Legion Works Inc

4275 Executive Square, Suite 200, La Jolla, CA

92037

(619) 452-1542

 

57,000,000 Units

Minimum Investment: 2,000 Units ($1,000.00)

Maximum Offering: 49,875,000.00

 

The Company is hereby providing the information required by Part I of Form S-1 (17 9 CFR 239.18 and are following the requirements for a smaller reporting company as it meets the definition of that term in Rule 405 (17 CFR 230.405).

 

 

 

 

 

Because these securities are being offered on a “best efforts” basis, the following disclosures are hereby made:

 

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(1) The Company shall pay Dalmore Group, LLC a broker-dealer services fee equivalent to 1% on funds raised in the Offering. Legion Works, Inc. is not an underwriter and will not be paid underwriting fees, but will be paid service fees. See “PLAN OF DISTRIBUTION.”

 

(2) Does not reflect payment of expenses of this offering, which are estimated to not exceed $500,000 and which include, among other things, legal fees, accounting costs, reproduction expenses, due diligence, marketing, consulting, administrative services other costs of blue sky compliance, and actual out-of-pocket expenses incurred by the Company selling the Shares, but which do not include administrative fees paid to Dalmore Group, LLC or technology providers. The Company may engage the services of additional broker-dealers in connection with the offering, and if it does their commissions will be an additional expense of the offering. See the “Plan of Distribution” for details regarding the compensation payable in connection with this offering. This amount represents the proceeds of the offering to the Company, which will be used as set out in “USE OF PROCEEDS TO COMPANY.”

 

(3) The Units, the Shares of Voting Common Stock and Warrants of which the Units consist and the underlying Warrant Shares are being offered pursuant to Regulation A of Section 3(b) of the Securities Act for Tier 2 offerings. The Units, the Shares of Common Stock and Warrants of which the Units consist and the underlying Warrant Shares are only issued to purchasers who satisfy the requirements set forth in Regulation A. We have the option in our sole discretion to accept less than the minimum investment. The Total Maximum Offering amounts include the aggregate price and future aggregate potential proceeds of $21,375,000 with respect to the Warrant Shares if all 50,000,000 Units are sold and all 28,500,000 Warrant Shares are sold upon exercise of the Warrants issued in the Offering.

 

 

 

This offering (the “Offering”) consists of Common Stock (the “Shares” or individually, each a “Share”) and Warrants (“Warrants”) (collectively “Units”) that is being offered on a “best efforts” basis, which means that there is no guarantee that any minimum amount will be sold. The Shares are being offered and sold by Legion Works, Inc., a Delaware Corporation (“Legion Works” or the “Company”). There are 57,000,000 Shares of our Voting Common Stock being offered at a price of $0.50 per Share and one-half of one common Share (a “Warrant Share”) at an exercise price of $0.75 USD per Warrant Share, subject to certain adjustments, over an 18-month exercise period following the date of issuance of the Warrant. There is a minimum purchase of 2,000 Units per Investor. The Units will not be issued or certified. Instead, the Shares and the Warrants underlying the Units will be issued separately issued although they will have been purchased together in this Offering. The Shares and Warrants will be separately transferable following the termination of any transfer hold periods under applicable law. See “Securities Being Offered” for a discussion of certain items required by Item 14 of Part II of Form 1-A. The Units are being offered on a best efforts basis to an unlimited number of accredited investors and an unlimited number of non-accredited investors only by the Company and through Dalmore Group a broker/dealer registered with the Securities and Exchange Commission (the “SEC”) and a member of the Financial Industry Regulatory Authority (“FINRA”). The maximum aggregate amount of the Shares offered is $50,000,000 (the “Maximum Offering”). There is no minimum number of Shares that needs to be sold in order for funds to be released to the Company and for this Offering to close.

 

The Units are being offered pursuant to Regulation A of Section 3(b) of the Securities Act of 1933, as amended, for Tier 2 offerings. The Units will only be issued to purchasers who satisfy the requirements set forth in Regulation A. The offering is expected to expire on the first of: (i) all of the Units offered are sold; or (ii) unless sooner terminated by the company’s CEO. Funds shall be deposited in a Company account that may be controlled by the Dalmore Group or the Company. . Funds will be promptly refunded without interest, for sales that are not consummated. All funds received shall be held only in a non-interest bearing bank account. Upon each closing under the terms as set out in this Offering Circular, funds will be immediately transferred to the Company’s operating account where they will be available for use in the operations of the Company’s business in a manner consistent with the “USE OF PROCEEDS TO COMPANY” in this Offering Circular. This Offering may remain open for a twelve (12) month period but may extend past the Closing Date at the discretion of the Company and in accordance with the rules and provisions of Regulation A of the JOBS Act.

 

 

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We are an emerging growth company. An emerging growth company is one that had total annual gross revenues of less than $1,000,000,000 (as such amount is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) during its most recently completed fiscal year. We would lose our emerging growth status if we were to exceed $1,000,000,000 in gross revenues. We are not sure this will ever take place.

 

Because we are an emerging growth company, we have the exemption from Section 404(b) of Sarbanes-Oxley Act of 2002 and Section 14A(a) and (b) of the Securities Exchange Act of 1934. Under Section 404(b), we are now exempt from the internal control assessment required by subsection (a) that requires each independent auditor that prepares or issues the audit report for the issuer shall attest to, and report on, the assessment made by the management of the issuer. We are also not required to receive a separate resolution regarding either executive compensation or for any golden parachutes for our executives so long as we continue to operate as an emerging growth company.

 

We hereby elect to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1).

 

We will lose our status as an emerging growth company in the following circumstances:

 

 

  

 

 

 

 

 

 

1. There are 2 classes of stock in the Company at present: Common Stock and Super Common Stock. To date, 9,350,000 shares of Super Common Stock have been issued to various shareholders in exchange for cash and services. It is expected that additional shares will be issued to various officers, directors, and other third-party services providers. There is currently no agreement for this issuance. For a full description of the rights of each class of stock, please see the section of this Offering Circular entitled “” on page 45 below.

 

As of the date of this Offering Circular, the Company is controlled by a few shareholders which are generally controlled by our officers and directors.

 

2. The total number of Shares of Common Stock (57,000,000) assumes that the maximum number of Units are sold in this offering.

 

3.Upon closing of the initial Offering, Units will be issued to investors that have subscribed to the Offering since the start of the qualification of the securities by the Securities Exchange Commission. These shares are considered issued for financial statement reporting purposes.

 

4. The Company is Offering one-half of one Warrant in this Offering.

 

5. Assumes the maximum amount of Common Stock in Offering are sold and Warrants are exercised.

 

The Company may not be able to sell the Maximum Offering Amount. The Company will conduct one or more closings on a rolling basis as funds are received from investors. Funds tendered by investors will be kept in an account in the Company’s name and will be immediately available to the Company. Once a subscription agreement is accepted by the Company, funds are non-refundable.

 

The Company plans to begin sales immediately after this Preliminary Offering Circular has been qualified by the Securities and Exchange Commission (the “SEC”). The Company will provide final pricing information in a final Offering Circular or supplemental Preliminary Offering Circular. The net proceeds of the Offering will be the gross proceeds of the Shares sold minus the expenses of the offering.

 

We are currently not listed on any trading market or stock exchange, and our ability to list our stock in the future is uncertain. Investors should not assume that the Offered Shares will be listed. A public trading market for the Shares may not develop.

 

 

The purchase of the Company’s Common Stock involves substantial risks. You should carefully consider the following risk factors in addition to any other risks associated with this investment. The Shares offered by the Company constitute a highly speculative investment and you should be in an economic position to lose your entire investment. The risks listed do not necessarily comprise all those associated with an investment in the Shares and are not set out in any particular order of priority. Additional risks and uncertainties may also have an adverse effect on the Company’s business and your investment in the Shares. An investment in the Company may not be suitable for all recipients of this Offering Circular. You are advised to consult an independent professional adviser or attorney who specializes in investments of this kind before making any decision to invest. You should consider carefully whether an investment in the Company is suitable in the light of your personal circumstances and the financial resources available to you.

 

 

The discussions and information in this Offering Circular may contain both historical and forward-looking statements. To the extent that the Offering Circular contains forward-looking statements regarding the financial condition, operating results, business prospects, or any other aspect of the Company’s business, please be advised that the Company’s actual financial condition, operating results, and business performance may differ materially from that projected or estimated by the Company in forward-looking statements. The Company has attempted to identify, in context, certain of the factors it currently believes may cause actual future experience and results may differ from the Company’s current expectations.

