hardware and services will be conducted online via
our website. Fleet and consumer customers will be able
to purchase the Atlis XP Platform, Atlis XT Pickup
Truck, and Atlis advanced charging solutions online.
Our advanced charging infrastructure will require users
to be able to purchase electricity at our charging
stations. This purchase will be conducted through our
cloud-based mobile application and website.
Growth Strategy
Our strategy for growth is to focus on execution. We are
completing the design work to deliver our production
prototype in the second half of 2020. From there, we
will stand up production and begin building product.
Once we have started production, we plan to leverage
influencer marketing and customer word of mouth the
generate additional interest in our products. We will
develop a dedicated sales team pursuing larger fleet
customers.
Need for Government Approval of Principal Products or
Services
As we progress, we may need to obtain government
approval for meeting federal transportation safety
guidelines.
Our Team Members
Mark Hanchett, Chief Executive Officer - Mark
Hanchett has over ten years of product development
experience with 16 successful electromechanical and
software product launches. Mark Hanchett brings a
passion for solving hard problems in product
strategy, design, manufacturing, and business
operations, while continuously driving a focus on the
best possible customer experience. Mark has served as
Founder, Director, and CEO of Atlis Motor Vehicles
since inception in 2016. Before starting Atlis Motor
Vehicles, Mark was a director at Axon Enterprise Inc
from 2012 to 2017, leading teams in the development
of innovative hardware and software products for law
enforcement. From 2007 to 2012 he served as a senior
mechanical engineer and project manager leading
cross-functional teams through design and development
of innovative conductive electrical weapons at Axon
Enterprise inc. He lives in Mesa, Arizona with his
wife and two kids. Mark is full time with Atlis.
Annie Pratt, President - Annie is a creative problem
solver with a background in product management,
design, and business. After studying Product Design
at Stanford's design school, she kicked off her
career as a Product Manager at Axon Enterprise,
launching in-car video solutions for law enforcement.
Most recently she served as the Director of Consumer
Products at Axon, where she built an independent
business unit and doubled both revenue and profit in
three years. She has brought a passion for design
thinking, user experience, and business strategy to
Atlis.
Ross Compton, Lead Vehicle Designer - Ross is an
independently contracted award winning designer with
a varied background within automotive design. After
completing the famous Coventry University Automotive
and Transport design course he went straight to
Turin, Italy where he was lucky enough to work on the
interior to the Willys AW380 show car shown in
Bologna 2014. From there Ross has been on many
smaller scale projects for new and developing brands,
designing everything from supercars to trucks.
Perhaps the most notable experience is his work at
Bollinger Motors where Ross, alongside the owner,
designed the Bollinger B1. His growing collection of
works can be found on his own site
www.macchinadesign.com.
Derek Duff, Vehicle Dynamics Engineer - Derek?s love
for the automotive industry started with his first
truck ? since he can remember, he's been researching
trucks and imagining ways to design and modify them.
After graduating with a degree in Mechanical
Engineering from the University of Maine, he moved to
Michigan to work with IAV Automotive Engineering at
the Chrysler Proving Grounds. A truck guy through-
and-through, Derek spends most of his personal time
designing and implementing his ideas into truck
builds. He is currently designing, testing and
validating the suspension and chassis designs for the
Atlis Motor Vehicles XT and XP.
Matthew Wilkins, Mechanical Design Engineer - Matt
has an experienced background in a wide variety of
fields. While pursuing his Mechanical Engineering
degree, he competed in the SAE Super mileage
competition as a body design team lead. Matt then
pursued his creative side and achieved his Masters in
Design, New Product Innovation with Arizona State
University. He has worked at TASER International as
an industrial designer, performed consumer research,
prototyping, and UI design at Nautilus Fitness, and
has done freelance design. Matt is our swiss-army-
knife here at Atlis, able to grind out CAD work on
our platform and body for weeks on end, and then
switch gears into creative UI, graphics, and video
work at a moment's notice. In his spare time, Matt is
a competitive cyclist and ultramarathoner.
Liam Burke, Senior Engineer - Liam has a passion for
emerging technologies, innovative ideas, and scrappy
teams. A mechanical engineer by education, he has
worked across a broad range of fields, from
manufacturing technologies, to aerospace hardware, to
consumer products. Before Atlis, Liam led the
consumer engineering team at Axon/Taser, where he
planned and developed mechanical, electrical, and
software systems. Growing up between Montana and
Washington, Liam loves the outdoors and believes a
great product should be much like nature: inspiring,
durable, sustainable, and simple, yet full of detail.
Abel Saucedo, Senior Electrical Engineer - An
Electrification enthusiast, Abel has been involved in
the EV scene for over 15 years. Throughout his
career, he?s designed products across a range of
fields, from aerospace hardware, to utility power and
consumer products. He also founded his own portable
energy company. A home-grown Arizonan, Abel enjoys
running, rock climbing and crossfit with his daughter
and pups.
Current Roles Being Filled as part of this offering.
VP of Engineering
Atlis Motor Vehicles is seeking and talking with a
talented individual with at minimum 10 years of
experience in automotive development programs. A
preference for electric vehicle development is desired
for this position. Startup mindset and a focus on
frugal spending will be key. We are primarily seeking
individuals who may currently be, or who are currently
exiting existing EV startups such as, but not limited
to, Faraday Future, Lucid Motors, Tesla, Rivian, and
Byton.
VP of Operations
Atlis Motor Vehicles is seeking and talking with
talented individuals with a minimum of 10 years of
experience in automotive development and manufacturing
programs. A key indicator is an individual with
automotive startup experience. This individual must
possess key talents in supplier development,
operational excellence, and lean startup processes. We
are primarily seeking individuals who may currently be,
or who are currently exiting existing EV startups such
as, but not limited to, Faraday Future, Lucid Motors,
Tesla, Rivian, and Byton.
Core Engineering and Technical talent.
Atlis Motor Vehicles currently hiring over 65 engineers
with automotive experience or significant talents that
will allow them to tackle key technical areas of
expertise. Our core focus is on battery, drive systems,
vehicle dynamics, vehicle structures, and electronic
systems.
Product and Program Management
Atlis Motor Vehicles is currently hiring key leadership
roles in program management and product management to
lead our technical teams in development of hardware,
software, and firmware systems. Each program is divided
based on technical and product expertise. These
individuals will be key factors in managing
expectations, schedules, budgets, and team coordination
efforts.
Significant Purchases of Plant and Equipment
Category
Purchase
Price
Mechanical Fabrication
Equipment (CNCs, Lathes, Laser
Cutters, Lifts, Welders, etc.)
$1,620,451
Power Tools
$573
Electrical Equipment (Meters,
ESD Tables, Power Supplies,
etc.)
$5,128
Battery Fabrication Equipment
(Welders, Testers, Safety
Equipment, Storage)
$65,352
Quality & Validation Test
Equipment
$69,499
Office Equipment (Desks,
Conference Rooms, Computers,
etc.)
$100,773
Paint Booth
$31,000
TOTAL
$1,892,776
Liquidity & Capital Resources
As of April 20, 2020, Atlis Motor Vehicles has a
balance of $198,744.40 in cash available. As of April
20, 2020 Atlis Motor Vehicles does not have available
revolving credit.
PROPERTY
Atlis has occupied 1828 Higley Road, Mesa AZ, for all
its operations
LEGAL PROCEEDINGS
No proceedings are pending to which the Company or any
of its property is subject, nor to the knowledge of the
Company, are any such legal proceedings threatened
against the Company.
MANAGEMENT
Executive Officer and Director
Our executive officers and directors, and their ages
and positions as of the date of this memorandum, are as
follows:
Name
Position
Mr. Mark Hanchett
Ms. Annie Pratt
Ms. Tamica Sears
CEO, Director
President
VP of Talent
EXECUTIVE COMPENSATION
Name
Capacities
in which
compensati
on was
received
Cash
compensati
on ($)
Other
compensati
on ($)
Total
compensati
on ($)
Mark
Hanchet
t
Chief
Executive
Officer
$200,000
$0
$200,000
Annie
Pratt
President
$200,000
$0
$200,000
Tamica
Sears
VP of
Talent
$120,000
$0
$120,000
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Name: Mark Hanchett
Securities owned: 10,000,000 Class D Stock
Total voting power: 84.1%
Name: Annie Pratt
Securities owned: 1,269,626 Class D Stock
Total voting power: 10.7%
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Name of Entity: Mark Hanchett
Relationship to Company: Officer
Nature/amount of interest in the transaction: Mark
Hanchett loaned money to Atlis Motor Vehicles to ensure
continued operations in the business.
Material Terms: There are no material terms. Loan will
be paid back as appropriate to ensure continued
operation of the business. As of January 1, 2020 the
company owes Mark Hanchett $10,483.49.
DESCRIPTION OF COMMON STOCK
We have authorized capital stock consisting of
60,000,000 shares of common stock, $0.0001 par value
per share. Atlis Motor Vehicles has several classes of
common stock shares.
Class A
Class A common stock has 1 vote per share.
As of March 31st, 2020. Atlis Motor Vehicles has issued
4,871,129 Class A shares outstanding.
Class B
Class B common stock has no voting power. This Class B
classification is reserved for future issues of common
stock.
As of March 1st, 2020. Atlis Motor Vehicles has 0 Class
B shares outstanding.
Class C
Class C common stock is Non-participating Preferred
Class A common stock. This Class C Class A common stock
has 1 vote per share. Class C stock receives non-
participating preferred liquidation preference. Upon a
sale or transfer of Class C stock, Class C stock shall
be converted to Class A stock. Holder of Class C stock
has the right to a board seat.
As of March 1st, 2020. Atlis Motor Vehicles has 0 Class
C shares outstanding.
Class D
Class D classification of common stock has 10 votes per
share. This Class D classification may be used for
future issues of common stock.
As of March 31st, 2020. Atlis Motor Vehicles had
12,225,048 Class D shares outstanding.
PENNY STOCK REGULATION
The SEC has adopted regulations which generally define
?penny stock? to be any equity security that has a
market price of less than Five Dollars ($5.00) per
share or an exercise price of less than Five Dollars
($5.00) per share. Such securities are subject to rules
that impose additional sales practice requirements on
broker-dealers who sell them. For transactions covered
by these rules, the broker-dealer must make a special
suitability determination for the purchaser of such
securities and have received the purchaser?s written
consent to the transaction prior to the purchase.
Additionally, for any transaction involving a penny
stock, unless exempt, the rules require the delivery,
prior to the transaction, of a disclosure schedule
prepared by the SEC relating to the penny stock market.
The broker-dealer also must disclose the commissions
payable to both the broker-dealer and the registered
representative, current quotations for the securities
and, if the broker-dealer is the sole market-maker, the
broker-dealer must disclose this fact and the broker-
dealer?s presumed control over the market. Finally,
among other requirements, monthly statements must be
sent disclosing recent price information for the penny
stock held in the account and information on the
limited market in penny stocks. As our Common Stock
immediately following this Offering may be subject to
such penny stock rules, purchasers in this Offering
will in all likelihood find it more difficult to sell
their Common Stock shares in the secondary market
DIVIDEND POLICY
We have never declared or paid cash dividends. We
intend to retain earnings, if any, to support the
development of the business and therefore, do not
anticipate paying cash dividends for the foreseeable
future. Payment of future dividends, if any, will be at
the discretion of our board of directors after taking
into account various factors, including current
financial condition, operating results and current and
anticipated cash needs.
OFFERING INCENTIVES
High Dollar Investor Perks
$500+ Investment - Get $500 off the purchase of XT
Pickup Truck or subscription membership
$1,500+ Investment - Get $1500 off the purchase of XT
Pickup Truck or subscription membership
$5,000+ Investment - Get $5000 off the purchase of XT
Pickup Truck or subscription membership
$20,000+ Investment - Get $20,000 off the purchase of
XT Pickup Truck or subscription membership
$100,000+ Investment - Get an XT pickup truck
configuration of choice
Early Investor Bonuses
Any investor who invests in the first 36 hours of the
campaign going live will receive a bonus 30% additional
shares. Any investor who invests within the first 7
days of the campaign going live will receive a bonus
20% additional shares. Any investor who invests within
the first 10 days of the campaign going live will
receive a bonus 10% additional shares
PLAN OF DISTRIBUTION
The shares are being offered by us on a ?best-efforts?
basis by our officers, directors and employees, with
the assistance of independent consultants, and possibly
through registered broker-dealers who are members of
the Financial Industry Regulatory Authority (?FINRA?)
and finders. As of the date of this Offering Circular,
unless otherwise permitted by applicable law, we do not
intend to accept subscriptions from investors in this
Offering who reside in certain states, unless and until
the Company has complied with each such states?
registration and/or qualification requirements or a
FINRA-member broker-dealer has been engaged by the
Company to consummate and process sales to investors in
such states. We reserve the right to temporarily
suspend and/or modify this Offering and Offering
Circular in the future, during the Offering Period, in
order to take such actions necessary to enable the
Company to accept subscriptions in this Offering from
investors residing in such states identified above.
There is no aggregate minimum to be raised in order for
the Offering to become effective and therefore the
Offering will be conducted on a ?rolling basis.? This
means we will be entitled to begin applying ?dollar
one? of the proceeds from the Offering towards our
business strategy, offering expenses, reimbursements,
and other uses as more specifically set forth in the
?Use of Proceeds? contained elsewhere in this Offering
Circular.
We may pay selling commissions to participating broker-
dealers who are members of FINRA for shares sold by
them, equal to a percentage of the purchase price of
the Class A common stock shares. We may pay finder?s
fees to persons who refer investors to us. We may also
pay consulting fees to consultants who assist us with
the Offering, based on invoices submitted by them for
advisory services rendered. Consulting compensation,
finder?s fees and brokerage commissions may be paid in
cash, Class A common stock or warrants to purchase our
Class A common stock. We may also issue shares and
grant stock options or warrants to purchase our Class A
common stock to broker-dealers for sales of shares
attributable to them, and to finders and consultants,
and reimburse them for due diligence and marketing
costs on an accountable or non-accountable basis. We
have not entered into selling agreements with any
broker-dealers to date, though we may engage a FINRA
registered broker-dealer firm for offering
administrative services. Participating broker-dealers,
if any, and others may be indemnified by us with
respect to this offering and the disclosures made in
this Offering Circular.
Our Offering will expire on the first to occur of (a)
the sale of all 3,033,981 shares of Class A common
stock offered hereby, (b) November 30, 2020, subject to
extension for up to one hundred-eighty (180) days in
the sole discretion of the Company, or (c) when our
board of directors elects to terminate the Offering.