 

Before investing, you should carefully read and carefully consider the following risk factors:

 

 

 

The Company has a limited operating history and there can be no assurance that the Company's proposed plan of business can be realized in the manner contemplated and, if it cannot be, shareholders may lose all or a substantial part of their investment. There is no guarantee that it will ever realize any significant operating revenues or that its operations will ever be profitable.

 

 

The Company's success is heavily dependent upon the continued active participation of the Company's current executive officers as well as other key personnel and consultants. Many of them will have concurrent responsibilities at other entities. Some of the advisors, scientists, consultants and others to whom the Company’s ultimate success may be reliant have not signed contracts with the Company and may not ever do so. Loss of the services of one or more of these individuals could have a material adverse effect upon the Company's business, financial condition or results of operations. Further, the Company's success and achievement of the Company's growth plans depend on the Company's ability to recruit, hire, train and retain other highly qualified scientific, technical and managerial personnel. Competition for qualified employees and consultants among companies in the applicable industries is intense, and the loss of any of such persons, or an inability to attract, retain and motivate any additional highly skilled employees and consultants required for the initiation and expansion of the Company's activities, could have a materially adverse effect on it. The inability to attract and retain the necessary personnel, consultants and advisors could have a material adverse effect on the Company's business, financial condition or results of operations.

 

 

Much of the Company’s future success depends on the continued service and availability of skilled personnel, including members of their executive team, and those in technical and other key positions. Experienced personnel in the software, mobile technologies, data science, data security, and software as a service industries are in high demand and competition for their talents is intense, especially in California and India, where the majority of the Company’s employees are located. Also, as the Company strives to continue to adapt to technological change and introduce new and enhanced products and business models, they must be able to secure, maintain and develop the right quality and quantity of engaged and committed talent. The incentives the Company has available to attract, retain, and motivate employees provided by their equity awards may become less effective, and if they were to issue significant equity to attract additional employees, the ownership of their existing stockholders would be diluted. Although the Company strives to be an employer of choice, they may not be able to continue to successfully attract, retain and develop key personnel, which may cause the Company’s business to suffer.

 

 

 

The Company’s key personnel may be able to remain with the company after the completion of a software company acquisition only if they are able to negotiate employment or consulting agreements in connection with the software company in question. Additionally, they may negotiate reimbursement of any out-of-pocket expenses incurred on the Company’s behalf prior to the consummation of the software company acquisition, should they choose to do so. Such negotiations would take place simultaneously with the negotiation of the software company acquisition and could provide for such individuals to receive compensation in the form of cash payments and/or the Company’s securities for services they would render to them after the completion of the software company acquisition, or as reimbursement for such out-of-pocket expenses. The personal and financial interests of such individuals may influence their motivation in identifying and selecting a target company. However, the Company believes the ability of such individuals to remain with them after the completion of software company acquisition will not be the determining factor in their decision as to whether or not they will proceed with any potential business acquisition. There is no certainty, however, that any of the Company’s key personnel will remain with them after the completion of a software company acquisition. The Company cannot assure you that any of their key personnel will remain in senior management or advisory positions with them. The determination as to whether any of their key personnel will remain with them will be made at the time of the Company’s software company acquisition.

 

 

When evaluating the desirability of affecting the Company’s acquisition of a prospective target software company, the Company’s ability to assess the target company’s management may be limited due to a lack of time, resources or information. The Company’s assessment of the capabilities of the target’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities they suspected. Should the target’s management not possess the skills, qualifications or abilities necessary to manage a public company, the operations and profitability of the post-software company acquisition may be negatively impacted. Accordingly, any stockholders who choose to remain stockholders following the initial software company acquisition could suffer a reduction in the value of their shares. Such stockholders are unlikely to have a remedy for such reduction in value.

 

 

The Company’s officers and directors are not required to, and may not, commit their full time to our affairs, which may result in a conflict of interest in allocating their time between their operations and their search for software company acquisitions and their other businesses. Each of the Company’s officers are engaged in other business endeavors for which they may be entitled to substantial compensation and their officers are not obligated to contribute any specific number of hours per week to their affairs. The Company’s independent directors may also serve as officers or board members for other entities. If the Company’s officers’ and directors’ other business affairs require them to devote substantial amounts of time to such affairs in excess of their current commitment levels, it could limit their ability to devote time to the Company’s affairs which may have a negative impact on their ability to complete a software company acquisition. For a complete discussion of our officers’ and directors’ other business affairs, please see the section of this prospectus entitled

 

 

 

In light of the involvement of officers and directors with other entities, the Company may decide to acquire one or more companies affiliated with the Company’s officers or directors. The Company’s directors also serve as officers and board members for other entities, including, without limitation, those described under the section of this prospectus entitled Such entities may compete with the Company for software company acquisition opportunities. The company’s, officers and directors are not currently aware of any specific opportunities for them to complete software company acquisitions with any entities with which they are affiliated, and there have been no preliminary discussions concerning a software company acquisition with any such entity or entities. Although the Company will not be specifically focusing on, or targeting, any transaction with any affiliated entities, they would pursue such a transaction if they determined that such affiliated entity met their criteria for a software company acquisition as set forth in the section of this prospectus entitled and such transaction was approved by a majority of the Company’s disinterested directors. Despite the Company’s agreement to obtain an opinion from an independent investment banking firm or from another independent entity that commonly renders valuation opinions, regarding the fairness to their stockholders from a financial point of view of a software company acquisition affiliated with our officers, directors or existing holders, potential conflicts of interest still may exist and, as a result, the terms of the software company acquisition may not be as advantageous to the Company’s public stockholders as they would be absent any conflicts of interest.

 

 

In pursuing a software company acquisition strategy, the Company may seek to effectuate a software company acquisition of a privately held company. Very little public information generally exists about private companies, and the Company could be required to make their decision on whether to pursue a potential software company acquisition on the basis of limited information, which may result in an acquisition of a company that is not as profitable as they suspected, if at all.

 

 

The Company is dependent upon management in order to conduct its operations and execute its business plan and despite having obtained insurance policies for certain key personnel, the Chief Operating Officer and the Chief Executive Officer, the Company has not purchased any life insurance policies with respect to those any other individuals in the event of their death or disability. Therefore, should any of those key personnel, management or founders die or become disabled, the Company will not receive any compensation that would assist with such person's absence. The loss of such person could negatively affect the Company and its operations.

 

 

Significant judgment is required in determining our provision for income taxes and other tax liabilities. In the ordinary course of our business, there are many transactions and calculations where the ultimate tax determination is uncertain. Although the Company believes that our tax estimates will be reasonable: (i) there is no assurance that the final determination of tax audits or tax disputes will not be different from what is reflected in our income tax provisions, expense amounts for non-income based taxes and accruals and (ii) any material differences could have an adverse effect on our financial position and results of operations in the period or periods for which determination is made.

 

 

The Company does not have the internal infrastructure necessary, and is not required, to complete an attestation about our financial controls that would be required under Section 404 of the Sarbanes-Oxley Act of 2002. There can be no assurances that there are no significant deficiencies or material weaknesses in the quality of our financial controls. The Company expects to incur additional expenses and diversion of management's time if and when it becomes necessary to perform the system and process evaluation, testing and remediation required in order to comply with the management certification and auditor attestation requirements.

 

 

Please see the section of this Offering Circular entitled “Interest of Management and Others in Certain Related-Party Transactions and Agreements”

 

 

 

Various federal and state laws, including labor laws, govern the Company’s relationship with our employees and affect operating costs. These laws may include minimum wage requirements, overtime pay, healthcare reform and the implementation of various federal and state healthcare laws, unemployment tax rates, workers' compensation rates, citizenship requirements, union membership and sales taxes. A number of factors could adversely affect our operating results, including additional government-imposed increases in minimum wages, overtime pay, paid leaves of absence and mandated health benefits, mandated training for employees, changing regulations from the National Labor Relations Board and increased employee litigation including claims relating to the Fair Labor Standards Act.

 

 

The Company’s regular bank accounts for this Offering each have federal insurance that is limited to a certain amount of coverage. It is anticipated that the account balances in each account may exceed those limits at times. In the event that any of Company’s banks should fail, the Company may not be able to recover all amounts deposited in these bank accounts.

 

 

The Company’s present business and planned business are speculative and subject to numerous risks and uncertainties. There is no assurance that the Company will generate significant revenues or profits.

 

 

The Company will face significant competition in the United States and elsewhere (please see the sub- section entitled “Competitive Landscape and Distinctions” below in this Offering Circular).