ADDITIONAL INFORMATION ABOUT THE OFFERING
Investment Limitations
Generally, no sale may be made to you in this Offering
if the aggregate purchase price you pay is more than
ten percent (10%) of the greater of your annual income
or net worth (please see below on how to calculate your
net worth). Different rules apply to accredited
investors and non-natural persons. Before making any
representation that your investment does not exceed
applicable thresholds, we encourage you to review Rule
251(d)(2)(i)(C) of Regulation A. For general
information on investing, we encourage you to refer
to www.investor.gov.
Because this is a Tier 2, Regulation A offering, most
investors must comply with the ten percent (10%)
limitation on investment in the Offering. The only
investor in this Offering exempt from this limitation
is an ?accredited investor? as defined under Rule 501
of Regulation D under the Securities Act (an
?Accredited Investor?). If you meet one of the
following tests you should qualify as an Accredited
Investor:
(i)
You are a natural person who has had individual
income in excess of $200,000 in each of the two
(2) most recent years, or joint income with your
spouse in excess of $300,000 in each of these
years, and have a reasonable expectation of
reaching the same income level in the current
year;
(ii)
You are a natural person and your individual net
worth, or joint net worth with your spouse,
exceeds $1,000,000 at the time you purchase Shares
(please see below on how to calculate your net
worth);
(iii)
You are an executive officer or general partner of
the issuer or a manager or executive officer of
the general partner of the issuer;
(iv)
You are an organization described in Section
501(c)(3) of the Internal Revenue Code of 1986, as
amended, or the Code, a corporation, a
Massachusetts or similar business trust or a
partnership, not formed for the specific purpose
of acquiring the Shares, with total assets in
excess of $5,000,000;
(v)
You are a bank or a savings and loan association
or other institution as defined in the Securities
Act, a broker or dealer registered pursuant to
Section 15 of the Exchange Act, an insurance
company as defined by the Securities Act, an
investment company registered under the Investment
Company Act of 1940 (the "Investment Company
Act"), or a business development company as
defined in that act, any Small Business Investment
Company licensed by the Small Business Investment
Act of 1958 or a private business development
company as defined in the Investment Advisers Act
of 1940;
(vi)
You are an entity (including an Individual
Retirement Account trust) in which each equity
owner is an accredited investor;
(vii)
You are a trust with total assets in excess of
$5,000,000, your purchase of Shares is directed
by a person who either alone or with his
purchaser representative(s) (as defined in
Regulation D promulgated under the Securities
Act) has such knowledge and experience in
financial and business matters that he is capable
of evaluating the merits and risks of the
prospective investment, and you were not formed
for the specific purpose of investing in the
Shares; or
(viii)
You are a plan established and maintained by a
state, its political subdivisions, or any agency
or instrumentality of a state or its political
subdivisions, for the benefit of its employees,
if such plan has assets in excess of $5,000,000.
Offering Period and Expiration Date
This Offering will start on or immediately prior to the
date on which the SEC initially qualifies this Offering
Statement (the ?Qualification Date?) and will terminate
on the Termination Date (the ?Offering Period?).
Procedures for Subscribing
If you decide to subscribe for our Class A common stock
shares in this Offering, you should:
1.
Electronically receive, review, execute and deliver
to us a subscription agreement; and
2.
Deliver funds directly by wire or electronic funds
transfer via ACH to the Company?s bank account
designated in the Company?s subscription agreement.
Any potential investor will have ample time to review
the subscription agreement, along with their counsel,
prior to making any final investment decision. We shall
only deliver such subscription agreement upon request
after a potential investor has had ample opportunity to
review this Offering Circular.
Right to Reject Subscriptions
After we receive your complete, executed subscription
agreement and the funds required under the subscription
agreement have been transferred to our designated
account, we have the right to review and accept or
reject your subscription in whole or in part, for any
reason or for no reason. We will return all monies from
rejected subscriptions immediately to you, without
interest or deduction.
Acceptance of Subscriptions
Upon our acceptance of a subscription agreement, we
will countersign the subscription agreement and issue
the shares subscribed at closing. Once you submit the
subscription agreement and it is accepted, you may not
revoke or change your subscription or request your
subscription funds. All accepted subscription
agreements are irrevocable.
Under Rule 251 of Regulation A, non-accredited, non-
natural investors are subject to the investment
limitation and may only invest funds which do not
exceed ten percent (10%) of the greater of the
purchaser's revenue or net assets (as of the
purchaser's most recent fiscal year end). A non-
accredited, natural person may only invest funds which
do not exceed ten percent (10%) of the greater of the
purchaser's annual income or net worth (please see
below on how to calculate your net worth).
NOTE: For the purposes of calculating your net worth,
it is defined as the difference between total assets
and total liabilities. This calculation must exclude
the value of your primary residence and may exclude any
indebtedness secured by your primary residence (up to
an amount equal to the value of your primary
residence). In the case of fiduciary accounts, net
worth and/or income suitability requirements may be
satisfied by the beneficiary of the account or by the
fiduciary, if the fiduciary directly or indirectly
provides funds for the purchase of the Shares.
In order to purchase our Class A common stock shares
and prior to the acceptance of any funds from an
investor, an investor will be required to represent, to
the Company?s satisfaction, that he is either an
accredited investor or is in compliance with the ten
percent (10%) of net worth or annual income limitation
on investment in this Offering.
EXPERTS
The financial statements of the Atlis appearing
elsewhere in this Offering Circular have been included
herein in reliance upon the report, which includes an
explanatory paragraph as to the Company's ability to
continue as a going concern, of LLC, an independent
certified public accounting firm, appearing elsewhere
herein, and upon the authority of that firm as experts
in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a Regulation A Offering
Statement on Form 1-A under the Securities Act of 1993,
as amended, with respect to the shares of Class A
common stock offered hereby. This Offering Circular,
which constitutes a part of the Offering Statement,
does not contain all of the information set forth in
the Offering Statement or the exhibits and schedules
filed therewith. For further information about us and
the Class A common stock offered hereby, we refer you
to the Offering Statement and the exhibits and
schedules filed therewith. Statements contained in this
Offering Circular regarding the contents of any
contract or other document that is filed as an exhibit
to the Offering Statement are not necessarily complete,
and each such statement is qualified in all respects by
reference to the full text of such contract or other
document filed as an exhibit to the Offering Statement.
Upon the completion of this Offering, we will be
required to file periodic reports, proxy statements,
and other information with the SEC pursuant to the
Securities Exchange Act of 1934. You may read and copy
this information at the SEC's Public Reference Room,
100 F Street, N.E., Room 1580, Washington, D.C. 20549.
You may obtain information on the operation of the
Public Reference Room by calling the SEC at 1-800-SEC-
0330. The SEC also maintains an Internet website that
contains reports, proxy statements and other
information about issuers, including us, that file
electronically with the SEC. The address of this site
is www.sec.gov.
FINANCIAL STATEMENTS
ATLIS MOTOR VEHICLES, INC.
INCOME STATEMENT
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
_________
2019
2018
Operating Income
Sales
$ 2,287
$
-
2,275
Gross Profit
12
-
Operating Expense
Salaries
182,176
209,595
Legal &
Professional
89,159
77,806
General &
Administrative
89,021
30,340
Research &
Development
50,428
106,720
Advertising
34,141
147,355
Payroll Taxes
14,486
14,563
Depreciation
4,130
4,130
Rent
630
-
464,171
590,508
Net Income from
Operations
(464,159)
(590,508)
Other Income
(Expense)
Interest Expense
(6,219)
(5,354)
Net Income
$ (470,378)
$ (595,862)
ATLIS MOTOR VEHICLES, INC.
BALANCE SHEET ? 2018 and 2019
2019
2018
ASSETS
CURRENT ASSETS
Cash
$
5,074
$
(1,500)
TOTAL CURRENT ASSETS
5,074
(1,500)
NON-CURRENT ASSETS
Fixed Assets
20,648
20,648
Accumulated Depreciation
(8,260)
(4,130)
TOTAL NON-CURRENT ASSETS
12,388
16,518
TOTAL ASSETS
17,462
15,018
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable
-
2,988
Accrued Taxes Payable
32,545
41,531
TOTAL CURRENT LIABILITIES
32,545
44,519
NON-CURRENT LIABILITIES
Related Party Loan
10,483
24,124
Loans Payable
7,737
41,174
TOTAL LIABILITIES
50,765
109,817
SHAREHOLDERS' EQUITY
Common Stock (17,857,143 shares
authorized;
1,478
1,478
14,782,630
issued; $0.0001 par value)
Additional Paid in Capital
1,082,041
550,165
Retained Earnings (Deficit)
(1,116,821)
(646,443)
TOTAL SHAREHOLDERS' EQUITY
(33,302)
(94,800)
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY
$
17,462
$
15,018
ATLIS MOTOR VEHICLES, INC.
STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
2019
2018
Cash Flows From Operating
Activities
Net Income (Loss) For The
Period
$
(470,378)
$
(595,862)
Change in Accrued Payroll
Tax Payable
(8,987)
41,531
Change in Accounts Payable
(2,988)
2,988
Change in Payroll
Corrections
11
-
Depreciation
4,130
4,130
Net Cash Flows From Operating
Activities
(478,212)
(547,214)
Cash Flows From Investing
Activities
Purchase of Fixed Assets
-
(20,648)
Net Cash Flows From Investing
Activities
-
(20,648)
Cash Flows From Financing
Activities
Payment toward Related
Party Loan
(13,641)
(27,956)
Payment toward Loan Payable
(33,452)
41,174
Issuance of Common Stock
-
1,478
Increase in Additional Paid
In Capital
531,876
550,165
Net Cash Flows From Financing
Activities
484,783
564,861
Cash at Beginning of Period
(1,500)
1,500
Net Increase (Decrease) In Cash
6,571
(3,001)
Cash at End of Period
$
5,074
$
(1,500)
ATLIS MOTOR VEHICLES, INC.
Audit Notes for years ending 2018 and 2019
ORGANIZATION AND NATURE OF ACTIVITIES
Atlis Motor Vehicles, Inc. (?the Company?) is a
corporation organized under the laws of Delaware and
domiciled in Arizona. The Company intends to develop
and manufacture electric vehicles and other energy
sustainable products.
NOTE B- GOING CONCERN MATTERS
The financial statements have been prepared on the
going concern basis, which assumes that the Company
will continue in operation for the foreseeable future.
However, management has identified the following
conditions and events that created an uncertainty about
the ability of the Company to continue as a going
concern. The company sustained net losses of $470,378
in 2019 and $595,862 in and had no cash available as of
December 31, 2018.
The following describes management's plans that are
intended to mitigate the conditions and events that
raise substantial doubt about the Company's ability to
continue as a going concern. The Company plans to raise
additional funds to meet obligations and further
operations through a Reg CF campaign. The Company's
ability to meet its obligations as they become due is
dependent upon the success of management's plans, as
described above.
These conditions and events create an uncertainty about
the ability of the Company to continue as a going
concern through April 21, 2021 (one year after the date
that the financial statements are available to be
issued). The financial statements do not include any
adjustments that might be necessary should the Company
be unable to continue as a going concern.
NOTE C- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements have been
prepared in accordance with accounting principles
generally accepted in the United States of America (?US
GAAP?).
Significant Risks and Uncertainties
The Company is subject to customary risks and
uncertainties associated with development of new
technology including, but not limited to, the need for
protection of proprietary technology, dependence on key
personnel, costs of services provided by third parties,
passing regulatory testing, meeting manufacturing and
environmental requirements, the need to obtain
additional financing, and limited operating history.
The Company currently has no developed products for
commercialization and there can be no assurance that
the Company?s research and development will be
successfully commercialized. Developing and
commercializing a product requires significant capital,
and based on the current operating plan, the Company
expects to continue to incur operating losses as well
as cash outflows from operations in the near term.
Use of Estimates
The preparation of financial statements in conformity
with GAAP 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 revenues and expenses during
the reporting period. Actual results could differ from
those estimates.
Cash and Cash Equivalents
Cash and cash equivalents include all cash balances,
and highly liquid investments with maturities of three
months or less when purchased.
Stockholders? Equity
During 2018, the company issued 14,782,630 shares of
common stock at Par Value $0.0001.
Fixed Assets
The Company capitalizes assets with an expected useful
life of one year or more, and an original purchase
price of $1,000 or more. Depreciation is calculated on
a straight-line basis over management?s estimate of
each asset?s useful life.
Revenue
Revenue is recognized when control of the promised
goods or services is transferred to customers, in an
amount that reflects the consideration the Company
expects to be entitled to in exchange for those goods
or services.
Current revenue is earned by the sale of small
merchandise.
Advertising
The Company records advertising expenses in the year
incurred.
Accrued Taxes Payable
During 2018 the company accrued $40,831 in payroll
taxes payable.
Rent
The company leases a storage space on a month-to-month
basis.
Equity Based Compensation
The Company accounts for stock options issued to
employees under ASC 718 (Stock Compensation). Under ASC
718, share-based compensation cost to employees is
measured at the grant date, based on the estimated fair
value of the award, and is recognized as an item of
expense ratably over the employee?s requisite vesting
period. The Company has elected early adoption of ASU
2018-07, which permits measurement of stock options at
their intrinsic value, instead of their fair value. An
option?s intrinsic value is defined as the amount by
which the fair value of the underlying stock exceeds
the exercise price of an option. In certain cases, this
means that option compensation granted by the Company
may have an intrinsic value of $0.
The Company measures compensation expense for its non-
employee stock-based compensation under ASC 505
(Equity). The fair value of the option issued or
committed to be issued is used to measure the
transaction, as this is more reliable than the fair
value of the services received. The fair value is
measured at the value of the Company?s common stock on
the date that the commitment for performance by the
counterparty has been reached or the counterparty?s
performance is complete. The fair value of the equity
instrument is charged directly to expense and credited
to additional paid-in capital.
Income Taxes
The Company applies ASC 740 Income Taxes (?ASC 740?).
Deferred income taxes are recognized for the tax
consequences in future years of differences between the
tax bases of assets and liabilities and their financial
statement reported amounts at each period end, based on
enacted tax laws and statutory tax rates applicable to
the periods in which the differences are expected to
affect taxable income. Valuation allowances are
established, when necessary, to reduce deferred tax
assets to the amount expected to be realized. The
provision for income taxes represents the tax expense
for the period, if any and the change during the period
in deferred tax assets and liabilities. ASC 740 also
provides criteria for the recognition, measurement,
presentation and disclosure of uncertain tax positions.
A tax benefit from an uncertain position is recognized
only if it is ?more likely than not? that the position
is sustainable upon examination by the relevant taxing
authority based on its technical merit.