 

 

The Company has and will likely incur debt (including secured debt) in the future and in the continuing operations of its business. Complying with obligations under such indebtedness may have a material adverse effect on the Company and on your investment.

 

 

The Company’s operating and other expenses could increase without a corresponding increase in revenues, which could have a material adverse effect on the Company’s financial results and on your investment. Factors which could increase operating and other expenses include, but are not limited to (1) increases in the rate of inflation, (2) increases in taxes and other statutory charges, (3) changes in laws, regulations or government policies which increase the costs of compliance with such laws, regulations or policies, (4) significant increases in insurance premiums, (5) increases in borrowing costs, and (5) unexpected increases in costs of supplies, goods, materials, construction, equipment or distribution.

 

 

It is important that the Company maintains and enhances the image of any new products. The image and reputation of the Company’s products may be impacted for various reasons including, but not limited to, bad publicity, litigation, and complaints from regulatory bodies. Such problems, even when unsubstantiated, could be harmful to the Company’s image and the reputation of its products. These claims may not be covered by the Company’s insurance policies. Any resulting litigation could be costly for the Company, divert management attention, and could result in increased costs of doing business, or otherwise have a material adverse effect on the Company’s business, results of operations, and financial condition. Any negative publicity generated could damage the Company’s reputation and diminish the value of the Company’s brand, which could have a material adverse effect on the Company’s business, results of operations, and financial condition, as well as your investment. Deterioration in the Company’s brand equity (brand image, reputation and product quality) may have a material adverse effect on its financial results as well as your investment.

 

 

 

The success of the Company will depend on their ability to obtain and maintain meaningful intellectual property protection for any such intellectual property. The names and/or logos of Company brands may be challenged by holders of trademarks who file opposition notices, or otherwise contest, trademark applications by the Company for its brands. Similarly, domains owned and used by the Company may be challenged by others who contest the ability of the Company to use the domain name or URL. The Company’s business depends on proprietary technology that may be infringed. Some or all of their products depends or will depend on their proprietary technology for their success. The Company relies on a combination of trade secrets, copyrights and trademarks, together with non-disclosure agreements, confidentiality provisions in sales, procurement, employment and other agreements and technical measures to establish and protect proprietary rights in their products. While the Company may seek patents for some or all of their products and technology, there is no guarantee that such patents will be granted. The Company’s ability to successfully protect their technology may be limited because intellectual property laws in certain jurisdictions may be relatively ineffective, detecting infringements and enforcing proprietary rights may divert management’s attention and company resources, contractual measures such as non-disclosure agreements and confidentiality provisions may afford only limited protection, any patents the Company may receive will expire, thus providing competitors access to the applicable technology, competitors may independently develop products that are substantially equivalent or superior to the Company’s products or circumvent heir intellectual property rights; and competitors may register patents in technologies relevant to their business areas. In addition, various parties may assert infringement claims against them. The cost of defending against infringement claims could be significant, regardless of whether the claims are valid. If the Company is not successful in defending such claims, they may be prevented from the use or sale of certain of their products, or liable for damages and required to obtain licenses, which may not be available on reasonable terms, any of which may have a material adverse impact on the Company’s business, results of operation or financial condition.

 

 

Computer, website and/or information system breakdowns as well as cyber security attacks could impair the Company’s ability to service its customers leading to reduced revenue from sales and/or reputational damage, which could have a material adverse effect on the Company’s financial results as well as your investment.

 

 

In order to achieve the Company's near and long-term goals, the Company may need to procure funds in addition to the amount raised in the Offering. There is no guarantee the Company will be able to raise such funds on acceptable terms or at all. If the Company is unable to raise sufficient capital in the future, they will not be able to execute their business plan, their continued operations will be in jeopardy and they may be forced to cease operations and sell or otherwise transfer all or substantially all of their remaining assets, which could cause you to lose all or a portion of your investment.

 

 

The Company may require additional debt and/or equity financing to pursue their growth and business strategies. These include, but are not limited to enhancing their operating infrastructure and otherwise respond to competitive pressures. Given their limited operating history and existing losses, there can be no assurance that additional financing will be available, or, if available, that the terms will be acceptable to them. Lack of additional funding could force them to curtail substantially their growth plans. Furthermore, the issuance by the Company of any additional securities pursuant to any future fundraising activities undertaken by them would dilute the ownership of existing shareholders and may reduce the price of our Shares.

 

 

 

If the Company is deemed to be an investment company under the Investment Company Act, the Company’s activities may be restricted, including:

 

 

In addition, the Company may have imposed upon them burdensome requirements, including:

 

  

In order not to be regulated as an investment company under the Investment Company Act, unless the Company can qualify for an exclusion, must ensure that they are engaged primarily in a business other than investing, reinvesting or trading in securities and that their activities do not include investing, reinvesting, owning, holding or trading constituting more than 40% of their total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. The Company’s business will be to identify and acquire software companies and thereafter to operate the post-transaction business or assets for the long term. The Company does not plan to buy unrelated businesses or assets or to be a passive investor.

 

The Company does not believe that their anticipated principal activities will subject us to the Investment Company Act.

 

 

We are subject to laws and regulations enacted by national, regional and local governments. In particular, we will be required to comply with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly.

 

Those laws and regulations and their interpretation and application may also change from time to time and those changes could have a material adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business, including our ability to negotiate and complete our initial business combination and results of operations.

 

 

The Company may have to engage in common equity, debt, or preferred stock financings in the future. Your rights and the value of your investment in the Common Stock could be reduced by the dilution caused by future equity issuances. Interest on debt securities could increase costs and negatively impact operating results. In the event the Company is permitted to issue preferred stock pursuant to the terms of our Company documents, preferred stock could be issued in series from time to time with such designation, rights, preferences, and limitations as needed to raise capital. The terms of preferred stock would be more advantageous to those investors than to the holders of Common Stock. In addition, if the Company needs to raise more equity capital from the sale of common stock, institutional or other investors may negotiate terms at least as, and possibly more, favorable than the terms of your investment. Shares of common stock which the Company sells could be sold into any market that develops, which could adversely affect the market price.

 

 

 

The Company’s employees, executive officers, directors and insider shareholders beneficially own or control a substantial portion of their outstanding type of stock which may limit your ability and the ability of theur other shareholders, whether acting alone or together, to propose or direct the management or overall direction of the company. Additionally, this concentration of ownership could discourage or prevent a potential takeover of the Company that might otherwise result in an investor receiving a premium over the market price for its Shares. The majority of the Company currently outstanding Shares of stock are beneficially owned and controlled by a group of insiders, including our employees, directors, executive officers and inside shareholders. Accordingly, Company employees, directors, executive officers and insider shareholders may have the power to control the election of directors and the approval of actions for which the approval of the Company’s shareholders is required. If you acquire the Company’s Shares, you will have no effective voice in the management of the Company. Such concentrated control of the Company may adversely affect the price of the Company’s Shares. Our principal shareholders may be able to control matters requiring approval by our shareholders, including the election of directors, mergers or other business combinations. Such concentrated control may also make it difficult for the Company’s shareholders to receive a premium for their Shares in the event that the Company merges with a third party or enter into different transactions which require shareholder approval. These provisions could also limit the price that investors might be willing to pay in the future for the Company’s Shares.

 

 

Whether actual operating results and business developments will be consistent with the Company’s expectations and assumptions as reflected in its forecast depends on a number of factors, many of which are outside the Company’s control, including, but not limited to:

 

 

Unfavorable changes in any of these or other factors, most of which are beyond the Company’s control, could materially and adversely affect its business, results of operations and financial condition.

 

 

The Company has been operating at a loss since the Company's inception, and the Company expects to continue to incur losses for the foreseeable future. Further, the Company may not be able to generate significant revenues in the future. In addition, the Company expects to incur substantial operating expenses in order to fund the expansion of the Company's business. As a result, The Company expects to continue to experience substantial negative cash flow for at least the foreseeable future and cannot predict when, or even if, the Company might become profitable.

 

 

 

The Company may not be able to expand the Company's product and service offerings, the Company's markets, or implement the other features of the Company's business strategy at the rate or to the extent presently planned. The Company's projected growth will place a significant strain on the Company's administrative, operational and financial resources. If the Company is unable to successfully manage the Company's future growth, establish and continue to upgrade the Company's operating and financial control systems, recruit and hire necessary personnel or effectively manage unexpected expansion difficulties, the Company's financial condition and results of operations could be materially and adversely affected.