The Company is subject to tax filing requirements as a
corporation in the federal jurisdiction of the United
States. The Company sustained net operating losses
during fiscal years 2019 and 2018. Net operating losses
will be carried forward to reduce taxable income in
future years. Due to management?s uncertainty as to the
timing and valuation of any benefits associated with
the net operating loss carryforwards, the Company has
elected to recognize an allowance to account for them
in the financial statements, but has fully reserved it.
Under current law, net operating losses may be carried
forward indefinitely.
The Company is subject to franchise and income tax
filing requirements in the State of Delaware and
Arizona.
Recently Adopted Accounting Pronouncements
From time to time, new accounting pronouncements are
issued by the Financial Accounting Standards Board, or
FASB, or other standard setting bodies and adopted by
the Company as of the specified effective date. Unless
otherwise discussed, the Company believes that the
impact of recently issued standards that are not yet
effective will not have a material impact on its
financial position or results of operations upon
adoption.
In November 2015, the FASB issued ASU (Accounting
Standards Update) 2015-17, Balance Sheet Classification
of Deferred Taxes, or ASU 2015-17. The guidance
requires that all deferred tax assets and liabilities,
along with any related valuation allowance, be
classified as noncurrent on the balance sheet. For all
entities other than public business entities, the
guidance becomes effective for financial statements
issued for annual periods beginning after December 15,
2017, and interim periods within annual periods
beginning after December 15, 2018. Early adoption is
permitted for all entities as of the beginning of an
interim or annual reporting period. The adoption of ASU
2015-17 had no material impact on the Company?s
financial statements and related disclosures.
In November 2016, the FASB issued ASU 2016-
18, Statement of Cash Flows (Topic 230), Restricted
Cash, or ASU 2016-18. The amendments of ASU 2016-18
were issued to address the diversity in classification
and presentation of changes in restricted cash and
restricted cash equivalents on the statement of cash
flows which is currently not addressed under Topic 230.
ASU 2016-18 would require an entity to include amounts
generally described as restricted cash and restricted
cash equivalents with cash and cash equivalents when
reconciling the beginning of period and end of period
total amounts on the statement of cash flows. This
guidance is effective for annual reporting periods, and
interim periods within those years, beginning after
December 15, 2018 for non-public entities. Early
adoption is permitted, and the standard must be applied
retrospectively. The adoption of ASU 2016-18 had no
material impact on the Company?s financial statements
and related disclosures.
In May 2014, the FASB issued ASU, 2014-09?Revenue from
Contracts with Customers (Topic 606), or ASU 2014-09,
and further updated through ASU 2016-12, or ASU 2016-
12, which amends the existing accounting standards for
revenue recognition. ASU 2014-09 is based on principles
that govern the recognition of revenue at an amount to
which an entity expects to be entitled to when products
are transferred to customers. This guidance is
effective for annual reporting periods, and interim
periods within those years, beginning December 15, 2018
for non-public entities. The new revenue standard may
be applied retrospectively to each prior period
presented or retrospectively with the cumulative effect
recognized as of the date of adoption. The adoption of
ASU 2014-09 had no material impact on the Company?s
financial statements and related disclosures.
In February 2016, the FASB issued ASU 2016-02, Leases
(Topic 842), or ASU 2016-02, which supersedes the
guidance in ASC 840, Leases. The new standard requires
lessees to apply a dual approach, classifying leases as
either finance or operating leases based on the
principle of whether or not the lease is effectively a
financed purchase by the lessee. This classification
will determine whether lease expense is recognized
based on an effective interest method or on a straight-
line basis over the term of the lease. A lessee is also
required to record a right-of-use asset and a lease
liability for all leases with a term of greater than 12
months regardless of their classification. Leases with
a term of 12 months or less will be accounted for
similar to existing guidance for operating leases
today. This guidance is effective for annual reporting
periods beginning after December 15, 2019 for non-
public entities. The adoption of ASU 2016-02 had no
material impact on the Company?s financial statements
and related disclosures.
In March 2016, the FASB issued ASU 2016-
09, Improvements to Employee Share-based Payment
Accounting, or ASU 2016-09. ASU 2016-09 simplifies
several aspects of the accounting for share-based
payment transactions, including the income tax
consequences, classification of awards as either equity
or liabilities, and classification on the statement of
cash flows. Some of the areas of simplification apply
only to non-public companies. This guidance was
effective on December 31, 2016 for public entities. For
entities other than public business entities, the
amendments are effective for annual periods beginning
after December 15, 2017, and interim periods within
annual periods beginning after December 15, 2018. Early
adoption is permitted for an entity in any interim or
annual period for which financial statements have not
been issued or made available for issuance. An entity
that elects early adoption must adopt all amendments in
the same period. The adoption of ASU 2016-09 had no
material impact on the Company?s financial statements
and related disclosures.
In May 2017, the FASB issued ASU 2017-09, Compensation?
Stock Compensation (Topic 718): Scope of Modification
Accounting, or ASU 2017-09, which clarifies when to
account for a change to the terms or conditions of a
share-based payment award as a modification. Under the
new guidance, modification accounting is required only
if the fair value, the vesting conditions, or the
classification of the award (as equity or liability)
changes as a result of the change in terms or
conditions. This guidance is effective for annual
reporting periods, and interim periods within those
years, beginning after December 15, 2017, for both
public entities and non-public entities. Early adoption
is permitted. The adoption of ASU 2017-09 had no
material impact on the Company?s financial statements
and related disclosures.
NOTE D- EQUITY
Under the Company?s original articles of incorporation
currently in effect, the Company authorized 17,857,143
shares of $0.0001 par value Common Stock.
As of December 31, 2019, the number of common shares
issued and outstanding was 14,782,630.
NOTE E- DEBT
In 2017, the company issued a note to a related party
in exchange for cash for the purpose of funding
continuing operations (?the Related Party Note
Payable?). The note does not accrue interest and is
payable at a future date to be determined by
management. During 2018 and 2017, the Company
capitalized no interest related to the note.
In 2018, the company issued a loan payable in exchange
for cash for the purpose of funding continuing
operations (?the Note Payable?). The note incurs an
annual interest rate of 35.6% on any remaining monthly
balance. This interest is paid each month on the
remaining loan balance. Minimum monthly payments are
equal to $4,872.
NOTE F- FAIR VALUE MEASUREMENTS
Fair value is an exit price, representing the price
that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between
market participants based on the highest and best use
of the asset or liability. As such, fair value is a
market-based measurement that should be determined
based on assumptions that market participants would use
in pricing an asset or liability. The Company uses
valuation techniques to measure fair value that
maximize the use of observable inputs and minimize the
use of unobservable inputs. These inputs are
prioritized as follows:
Level 1 - Observable inputs, such as quoted prices for
identical assets or liabilities in active markets;
Level 2 - Inputs, other than the quoted prices in
active markets, that are observable either directly or
indirectly, such as quoted prices for similar assets or
liabilities, or market-corroborated inputs; and
Level 3 - Unobservable inputs for which there is little
or no market data which require the reporting entity to
develop its own assumptions about how market
participants would price the assets or liabilities.
The valuation techniques that may be used to measure
fair value are as follows:
Market approach - Uses prices and other relevant
information generated by market transactions involving
identical or comparable assets or liabilities.
Income approach - Uses valuation techniques to convert
future amounts to a single present amount based on
current market expectations about those future amounts,
including present value techniques, option-pricing
models, and excess earnings method.