 

 

The Company currently relies on trade secrets. While the Company uses reasonable efforts to protect these trade secrets, the Company cannot assure that its employees, consultants, contractors or advisors will not, unintentionally or willfully, disclose the Company's trade secrets to competitors or other third parties. In addition, courts outside the United States are sometimes less willing to protect trade secrets. Moreover, the Company's competitors may independently develop equivalent knowledge, methods and know-how. If the Company is unable to defend the Company's trade secrets from others use, or if the Company's competitors develop equivalent knowledge, it could have a material adverse effect on the Company's business. Any infringement of the Company's proprietary rights could result in significant litigation costs, and any failure to adequately protect the Company's proprietary rights could result in the Company's competitors offering similar products, potentially resulting in loss of a competitive advantage and decreased revenue. Existing patent, copyright, trademark and trade secret laws afford only limited protection. In addition, the laws of some foreign countries do not protect the Company's proprietary rights to the same extent as do the laws of the United States. Therefore, the Company may not be able to protect the Company's proprietary rights against unauthorized third-party use. Enforcing a claim that a third party illegally obtained and is using the Company's trade secrets could be expensive and time consuming, and the outcome of such a claim is unpredictable. Litigation may be necessary in the future to enforce the Company's intellectual property rights, to protect the Company's trade secrets or to determine the validity and scope of the proprietary rights of others. This litigation could result in substantial costs and diversion of resources and could materially adversely affect the Company's future operating results.

 

 

The Company believes that maintaining and enhancing awareness of the Company's brand is critical to achieving widespread acceptance and success of the Company's business. The Company also believes that the importance of brand recognition will increase due to the relatively low barriers to entry in the Company's market. Maintaining and enhancing the Company's brand awareness may require the Company to spend increasing amounts of money on, and devote greater resources to, advertising, marketing and other brand-building efforts, and these investments may not be successful. Further, even if these efforts are successful, they may not be cost-effective. If the Company is unable to continuously maintain and enhance the Company's media presence, the Company's market may decrease and the Company may fail to attract advertisers and subscribers, which could in turn result in lost revenues and adversely affect the Company's business and financial results.

 

 

Due to a variety of factors, the Company's opportunity to achieve and maintain a significant market share may be limited. Developing and maintaining awareness of the Company's brand name, among other factors, is critical. Further, the importance of brand recognition will increase as competition in the Company's market increases. Successfully promoting and positioning the Company's brand, products and services will depend largely on the effectiveness of the Company's marketing efforts. Therefore, the Company may need to increase the Company's financial commitment to creating and maintaining brand awareness. If the Company fails to successfully promote the Company's brand name or if the Company incurs significant expenses promoting and maintaining the Company's brand name, it would have a material adverse effect on the Company's results of operations.

 

 

 

In many cases, the Company’s competitors have longer operating histories, established ties to the market and consumers, greater brand awareness, and greater financial, technical and marketing resources. The Company's ability to compete depends, in part, upon a number of factors outside the Company's control, including the ability of the Company's competitors to make superior, more profitable and influential acquisitions . If the Company fails to successfully compete in its markets, or if the Company incurs significant expenses in order to compete, it could have a material adverse effect on the Company's results of operations.

 

 

The Company hosts, collects, uses and retains large amounts of sensitive and personal customer and workforce data, including credit card information, tax return information, bank account numbers, login credentials and passwords, personal and business financial data and transactions data, social security numbers and payroll information, as well as our confidential, nonpublic business information. The Company uses commercially available security technologies and security and business controls to limit access to and use of such sensitive data. Although the Company expends significant resources to create security protections designed to shield this data against potential theft and security breaches, such measures cannot provide absolute security.

 

The Company’s technologies, systems, and networks have been subject to, and are likely to continue to be the target of, cyberattacks, computer viruses, worms, social engineering, malicious software programs, insider threats, and other cybersecurity incidents that could result in the unauthorized release, gathering, monitoring, use, loss or destruction of sensitive and personal data of its customers and members of its workforce, or Intuit's sensitive business data or cause temporary or sustained unavailability of its software and systems. These types of attacks can be made by individuals, groups of hackers, and sophisticated organizations including state-sponsored organizations or nation-states themselves. Customers who fail to update their systems, continue to run software that the Company no longer support or that fail to install security patches on a timely basis create vulnerabilities and make it more difficult for the Company to detect and prevent these kinds of attacks. The Company is increasingly incorporating open source software into their products. There may be vulnerabilities in open source software that make it susceptible to cyberattacks. In addition, because the techniques used to obtain unauthorized access to sensitive information change frequently, and are becoming more sophisticated and are often not able to be detected until after a successful attack, the Company may be unable to anticipate these techniques or implement adequate preventive measures. Although this is an industry-wide problem that affects software and hardware across platforms, it may increasingly affect the Company’s offerings because cyber-criminals tend to focus their efforts on well-known offerings that are popular among customers and hold sensitive information and the Company expects them to continue to do so.

 

Further, the security measures the Company implements may not be able to prevent unauthorized access to their products and their customers’ account data. Third parties may fraudulently induce members of the Company’s workforce, customers, or users by social engineering means, such as email phishing, to disclose sensitive information in order to gain access to our systems. It is also possible that unauthorized access to or disclosure of customer data may occur due to inadequate use of security controls by the Company’s customers or members of their workforce. Accounts created with weak or recycled passwords could allow cyber-attackers to gain access to customer data. Unauthorized persons could gain access to customer accounts if customers do not maintain effective access controls of their systems and software.

 

Criminals may also use stolen identity information obtained outside of the Company’s systems to gain unauthorized access to their customers’ data. The Company has experienced such instances in the past and as the accessibility of stolen identity information increases, generally, they may experience further instances of unauthorized access to their systems through the use of stolen identity information of their customers or members of their workforce in the future. Further, the Company’s customers may choose to use the same user ID and password across multiple products and services unrelated to our products. Such customers’ login credentials may be stolen from products offered by third-party service providers unrelated to the Company and the stolen identity information may be used by a malicious third party to access their products, which could result in disclosure of confidential information.

 

 

The Company’s efforts to protect data may also be unsuccessful due to software bugs (whether open source or proprietary code), break-ins, workforce member error or other threats that evolve. Further, because the Company has created an ecosystem where customers can have one identity across multiple products, a security incident may give access to increased amounts of customer data. This may result in disclosure of confidential information, loss of customer confidence in the Company’s products, possible litigation, material harm to their reputation and financial condition, disruption of their or their customers’ business operations and a decline in the Company’s stock price. From time to time, the Company detects, or receives notices from customers or public or private agencies that they have detected, actual or perceived vulnerabilities in their servers, their software or third-party software components that are distributed with their products or fraudulent activity by unauthorized persons utilizing their products with stolen customer identity information. The existence of such vulnerabilities or fraudulent activity, even if they do not result in a security breach, may undermine customer confidence as well as the confidence of government agencies that regulate our offerings. Such perceived vulnerabilities could also seriously harm the Company’s business by tarnishing their reputation and brand and/or limiting the adoption of their products and services and could cause their stock price to decline.

 

 

The Company depends on a number of third parties, including vendors, developers and partners who are critical to their business. The Company or their customers may grant access to customer data to these third parties to help deliver customer benefits, or to host certain of their and their customers' sensitive and personal data. In addition, the Company shares sensitive, nonpublic business information (including, for example, materials relating to financial, business and legal strategies) with other vendors in the ordinary course of business.

 

While the Company conducts background checks of their workforce, conduct reviews of partners, developers and vendors and use commercially available technologies to limit access to systems and data, it is possible that one or more of these individuals or third parties may misrepresent their intended use of data or may circumvent the Company’s controls, resulting in accidental or intentional disclosure or misuse of the Company’s customers’ or employees’ data. Further, while the Company conducts due diligence on these third parties with respect to their security and business controls, they may not have the ability to effectively monitor or oversee the implementation of these control measures. Individuals or third parties may be able to circumvent these security and business controls and/or exploit vulnerabilities that may exist in these controls, resulting in the disclosure or misuse of sensitive business and personal customer or employee information and data.

 

A security incident involving third parties whom the Company relies on may have serious negative consequences for their businesses, including disclosure of sensitive customer or employee data, or confidential or competitively sensitive information regarding their business, including intellectual property and other proprietary data; make their products more vulnerable to fraudulent activity; cause temporary or sustained unavailability of their software and systems; result in possible litigation, fines, penalties and damages; result in loss of customer confidence; cause material harm to the Company’s reputation and brands; lead to further regulation and oversight by federal or state agencies; cause adverse financial condition; and result in a reduced stock price.

 

 

The continued occurrence of cyber-attacks and data breaches on governments, businesses and consumers in general indicates that the Company operates in an external environment where cyber-attacks and data breaches are becoming increasingly common. If the global cybersecurity environment worsens, and there are increased instances of security breaches of third-party offerings where consumers’ data and sensitive information is compromised, consumers may be less willing to use online offerings, particularly offerings like the Company’s in which customers often share sensitive financial data. In addition, the increased availability of data obtained as a result of breaches of third-party offerings could make the Company’s own products more vulnerable to fraudulent activity. Even if the Company’s products are not affected directly by such incidents, any such incident could damage their reputation and deter current and potential customers from adopting their products and services or lead customers to cease using online and connected software products to transact financial business altogether.

 

 

 

The online tax preparation, payroll administration and online payments industries have been experiencing an increasing amount of fraudulent activities by third parties, and those fraudulent activities are becoming increasingly sophisticated. Although the Company does not believe that any of this activity is uniquely targeted at their products or business, this type of fraudulent activity may adversely impact their tax, payroll, and payments businesses. In addition to any losses that may result from such fraud, which may be substantial, a loss of confidence by the Company’s customers or by governmental agencies in their ability to prevent fraudulent activity that is perpetrated through the Company’s offerings may seriously harm their business and damage their brand. If the Company cannot adequately combat such fraudulent activity that is perpetrated through their tax offerings, governmental authorities may refuse to allow them to continue to offer such services, which could include federal or state tax authorities refusing to allow them to process their customers’ tax returns electronically, resulting in a significant adverse impact on their earnings and revenue. As fraudulent activities become more pervasive and increasingly sophisticated, and fraud detection and prevention measures must become correspondingly more complex to combat them across the various industries in which we operate, the Company may implement risk control mechanisms that could make it more difficult for legitimate customers to obtain and use the Company’s products, which could result in lost revenue and negatively impact their earnings.

 

 

The Company’s operations process a significant volume and dollar value of transactions on a daily basis, especially in our payroll and payments businesses. Despite the Company’s efforts to ensure that effective processing systems and controls are in place to handle transactions appropriately, it is possible that they may make errors or that funds may be misappropriated due to fraud. The likelihood of any such error or misappropriation may increase as the Company accelerates the speed at which we process transactions. The systems supporting the Company’s business are comprised of multiple technology platforms that are sometimes difficult to scale. If the Company is unable to effectively manage their systems and processes, or if there is an error in their products, they may be unable to process customer data in an accurate, reliable and timely manner, which may harm their reputation, the willingness of customers to use their products, and their financial results. In the Company’s payments processing service business, if merchants for whom they process payment transactions are unable to pay refunds due to their customers in connection with disputed or fraudulent merchant transactions, the Company may be required to pay those amounts and their payments may exceed the amount of the customer reserves they have established to make such payments.

 

 

The Company’s reputation and ability to attract, retain and serve their customers is dependent upon the reliable performance of their products and their underlying technical infrastructure. As the Company continues to grow their online services, they become more dependent on the continuing operation and availability of their information technology and communications systems and those of their external service providers, including, for example, third-party Internet-based or cloud computing services. The Company does not have redundancy for all of their systems, and their disaster recovery planning may not account for all eventualities. The Company has designed a significant portion of their software and computer systems to utilize data processing and storage capabilities provided by public cloud providers, such as Amazon Web Services. If any public cloud service that they use is unavailable to them for any reason, their customers may not be able to access certain of their cloud products or features, which could significantly impact their operations, business, and financial results.

 

 

Failure of the Company’s systems or those of their third-party service providers, may result in interruptions in their service and loss of data or processing capabilities, all of which may cause a loss in customers, refunds of product fees, material harm to the Company’s reputation and operating results.

 

The Company’s tax businesses must effectively handle extremely heavy customer demand during critical peak periods from January until April of each year. The Company faces significant risks in maintaining adequate service levels during these peak periods when they derive a substantial portion of their overall revenue from the tax businesses. Any interruptions in the Company’s online tax preparation or electronic filing service at any time during the tax season, particularly during a peak period, could result in significantly decreased revenue, lost customers, unexpected refunds of customer charges, negative publicity and increased operating costs, any of which could significantly harm the Company’s business, financial condition and results of operations.

 

The Company relies on internal systems and external systems maintained by manufacturers, distributors and other service providers to take and fulfill customer orders, handle customer service requests and host certain online activities. Any interruption or failure of the Company’s internal or external systems may prevent them or their service providers from accepting and fulfilling customer orders or cause company and customer data to be unintentionally disclosed. The Company’s continuing efforts to upgrade and expand their network security and other information systems as well as their high-availability capabilities may be costly, and problems with the design or implementation of system enhancements may harm the Company’s business and our results of operations.

 

The Company’s business operations, data centers, information technology and communications systems are vulnerable to damage or interruption from natural disasters, human error, malicious attacks, fire, power loss, telecommunications failures, computer viruses, computer denial of service attacks, terrorist attacks and other events beyond our control. In addition, the Company’s corporate headquarters and other critical business operations are located near major seismic faults. In the event of a major natural or man-made disaster, the Company’s insurance coverage may not completely compensate them for their losses and their future financial results may be materially harmed.

 

 

The Company relies on their network and data center infrastructure and internal technology systems for many of their development, marketing, operational, support, sales, accounting and financial reporting activities. The Company is continually investing resources to update and improve these systems and environments in order to meet existing needs, as well as the growing and changing requirements of their business and customers. If the Company experiences prolonged delays or unforeseen difficulties in updating and upgrading their systems and architecture, they may experience outages and may not be able to deliver certain offerings and develop new offerings and enhancements that they need to remain competitive. Such improvements and upgrades are often complex, costly and time consuming. In addition, such improvements can be challenging to integrate with their existing technology systems, or may uncover problems with their existing technology systems. Unsuccessful implementation of hardware or software updates and improvements could result in outages, disruption in the Company’s business operations, loss of revenue or damage to their reputation.

 

 

 

The Company’s growth is increasingly dependent on the strength of their business relationships and their ability to continue to develop, manage and maintain new and existing relationships with third-party partners. The Company relies on various third-party partners, including software and service providers, suppliers, vendors, manufacturers, distributors, accountants, contractors, financial institutions, core processors, licensing partners and development partners, among others, in many areas of their business in order to deliver their offerings and operate their business. The Company also relies on third parties to support the operation of their business by maintaining their physical facilities, equipment, power systems and infrastructure. In certain instances, these third-party relationships are sole source or limited source relationships and can be difficult to replace or substitute depending on the level of integration of the third party’s products or services into, or with, their offerings and/or the general availability of such third party’s products and services. In addition, there may be few or no alternative third-party providers or vendors in the market. Further, there can be no assurance that the Company will be able to adequately retain third-party contractors engaged to help us operate their business. The failure of third parties to provide acceptable and high quality products, services and technologies or to update their products, services and technologies may result in a disruption to their business operations and their customers, which may reduce their revenues and profits, cause them to lose customers and damage their reputation. Alternative arrangements and services may not be available to them on commercially reasonable terms or at all, or they may experience business interruptions upon a transition to an alternative partner.

 

Although the Company has strict standards for their suppliers and business partners to comply with the law and company policies regarding workplace and employment practices, data use and security, environmental compliance, intellectual property licensing and other applicable regulatory and compliance requirements, the Company cannot control their day-to-day practices. If any of them violate laws or implement practices regarded as unethical, they could experience supply chain disruptions, canceled orders, terminations of or damage to key relationships, and damage to our reputation. In particular, the Company has relationships with banks, credit unions and other financial institutions that support certain critical services they offer to their customers. If macroeconomic conditions or other factors cause any of these institutions to fail, consolidate, stop providing certain services or institute cost-cutting efforts, their business and financial results may suffer and they may be unable to offer those services to their customers.

 

The Company increasingly utilizes the distribution platforms of third parties like Apple’s App Store and Google’s Play Store for the distribution of certain of their product offerings. Although the Company benefits from the strong brand recognition and large user base of these distribution platforms to attract new customers, the platform owners have wide discretion to change the pricing structure, terms of service and other policies with respect to us and other developers. Any adverse changes by these third parties could adversely affect our financial results.

 

 

The Company may outsource some or all of its online presence and data management to third parties who host the actual servers and provide power and security in multiple data centers in each geographic location. These third-party facilities could require uninterrupted access to the Internet. If the operation of the servers is interrupted for any reason, including natural disaster, financial insolvency of a third-party provider, or malicious electronic intrusion into the data center, its business could be significantly damaged. As has occurred with many Internet-based businesses, the Company may be subject to "denial-of-service" attacks in which unknown individuals bombard its computer servers with requests for data, thereby degrading the servers' performance. The Company cannot be certain it will be successful in quickly identifying and neutralizing these attacks. If either a third-party facility failed, or the Company's ability to access the Internet was interfered with because of the failure of Internet equipment in general or if the Company becomes subject to malicious attacks of computer intruders, its business and operating results will could be materially adversely affected.