Cost approach - Based on the amount that currently
would be required to replace the service capacity of an
asset (replacement cost).
NOTE G- CONCENTRATIONS OF RISK
Financial instruments that potentially subject the
Company to credit risk consist of cash and cash
equivalents. The Company places its cash and cash
equivalents with a limited number of high-quality
financial institutions and at times may exceed the
amount of insurance provided on such deposits.
NOTE H- SUBSEQUENT EVENTS
Management considered events subsequent to the end of
the period but before April 21, 2021, the date that the
financial statements were available to be issued.
1
EX1A-15 ADD EXHB
3
ex1a15.txt
INDEX
ATLIS MOTOR VEHICLES, INC
EXHIBIT LIST
INDEX - EX1A-15
UNDERWRITING AGREEMENT - EX1A-1
ARTICLES OF INCORPORATION - EX1A-2A
BYLAWS - EX1A-2B
AMENDMENTS TO BYLAWS - EX1A-3
BOARD RESOLUTION - EX1A-3
INDEPENDENT AUDITOR'S REPORT - EX1A-9
SIGNATURES - EX-96
EX1A-1 UNDR AGMT
4
ex1a1.txt
UNDERWRITING AGREEMENT
BROKER-DEALER SERVICES AGREEMENT
This Broker-Dealer Service Agreement
("Agreement") is
made and entered into as of March 21 , 2020
by and between JumpStart Securities, LLC
("Jumpstart", "us, "our", or "we") and
Atlis Motor Vehicles ("Issuer", "you" or
"your").
Whereas, Jumpstart is a broker-dealer
registered with the
Securities and Exchange Commission
and a member of the Financial Industry
Regulatory Authority
("FINRA") providing capital markets
compliance and other services for market
participants, including
issuers conducting offerings of
securities pursuant to exemptions from the
registration
requirements of the Securities Act of 1933,
as
amended (the "Securities Act"), including
Regulation A,
as amended. In servicing this market,
Jumpstart
has created and maintains proprietary tools
and technology,
negotiated
third-party integrations, and
has developed operational services,
including limited
customer service and compliance, to provide
certain back-end tools and specific
compliance services
to issuers raising capital; and,
Whereas, Issuer is undertaking a capital
raising effort
pursuant to the exemption from
registration (the "Offering"); and,
Whereas Issuer recognizes the benefit of
having Jumpstart,
as a regulated market participant,
provide certain support services as
described herein for proposed
investors in its Offering, and therefore
Issuer desires to retain Jumpstart and
Jumpstart desires to be
retained by Issuer pursuant to the terms
and conditions set forth herein.
Now, therefore, in consideration of the
mutual promises and
covenants contained herein and
for good and valuable consideration, the
receipt and sufficiency
of which are hereby acknowledged, the
Parties agree as follows:
1. Retention:
a. Issuer hereby retains Jumpstart to
provide the services set
forth in Section 2 below (the
"Services") during the Offering period,
commencing on the date
hereof and until the earlier of the
completion or cancellation of the Offering
or the termination
of this Agreement as provided in Section 8
hereof.
b. Jumpstart shall serve as the back-office
service provider for
all potential investors in the Offering
as requested by the Issuer. However,
Jumpstart will not provide
services for any investors who are
introduced to the Offering by a registered
broker-dealer that
entered into a selling agreement with
Issuer.
c. Issuer agrees to provide Jumpstart with
due diligence information
and materials as it reasonably
requests and undertakes to update such
information and materials
throughout the Offering as may be
necessary for accuracy.
d. Jumpstart will not advise Issuer or any
prospective investor
with respect to the Offering, or the
terms and structure thereof, which will be
determined solely and
exclusively by Issuer and its advisers in
meeting its capital needs, but will assist
in advising concerning
marketing and distribution. Issuer will
provide Jumpstart with copies of the
Offering materials and
disclosures, including the investor
subscription agreement and the offering
circular (collectively,
the "Offering Circular"). Under no
circumstances shall any communication,
whether oral or written,
be construed or relied on by Issuer as
advice from Jumpstart. Issuer acknowledges
that Jumpstart is not
acting as a placement agent or
underwriter for the Offering and has not
and will not at any time
provide any securities, financing, legal
or accounting advice to Issuer. Issuer
represents that it will only
rely on the advice of its securities
counsel, accountants and/or auditors, and
any placement agent or
underwriter. Further, Issuer
acknowledges and understands that Jumpstart
will not have any direct
communication with investors
other than unsolicited contact that will be
redirected to Issuer or
Issuer's designees.
2. Services:
a. JumpStart Securities Responsibilities -
JumpStart agrees to:
i. Phase one:
A. Advisory services, covering in-depth
analysis and assessment
activities on the
offering, business feasibility, business
analysis, marketing
approach, management experience with
offerings, and certain
out-of-pocket expenses for other analysis
work/activities, such as
legal work, diligence, etc.
ii. Phase two:
A. As part of a fee selection in Section
3c, JumpStart Securities
may Market the
offering to its previous investors,
potential investors, and
solicit interest from investors
that meet the suitability, sophistication,
and purchase criteria
for the Offering;
B. Accept investor data from Issuer,
generally via any software
system used to
capture investors, but also via other means
as may be
established by mutual agreement
of the Parties;
C. Review and process information from
potential investors,
including but not
limited to running reasonable background
checks for anti-money
laundering ("AML."),
IRS tax fraud identification and USA
PATRIOT Act purposes, and
gather and review
responses to customer identification
information;
D. Verification of accredited investor
status of each investor,
as applicable in
Regulation D, Rule 506c offerings;
E. Review subscription agreements received
from prospective
investors to confirm
they are complete;
F. Contact Issuer and/or Issuer's
designees, if needed, to
gather additional
information or clarification from
prospective investors;
G. Advise Issuer as to permitted investment
limits for investors
pursuant to
Regulation D, Rule 506(c);
H. Provide Issuer with prompt notice about
inconsistent,
incorrect or otherwise
flagged (e.g. for underage or AML reasons)
subscriptions;
I. Serve as registered agent where required
for state blue
sky requirements, but in
no circumstance will Jumpstart solicit a
securities
transaction, recommend the Issuer's
securities or provide investment advice to
any prospective
investor;
J. Transmit data to transfer agent as book-
entry data for
maintaining Issuer's
responsibilities for managing investors
(investor
relationship management, aka "CRM")
and for maintaining future good-delivery
and recordkeeping;
K. Transmit any checks received from
subscribers promptly upon
settlement.
b. Issuer Responsibilities -Issuer agrees
to:
i. Refer investor data, at its sole and
arbitrary discretion,
to Jumpstart Securities;
ii. Ensure investors understand they are
making a "self-directed"
decision, and provide
Jumpstart with all information and data
required to ascertain
whether the investor is eligible to
invest in the Offering and the investment
threshold, if
applicable;
iii. Immediately, but not later than within
24 hours, notify
Jumpstart with details of any
notices, requests, complaints or actions of
or by any regulators,
law enforcement, investors,
trade associations or legal counsel
regarding the Offering;
iv. Comply with state and federal laws and
rules; and
v. Not compensate any unregistered person
directly or indirectly
with any fees,
commissions or other consideration based
upon the amount, sale of
securities or success of an
Offering.
c. Marketing of Offering -Issuer represents
that it will ensure
the marketing and promotional
activities it engages in, as related to the
Offering, are not
materially misleading and in compliance
with
all SEC rules and regulatory guidance, as
well as industry best
practices. Issuer will not compensate any
person for directly selling securities
unless such person is
associated with a FINRA member brokerdealer
and is appropriately registered with both
the SEC and the state(s)
in which the investors reside.
Issuer may use Jumpstart's name but only to
extent set forth in
Section 6 of this Agreement.
3. Compensation: For services provided
under this Agreement, the
terms and payments shall be:
a. Advisory Service Fee. We will pay
Jumpstart Securities, LLC a
$10,000 advisory fee for providing
initial analysis work in the first phase of
services.
b. Administrative Service Fees: During the
second phase of
services, additionally, we will pay
Jumpstart Securities, LLC the following
administrative service
fee: (i) fee per AML check executed,
below, {2) fee per AML
exception, as described in the fees below,
and {3) accredited
investor verification
fee. Administrative service fees will be
charged to Issuer at
the time of the subscription.
i. US Individual $2
ii. US Entity $5
iii. CA/UK Individual $5
iv. CA/UK Entity $75
v. International Individual $60
vi. International Entity $75
vii. AML Exceptions $ !SO/investor owed
upon exception
viii. Investor verification
$45/verification owed upon subscription
c. Broker-Dealer Close Fees: During the
second phase of services,
a broker-dealer fee will be as
selected below. Please select one.
D Marketing fee, including broker of record
service fee of 3.25%
(three and one quarter
percent) of the aggregate amount of gross
Offering proceeds
received, and that are accepted, by the
Issuer for use of Jumpstart's marketing
services in state notice
filings required for the Offering and
review of subscription information for
accuracy, completeness, and
compliance with Regulation D
guidelines. Such fee shall not apply for
any investor purchasing
directly through Issuer wherein such
investor is a contact of Issuer, and shall
not apply to any
investor referred by any other broker-
dealer to
Issuer.
f!J Broker of record fee of 1.50% (one and
one half percent) of
the aggregate amount of gross
Offering proceeds received, and that are
accepted by the Issuer.
Fees may be reduced on a case-by-case
basis, or as required in
compliance with FINRA rules. For these
purposes, an email from Jumpstart to Issuer
will constitute
sufficient evidence of an alteration of the
fees contained in this Agreement. Any
alteration to the fees
shall not be interpreted to be, or
constitute
an amendment or general waiver of other
terms of this Agreement
unless specifically set forth by
Jumpstart in writing.
d. Expenses: Issuer will be responsible for
and pay directly
(i) fees due to FINRA for filings made
with respect to the Offering, if necessary.
Pre-approved Travel
and Offering expense reimbursements
may also be paid to Jumpstart Securities
for out-of-pocket
expenses (not to exceed $2,500). If
expenses
are expected to exceed $2,500 they will be
pre-approved. Receipts
would be presented with the
requested reimbursements.
e. Payment Terms: Jumpstart will charge
Administrative service fees
directly to Issuer via ACHdebit
and Issuer hereby authorizes such payment.
Brokerage service fees
are due upon the sale of
securities to investors and Issuer agrees
and directs that they
will be paid from the flow of funds upon
the acceptance by the Issuer of any
investor, with such acceptance
being conditional on the terms of the
Offering. Once the Issuer countersigns the
investor subscription
the investors are accepted. The parties
shall have the reasonable right to obtain
documentation concerning
the details of the payments due.
4. Warranties and Representations: The
Issuer and Jumpstart
represent and warrant that each has
all requisite power and authority to enter
into and carry out the
terms and provisions of this Agreement
and the execution, delivery and performance
of this Agreement does
not breach or conflict with any
agreement, document or instrument to which
it is a party or bound,
and further:
a. Jumpstart warrants and represents to the
Issuer that:
i. It is an SEC registered, FINRA member,
SIPC insured firm in good
standing and licensed
to conduct securities business;
ii. It is duly registered in states where
investors reside;
iii. Its personnel who provide services to
the Issuer are licensed
securities representatives
and/or principals, as required by
regulations for the business being
conducted;
iv. It will not compensate any unregistered
person with any fees
based upon the amount or
success of any investment in the Offering;
v. It will not solicit or sell investors
any other services or
investment products; and
vi. It will not provide any investment
advice nor any investment
solicitation or
recommendations to any investor.
b. Issuer warrants and represents to
Jumpstart that:
i. The offering materials will be complete
and correct in all
material respects and will not
contain any untrue statement of a material
fact or omit to state
a material fact necessary in
order to make the statements therein, in
light of the
circumstances under which they were
made, not misleading.
ii. It will duly comply with all applicable
state and Federal
laws, rules and regulations and
make all filings as required.
5. Non-Exclusivity, No Underwriting: This
Agreement is
non-exclusive and shall not be construed
to prevent either party from engaging in
any business activities.
6. Limited License of Trademarks. During
the term of this
Agreement, Issuer may request to use
Jumpstart's name, logo and trademarks on
its website and other
marketing materials, but Jumpstart
must approve in advance the specific uses
intended by Issuer.
Generally, the use of Jumpstart's name,
logo or trademarks is not used in a manner
that implies the
Offering is endorsed, recommended, or
vetted by Jumpstart, or that Issuer or its
agents are authorized
to act as a securities agent or a
representative of Jumpstart. Furthermore,
it is agreed that
Jumpstart and Issuer each, in perpetuity,
have the option to use the name and logo of
one another in
disclosing the existence of this business
relationship.
7. Independent Contractor: It is agreed
that Jumpstart and Issuer
are independent contractors for
the business and services provided
hereunder. Under no
circumstances shall this Agreement be
deemed
to imply or infer that Issuer and Jumpstart
have anything other
than an arm's length and independent
relationship. Both Jumpstart and Issuer
shall be individually
responsible and liable for their own
respective federal, state, local and other
taxes or fees, as well
as all costs associated with their
businesses. Jumpstart is not a fiduciary of
the Issuer or its
management or board of directors in regard
to any of the Services provided under this
Agreement.
8. Term and Termination: This Agreement is
effective beginning
on the date set forth above
through the completion or cancellation of
the Offering unless
terminated by either Party pursuant to
this Section 8.
a. Either Party may terminate their
participation in this
Agreement without cause by giving 10
days' notice via email to the other at any
time. Such termination
shall only affect future business and not
apply to transactions or other business
conducted prior to the
date of termination.
b. Either Party may terminate their
participation in this
Agreement for a material breach of this
Agreement immediately by giving notice via
email to the other
at any time. Such termination shall only
affect future business and not apply to
transactions or other
business conducted prior to the date of
termination. The non-breaching Party has
the sole discretion
to grant a period to cure by giving notice
via email of the time period for such cure.
However, the grant
of a cure period does not waive any
indemnification or rights of the non-
breaching Party to pursue
all remedies.
c. In the event of any termination, the
responsibilities of each
party detailed in Section 2 shall
cease.
d. If the agreement is terminated by
Issuer, Issuer will
reimburse Jumpstart for its actual,
documented out-of-pocket expenses up to an
aggregate cap of
$10,000 (except if termination is for
breach of the Agreement by Jumpstart).