 

 

The Company operates in industries that are characterized by rapidly changing technology, evolving industry standards and frequent new product introductions. The Company must continue to innovate and develop new products and features to meet changing customer needs and attract and retain talented software developers. The Company needs to continue to develop its skills, tools and capabilities to capitalize on existing and emerging technologies, which requires us to devote significant resources.

 

 

The Company’s consumer and professional tax businesses depend significantly on revenue from customers who return each year to use our updated tax preparation and filing software and services. As existing products mature, encouraging customers to purchase product upgrades becomes more challenging unless new product releases provide features and functionality that have meaningful incremental value. The Company also provides additional customer benefits by utilizing customer data available to them through the Company’s existing offerings. If the Company is unable to develop and clearly demonstrate the value of new or upgraded products or services to the Company’s customers, or effectively utilize its customers’ data to provide them with value, their revenues may be harmed. In addition, the Company continues to introduce and expand their new business models, including offerings that are free to end users, their customers may not perceive value in the additional benefits and services it offers beyond their free offering and may choose not to pay for those additional benefits or the Company may be unsuccessful in increasing customer adoption of these offerings or their risk profile may change, resulting in loss of revenue.

 

In some cases, the Company may expend a significant amount of resources and management attention on offerings that do not ultimately succeed in their markets. The Company may encounter difficulty in launching new products and services. If the Company misjudges customer needs in the future, their new products and services may not succeed and their revenues and earnings may be harmed. The Company may also invest, and in the future, expect to invest in new business models, geographies, strategies and initiatives. Such endeavors may involve significant risks and uncertainties, including distraction of management from current operations, expenses associated with the initiatives and inadequate return on investments. Because these new initiatives are inherently risky, they may not be successful and may harm the Company’s financial condition and operating results.

 

 

The Company has acquired and may continue to acquire companies, products, technologies and talent that complement its strategic direction, both in and outside the United States. Acquisitions involve significant risks and uncertainties, including:

 

 

 

The Company may in the future divest certain assets or businesses that no longer fit with its strategic direction or growth targets. Divestitures involve significant risks and uncertainties, including:

 

 

In addition, any acquisition or divestiture that the Company announces may not be completed if closing conditions are not satisfied. Because acquisitions and divestitures are inherently risky, the Company’s transactions may not be successful and may, in some cases, harm their operating results or financial condition. Although the Company typically funds its acquisitions through cash available from operations, if they were to use debt to fund acquisitions or for other purposes, their interest expense and leverage would increase significantly, and if they were to issue equity securities as consideration in an acquisition, current shareholders’ percentage ownership and earnings per share would be diluted.

 

 

 

In addition to uncertainty about the Company’s ability to generate revenues from their foreign operations and expand into international markets, there are risks inherent in doing business internationally, including:

 

 

Violations of the rapidly evolving and complex foreign and U.S. laws and regulations that apply to the Company’s international operations may result in fines, criminal actions or sanctions against them, their officers or their employees, prohibitions on the conduct of their business and damage to their reputation. Although the Company has implemented policies and procedures designed to promote compliance with these laws, there can be no assurance that their employees, contractors or agents will not violate their policies. These risks inherent in the Company’s international operations and expansion increase their costs of doing business internationally and may result in harm to their business, operating results, and financial condition.

 

 

 

Although the Company intends to focus on identifying companies in sectors where we have experience, the Company will consider a software company acquisition outside of their management’s area of expertise if a software company acquisition candidate is presented to them and they determine that such candidate offers an attractive acquisition opportunity for or they are unable to identify a suitable candidate in this sector after having expanded a reasonable amount of time and effort in an attempt to do so. Although the Company’s management will endeavor to evaluate the risks inherent in any particular software company acquisition candidate, the Company cannot assure you that they will adequately ascertain or assess all of the significant risk factors. The Company also cannot assure you that an investment in their Shares will not ultimately prove to be less favorable to investors in this offering than a direct investment, if an opportunity were available, in a software company acquisition candidate. In the event the Company elects to pursue a software company outside of the areas of their management’s expertise, their management’s expertise may not be directly applicable to its evaluation or operation, and the information contained in this prospectus regarding the areas of their management’s expertise would not be relevant to an understanding of the business that they elect to acquire. As a result, the Company’s management may not be able to adequately ascertain or assess all of the significant risk factors. Accordingly, any stockholders who choose to remain stockholders following the Company’s software company acquisitions could suffer a reduction in the value of their shares. Such stockholders are unlikely to have a remedy for such reduction in value.

 

 

To the extent the Company completes a software company acquisition with a financially unstable business or an entity lacking an established record of revenues or earnings, the Company may be affected by numerous risks inherent in the operations of the business with which they acquire. These risks include volatile revenues or earnings and difficulties in obtaining and retaining key personnel. Although the Company’s officers and directors will endeavor to evaluate the risks inherent in a particular target business, they may not be able to properly ascertain or assess all of the significant risk factors and may not have adequate time to complete due diligence. Furthermore, some of these risks may be outside of the Company’s control and leave it with no ability to control or reduce the chances that those risks will adversely impact a target business.

 

 

Unless the Company completes our initial business combination with an affiliated entity or our board cannot independently determine the fair market value of the target company or companies, the Company is not required to obtain an opinion from an independent investment banking firm or from another independent entity that commonly renders valuation opinions that the price the Company is paying is fair to from a financial point of view. If no opinion is obtained, the Company’s stockholders will be relying on the judgment of their board of directors, who will determine fair market value based on standards generally accepted by the financial community. Such standards used will be disclosed in the Company’s proxy materials or tender offer documents, as applicable, related to their initial business combination.

 

 

The Company may provide for the indemnification of directors to the fullest extent permitted by law and, to the extent permitted by such law, eliminate or limit the personal liability of directors to the Company and its shareholders for monetary damages for certain breaches of fiduciary duty. Such indemnification may be available for liabilities arising in connection with this Offering. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling the Company pursuant to the foregoing provisions, the Company has been informed that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

 

 

 

The Company’s operating and other expenses could increase without a corresponding increase in revenues, which could have a material adverse effect on the Company’s financial results and on your investment. Factors which could increase operating and other expenses include, but are not limited to (1) increases in the rate of inflation, (2) increases in taxes and other statutory charges, (3) changes in laws, regulations or government policies which increase the costs of compliance with such laws, regulations or policies, (4) significant increases in insurance premiums, (5) increases in borrowing costs, and (5) unexpected increases in costs of supplies, goods, materials, construction, equipment or distribution.

 

 

Changes in the general economic climate could have a detrimental impact on the Company’s revenue. It is possible that recessionary pressures and other economic factors (such as declining incomes, future potential rising interest rates, higher unemployment and tax increases) may decrease the disposable income that customers have available to spend on products and services like those of the Company and may adversely affect customers’ confidence and willingness to spend. Any of such events or occurrences could have a material adverse effect on the Company’s financial results and on your investment.

 

 

 

The Company may undertake further equity or debt financing which may be dilutive to existing shareholders, including you, or result in an issuance of securities whose rights, preferences and privileges are senior to those of existing shareholders, including you, and also reducing the value of Shares subscribed for under this Offering.

 

 

An investment in the Company’s Shares is speculative and there is no assurance that investors will obtain any return on their investment. Investors will be subject to substantial risks involved in an investment in the Company, including the risk of losing their entire investment.

 

 

Since the Company is offering the Shares on a “best efforts” basis, there is no assurance that the Company will sell enough Shares to meet its capital needs. If you purchase Shares in this Offering, you will do so without any assurance that the Company will raise enough money to satisfy the full USE OF PROCEEDS TO COMPANY which the Company has outlined in this Offering Circular or to meet the Company’s working capital needs.

 

 

There is no assurance that the maximum amount of Shares in this offering will be sold. If the maximum Offering amount is not sold, we may need to incur additional debt or raise additional equity in order to finance our operations. Increasing the amount of debt will increase our debt service obligations and make less cash available for distribution to our shareholders. Increasing the amount of additional equity that we will have to seek in the future will further dilute those investors participating in this Offering.

 

 

 

We have never paid cash dividends on our Shares and, though we do anticipate paying cash dividends in the foreseeable future, there is no guarantee we will do so. The payment of dividends on our Shares will depend on earnings, financial condition and other business and economic factors affecting it at such time that management may consider relevant. If we do not pay dividends, our Shares may be less valuable because a return on your investment will only occur if its stock price appreciates.

 

 

The proceeds from this Offering, including potential proceeds from the sale of Warrant Shares upon exercise of all the Warrants, will be up to $49,875,000 before deducting fees, commissions and offering expenses payable by us. We expect that if the maximum sale of Units and Warrant Shares is achieved, the net proceeds from this Offering will be sufficient to fund our current operations for at least the next twenty-four months. However, we may not achieve the maximum sale of Units and Warrant Shares, and/or our operating plan may change as a result of many factors currently unknown to us, and we may need to seek additional funds sooner than planned, through public or private equity or debt financings, government or other third-party funding, marketing and distribution arrangements and other collaborations, strategic alliances or a combination of these approaches. Raising funds in the current economic environment may present additional challenges. It is not certain that we have accounted for all costs and expenses of future development and regulatory compliance. Even if we believe we have sufficient funds for our current or future operating plans, we may seek additional capital if market conditions are favorable or if we have specific strategic considerations.

 

 

Even if the Company is successful in selling the maximum number of Shares in the Offering, the Company may require additional funds to continue and grow its business. The Company may not be able to obtain additional financing as needed, on acceptable terms, or at all, which would force the Company to delay its plans for growth and implementation of its strategy which could seriously harm its business, financial condition and results of operations. If the Company needs additional funds, the Company may seek to obtain them primarily through additional equity or debt financings. Those additional financings could result in dilution to the Company’s current shareholders and to you if you invest in this Offering.

 

 

An investment in the Company's Shares offered in this Offering involves a high degree of risk and you should not purchase the Shares if you cannot afford the loss of your entire investment. You may not be able to liquidate your investment for any reason in the near future.

 

 

While the Company may choose to pay distributions at some point in the future to its shareholders, there can be no assurance that cash flow and profits will allow such distributions to be made.

 

 

At present, there is no active trading market for the Company’s securities and the Company cannot assure that a trading market will develop. The Company’s Common Stock has no trading symbol. In order to obtain a trading symbol and authorization to have the Company’s securities trade publicly, the Company must file an application on Form 211 with, and receive the approval by, the Financial Industry Regulatory Authority (“FINRA”) of which there is no assurance, before active trading of the Company’s securities could commence. If the Company’s securities ever publicly trade, they may be relegated to the OTC Pink Sheets. The OTC Pink Sheets provide significantly less liquidity than the NASD’s automated quotation system, or NASDAQ Stock Market. Prices for securities traded solely on the Pink Sheets may be difficult to obtain and holders of the Shares and the Company’s securities may be unable to resell their securities at or near their original price or at any price. In any event, except to the extent that investors’ Shares may be registered on a Form S-1 Registration Statement with the Securities and Exchange Commission in the future, there is absolutely no assurance that Shares could be sold under Rule 144 or otherwise until the Company becomes a current public reporting company with the Securities and Exchange Commission and otherwise is current in the Company’s business, financial and management information reporting, and applicable holding periods have been satisfied.

 

 

 

Certain officers, directors and/or other insiders may hold shares in the Company and may be able to sell their stock in a trading market if one should develop. The availability for sale of substantial amounts of stock by officers, directors and/or other insiders could reduce prevailing market prices for our securities in any trading market that may develop.

 

 

Should a market develop and our shareholders sell substantial amounts of our Shares in the public market, Shares sold may cause the price to decrease below the current offering price. These sales may also make it more difficult for us to sell equity or equity-related securities at a time and price that we deem reasonable or appropriate.

 

 

The Company does not have an audit or compensation committee comprised of independent directors or any audit or compensation committee. The board of directors performs these functions as a whole. No members of the board of directors are independent directors. 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.

 

 

The discussions and information in this Offering Circular may contain both historical and “forward-looking statements” which can be identified by the use of forward-looking terminology including the terms “believes,” “anticipates,” “continues,” “expects,” “intends,” “may,” “will,” “would,” “should,” or, in each case, their negative or other variations or comparable terminology. You should not place undue reliance on forward-looking statements. These forward-looking statements include matters that are not historical facts. Forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Forward-looking statements contained in this Offering Circular, based on past trends or activities, should not be taken as a representation that such trends or activities will continue in the future. To the extent that the Offering Circular contains forward-looking statements regarding the financial condition, operating results, business prospects, or any other aspect of the Company’s business, please be advised that the Company’s actual financial condition, operating results, and business performance may differ materially from that projected or estimated by the Company. The Company has attempted to identify, in context, certain of the factors it currently believes may cause actual future experience and results to differ from its current expectations. The differences may be caused by a variety of factors, including but not limited to adverse economic conditions, lack of market acceptance, reduction of consumer demand, unexpected costs and operating deficits, lower sales and revenues than forecast, default on leases or other indebtedness, loss of suppliers, loss of supply, loss of distribution and service contracts, price increases for capital, supplies and materials, inadequate capital, inability to raise capital or financing, failure to obtain customers, loss of customers and failure to obtain new customers, the risk of litigation and administrative proceedings involving the Company or its employees, loss of government licenses and permits or failure to obtain them, higher than anticipated labor costs, the possible acquisition of new businesses or products that result in operating losses or that do not perform as anticipated, resulting in unanticipated losses, the possible fluctuation and volatility of the Company’s operating results and financial condition, adverse publicity and news coverage, inability to carry out marketing and sales plans, loss of key executives, changes in interest rates, inflationary factors, and other specific risks that may be referred to in this Offering Circular or in other reports issued by us or by third-party publishers.

 

 

 

Due to our significant accumulated deficit, investors in this offering will suffer immediate and substantial dilution. Further, if all of the shares offered hereby are sold, investors in this offering will own approximately 90% of the then outstanding shares of common stock, but will have paid approximately 100% of the total consideration for our outstanding shares. See “Dilution.”

 

 

The Company has significant discretion over the net proceeds of this Offering. As is the case with any business, particularly one without a proven business model, it should be expected that certain expenses unforeseeable to management at this juncture will arise in the future. There can be no assurance that management's use of proceeds generated through this offering will prove optimal or translate into revenue or profitability for the Company. Investors are urged to consult with their attorneys, accountants and personal investment advisors prior to making any decision to invest in the Company.

 

 

The price at which the Shares are being offered has been arbitrarily determined by the Company. There is no relationship between the offering price and our assets, book value, net worth, or any other economic or recognized criteria of value. Rather, the price of the Shares was derived as a result of internal decisions based upon various factors including prevailing market conditions, our future prospects and our capital structure. These prices do not necessarily accurately reflect the actual value of the Shares or the price that may be realized upon disposition of the Shares.

 

 

There is not now, and likely will not be in the near future, a public market, for the Shares. Because the Shares have not been registered under the Securities Act or under the securities laws of any state or non-United States jurisdiction, the Shares may have certain transfer restrictions. It is not currently contemplated that registration under the Securities Act or other securities laws will be affected. Limitations on the transfer of the Shares may also adversely affect the price that you might be able to obtain for the Shares in a private sale. You should be aware of the long-term nature of your investment in the Company. You will be required to represent that you are purchasing the Securities for your own account, for investment purposes and not with a view to resale or distribution thereof.

 

 

The Company also has relied on exemptions provided by Regulation A of the JOBS Act from securities registration requirements under applicable state and federal securities laws. Investors in the Company, therefore, will not receive any of the benefits that such registration would otherwise provide. Prospective investors must therefore assess the adequacy of disclosure and the fairness of the terms of this Offering on their own or in conjunction with their personal advisors.

 

 

The Shares in this Offering have no protective provisions. As such, you will not be afforded protection, by any provision of the Shares or as a Shareholder in the event of a transaction that may adversely affect you, including a reorganization, restructuring, merger or other similar transaction involving the Company. If there is a "liquidation event" or "change of control" the Shares being offered do not provide you with any protection. In addition, there are no provisions attached to the Shares in the Offering that would permit you to require the Company to repurchase the Shares in the event of a takeover, recapitalization or similar transaction.

 

 

 

The Shares in this Offering are subject to a right of first refusal. Until the Shares are listed on an exchange and made available for trading, no Shareholder shall sell, assign, pledge or in any manner transfer any of the Shares of the corporation or any right or interest therein, whether voluntarily or by operation of law, or by gift or otherwise, without first giving written notice thereof to the Company, who then shall have the right to purchase the Shares from the Shareholder, subject to certain limitations. For a complete description of this right of first refusal, see “” below and the Company’s Bylaws.