9. Mutual Indemnification: The Parties
hereby agree as follows:
a. To the extent permitted by law, the
Issuer will indemnify
Jumpstart and its affiliates,
stockholders, directors, officers,
employees and controlling
persons (within the meaning of Section 15
of
the Securities Act or Section 20 of the
Exchange Act) against
all losses, claims, damages, expenses and
liabilities, as the same are incurred
(including the reasonable
fees and expenses of counsel), relating to
or arising out of its activities hereunder
or pursuant to this
engagement letter, except to the extent
that
any losses, claims, damages, expenses or
liabilities (or actions
in respect thereof) are found in a final
judgment (not subject to appeal) by a court
of law to have
resulted primarily and directly from
Jumpstart's willful misconduct or gross
negligence in performing
the services described herein.
b. Promptly after receipt by Jumpstart of
notice of any claim or
the commencement of any action
or proceeding with respect to which
Jumpstart is entitled to
indemnity hereunder, Jumpstart will notify
the Issuer in writing of such claim or of
the commencement of
such action or proceeding, and the Issuer
will assume the defense of such action or
proceeding and will
employ counsel reasonably satisfactory to
Jumpstart and will pay the fees and
expenses of such counsel.
Notwithstanding the preceding sentence,
Jumpstart will be entitled to employ
counsel separate from
counsel for the Issuer and from any other
party in such action if counsel for
Jumpstart reasonably
determines that it would be inappropriate
under
the applicable rules of professional
responsibility for the
same counsel to represent both the Issuer
and
Jumpstart. In such event, the reasonable
fees and disbursements
of no more than one such separate
counsel will be paid by the Issuer, in
addition to local counsel.
The Issuer will have the exclusive right
to
settle the claim or proceeding provided
that the Issuer will
not settle any such claim, action or
proceeding without the prior written
consent of Jumpstart,
which will not be unreasonably withheld.
c. The Issuer agrees to notify Jumpstart
promptly of the
assertion against it or any other person of
any claim or the commencement of any action
or proceeding
relating to a transaction contemplated by
this engagement letter.
d. If for any reason the foregoing
indemnity is unavailable
to Jumpstart or insufficient to hold
Jumpstart harmless, then the Issuer shall
contribute to the
amount paid or payable by Jumpstart as a
result of such losses, claims, damages or
liabilities in such
proportion as is appropriate to reflect not
only
the relative benefits received by the Issue
r on the one hand
and Jumpstart on the other, but also the
relative fault of the Issuer on the one
hand and Jumpstart on
the other that resulted in such losses,
claims, damages or liabilities, as well as
any relevant
equitable considerations. The amounts paid
or
payable by a party in respect of losses,
claims, damages and
liabilities referred to above shall be
deemed
to include any legal or other fees and
expenses incurred in
defending any litigation, proceeding or
other
action or claim. Notwithstanding the
provisions hereof,
Jumpstart's share of the liability
hereunder shall
not be in excess of the amount of fees
actually received,
or to be received, by Jumps tart under this
engagement letter (excluding any amounts
received as
reimbursement of expenses incurred by
Jumpstart).
10. Certain Placement Procedures. On or
prior to the date the
securities are made available for
purchase by subscribers for the purchase
and sale of the
securities to subscribers in the Offering
(the
"Closing Date"), Jumpstart shall have
obtained from the Company
the following:
a. Officers' Certificate signed by the
Chairman of the Board
or the Chief Executive Officer and the
Secretary of the Company (in their
capacities as such) to the
effect that the Company has performed all
covenants and complied with all conditions
required by this
Agreement to be performed or complied
with by the Company, that the
representations and warranties
of the Company set forth herein and the
disclosure provided in the offering
materials are
true and correct.
b. Secretary's Certificate signed by the
Secretary or
Assistant Secretary of the Company,
respectively, certifying (i) that the
Certificate of
Incorporation and Bylaws, as amended of the
Company
are true and complete, have not been
modified and are
in full force and effect, (ii) that the
resolutions
of the Company's Board of Directors
relating to the public
offering contemplated by this Agreement are
in full force and effect and have not been
modified,
(iii) as to the accuracy and completeness
of all
correspondence between the Company or its
counsel and
the Commission, and (iv) as to the
incumbency of the officers of the Company.
The documents referred to in such
certificate shall be
attached to such certificate.
c. Legal Opinion of Company Counsel and
negative assurance
statement with respect to offering
customarily provided in public offerings
addressed to
Jumpstart Securities in form and substance
satisfactory to Jumpstart Securities.
11. Confidentiality and Mutual Non-
Disclosure: It is
acknowledged that in the performance of
this
Agreement each party may become aware of
and/or in
possession of confidential, non-public
information of the other party. Except as
necessary in
this Agreement's performance, or as
authorized in
writing by a Party or by law, the Parties
(and their
affiliated persons) shall not disclose or
make use of
such non-public information. Nothing
contained herein
shall be construed to prohibit the SEC,
FINRA, or
other government official or entities from
obtaining,
reviewing, and auditing any information,
records,
or data. Issuer acknowledges that
regulatory record-keeping
requirements, as well as securities
industry
best practices, require Jumpstart to
maintain copies of
practically all data, including
communications
and Offering materials, regardless of any
termination of
this Agreement. Notwithstanding the
foregoing,
information which is, or was, in the public
domain (including
having been published on the internet) is
not subject to this section.
12. Notices: All notices given pursuant to
this Agreement
shall be in writing and sent via email to:
Jumpstart Securities, LLC
jonathan@jumpstartsecurities.com
13. Binding Arbitration, Applicable Law and
Venue,
Attorneys Fees: This Agreement is governed
by, and will be interpreted and enforced in
accordance
with the regulations of the SEC and FIN
RA, and
laws of the State of New York, without
regard to principles
of conflict of laws. Any claim or dispute
arising under this Agreement may only be
brought in
arbitration, pursuant to the rules of the
Financial
Industry Regulatory Authority ("FINRA"),
with venue in
New York City, New York. Each of the
parties
hereby consents to this method of dispute
resolution,
as well as jurisdiction, and waives any
right it may
have to object to either the method, venue
or jurisdiction
for such claim or dispute. Any award an
arbitrator makes will be final and binding
on all parties
and judgment on it may be entered in any
court
having jurisdiction. Furthermore, the
prevailing party shall
be entitled to recover damages plus
reasonable attorney's fees .
14. Entire Agreement, Amendment,
Severability and Force
Majeure: Thi s Agreement contains the
entire agreement between Issuer and
Jumpstart regarding this
Agreement. If any provision of this
Agreement is held invalid, the remainder of
this Agreement
shall continue in full force and effect.
Furthermore, no party shall be responsible
for any failure to
perform due to acts beyond its reasonable
control, including acts of regulators, acts
of God, terrorism,
shortage of supply, labor difficulties
(including strikes), war, civil unrest,
fire, floods,
electrical outages, equipment or
transmission failures,
internet interruptions, vendor failures
(including information
technology providers), or other similar
causes. This Agreement constitutes the
entire agreement between
the parties with respect to the
subject matter hereof. This Agreement must
be amended in writing.
15. Counterparts; Facsimile. This Agreement
may be executed in
counterparts, each of which will
be deemed an original and all of which,
taken together, will
constitute one and the same instrument,
binding on each signatory thereto. This
Agreement may be
executed by signatures, electronically or
otherwise, delivered by facsimile or email,
and a copy
hereof that is properly executed and
delivered by
a party will be binding upon that party to
the same
extent as an original executed version
hereof.
IN WITNESS WHEREOF, the parties have
entered into
this Agreement as of the date set forth
above.
JumpStart Securities, LLC
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ex1a1page1.jpg
UNDERWRITING AGREEMENT PAGE 1
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