 

 

Substantially all decisions with respect to the management of the Company will be made exclusively by the officers, directors, managers or employees of the Company. You will have a very limited ability, if at all, to vote on issues of Company management and will not have the right or power to take part in the management of the Company and will not be represented on the board of directors or by managers of the Company. Accordingly, no person should purchase Shares unless he or she is willing to entrust all aspects of management to the Company.

 

 

There is no assurance that you will realize a return on your investment or that you will not lose your entire investment. For this reason, you should read this Form 1-A, Offering Circular and all exhibits and referenced materials carefully and should consult with your own attorney and business advisor prior to making any investment decision.

 

IN ADDITION TO THE RISKS LISTED ABOVE, BUSINESSES ARE OFTEN SUBJECT TO RISKS NOT FORESEEN OR FULLY APPRECIATED BY THE MANAGEMENT. IT IS NOT POSSIBLE TO FORESEE ALL RISKS THAT MAY AFFECT THE COMPANY. MOREOVER, THE COMPANY CANNOT PREDICT WHETHER THE COMPANY WILL SUCCESSFULLY EFFECTUATE THE COMPANY'S CURRENT BUSINESS PLAN. EACH PROSPECTIVE PURCHASER IS ENCOURAGED TO CAREFULLY ANALYZE THE RISKS AND MERITS OF AN INVESTMENT IN THE SECURITIES AND SHOULD TAKE INTO CONSIDERATION WHEN MAKING SUCH ANALYSIS, AMONG OTHER FACTORS, THE RISK FACTORS DISCUSSED ABOVE.

 

 

The Use of Proceeds is an estimate based on the Company’s current business plan. We may find it necessary or advisable to reallocate portions of the net proceeds reserved for one category to another, or to add additional categories, and we will have broad discretion in doing so. For example, if our research and development activities need to be bolstered beyond our initial estimates we may allocate additional resources by reallocating proceeds from other categories such as marketing for the purposes of research and development.

 

The maximum gross proceeds from the sale of the Shares in this Offering are $49,875,000. The net proceeds from the offering, assuming it is fully subscribed, together with its previous offering, are expected to be approximately $49,500,000 after the payment of offering costs including broker-dealer and selling commissions, but before printing, mailing, marketing, legal and accounting costs, and other compliance and professional fees that may be incurred. The estimate of the budget for offering costs is an estimate only and the actual offering costs may differ from those expected by management.

 

A portion of the proceeds from this Offering may ultimately be used to compensate or otherwise make payments to officers or directors of the Company. The officers and directors of the Company may be paid salaries and receive benefits that are commensurate with similar companies, and a portion of the proceeds may be used to pay these ongoing business expenses.

 

 

 

 

____________

^1. The Company was advanced offering expenses related to accounting and legal services by its officers and directors. This advance is not in writing and is due upon receipt of funds as described in the Use of Proceeds above. The advance does not bear interest.

 

 

^2. The Broker Dealer receives a one percent (1%) commission on proceeds raised. Transaction fees charged by broker are included in their 1% fee. Investments made by credit card or debit card will incur a surcharge charged by the credit card service provider.

 

^3. The Company intends to use most of the proceeds from the offering for the purposes of purchasing assets such as software assets and developing those assets.

 

^4. The Company is allocating approximately $875,000 to pay officers’ salaries including the CEO, COO, CFO, Head of Product, and Head of Ventures for the year if fully funded. With taxes and annual benefits, the Company expects to use up to $1,032,500 for these expenses. The company may not receive revenues to cover all expenses including officers’ salaries, and thus, may need to use proceeds from this offering to provide for subsequent years following the first year of operations.

 

^5. The Company believes it will need to allocate approximately $358,800 for administrative staff including a remote assistant, an analyst, and a developer. This includes benefits and taxes.

 

^6. Although the Company has not yet established that this will rent office space, it expects that it will eventually have a need for a permanent location. The Company has budgeted $5,000 per month for office expenses such as rent.

 

^7. The Company intends to acquire certain equipment in order to develop and run the day to day operations of the Company. This equipment will most likely be comprised of computer equipment necessary to carry out the objectives of the Company.

 

^8. The estimated amount the Company expects to pay on utilities such as electricity, water, telephone, and internet.

 

^9. In order to carry out the plan of the Company, it is necessary to travel to where assets are located for the purpose of acquisition and for ongoing operations. These are the expected expenses for a year of acquisition and development of assets in locations outside of the principal place of business of San Diego, California.

 

^10. The costs associated with insuring the operations of the Company outside of the required employment insurance and benefits.

 

^11. Costs associated with software to operate the Company.

 

^12. Estimated legal fees for the next 12 months.

 

^13. Working Capital contingency for those expenses that may be unexpected.

 

 

 

This Offering is a self-underwritten offering, which means that it does not involve the participation of an underwriter to market, distribute or sell the common stock offered under this offering. Our Offering Price is arbitrary with no relation to value of the company. The Company has engaged Dalmore Group, LLC, a broker-dealer registered with the SEC and a member of the Financial Industry Regulatory Authority (“FINRA”), to perform administrative and technology related functions in connection with this offering, but not for underwriting or placement agent services.

 

If all of the Shares in this offering are fully subscribed and sold, the Shares offered herein will constitute approximately 90% of the total Shares of stock of the Company.

 

 

The term “dilution” refers to the reduction (as a percentage of the aggregate Shares outstanding) that occurs for any given share of stock when additional Shares are issued. If all the Shares in this offering are fully subscribed and sold, the remaining Shares offered herein will constitute approximately 90% of the total Shares of stock of the Company. The Company anticipates that subsequent to this offering the Company may require additional capital or issue Shares of Stock in consideration of services rendered to Company and such capital may take the form of Common Stock, other stock or securities or debt convertible into stock. Such future fund raising will further dilute the percentage ownership of the Shares sold herein in the Company. The chart below assumes exercise of the Warrants issued under this Offering.

 

If you invest in our Common Stock, your interest will be diluted immediately to the extent of the difference between the offering price per share of our Common Stock and the pro forma net tangible book value per share of our Common Stock after this offering.

 

 

 

The Units, the Shares of our Common Stock and Warrants of which the Units consist, and the underlying Warrant Shares are being offered in the United States pursuant to Regulation A of Section 3(b) of the Securities Act of 1933, as amended (the “Securities Act”), for Tier 2 offerings, by the management of the Company on a “” basis directly to purchasers who satisfy the requirements set forth in Regulation A. There is no minimum subscription amount required (other than a per investor minimum purchase) to distribute funds to the Company. The Company will not initially sell the Units through commissioned broker-dealers, but may do so after the commencement of the offering. Any such arrangement will add to our expenses in connection with the offering. If we engage one or more commissioned sales agents or underwriters, we will supplement this Form 1-A to describe the arrangement. Funds tendered by investors will be kept in an account in the name of the Company and will be immediately available to the Company. All subscribers will be instructed by the Company or its agents to transfer funds by wire, check, credit or debit cards, ACH transfer or other method authorized by company directly to the bank account established for this Offering or deliver checks made payable to “Legion Works, Inc.”.

 

 

Subscribers have no right to a return of their funds unless the Company rejects a subscription agreement within ten (10) days of tender. If a Subscriber’s investment is not accepted by Company, any funds received for investment not accepted will promptly refunded to each investor without interest. The Company may terminate the offering at any time for any reason at its sole discretion, and may extend the Offering past the Closing Date if the absolutely discretion of the Company and in accordance with the rules and provisions of Regulation A of the JOBS Act.

 

None of the Shares being sold in this offering are being sold by existing securities holders. All of the Common Stock was authorized as of December 31, 2019 and issued by the Company.

 

After the Offering Statement has been qualified by the Securities and Exchange Commission (the “SEC”), the Company will accept tenders of funds to purchase the Shares. The Company does not intend to use an escrow agent as this is a “best efforts” offering and funds will be available immediately to the Company for use.

 

We initially will use our existing website, www.Legion.is, to provide notification of the Offering. Access to this Offering Circular will be furnished to prospective investors 24 hours per day, 7 days per week on the www.Legion.iswebsite.

 

You will be required to complete a subscription agreement in order to invest. The subscription agreement includes a representation to the effect that, if you are not an “accredited investor” as defined under securities law, you are investing an amount that does not exceed the greater of 10% of your annual income or 10% of your net worth, as described in the subscription agreement.

 

The Company has engaged Dalmore Group, LLC, a broker-dealer registered with the SEC and a member of the Financial Industry Regulatory Authority (“FINRA”), to perform the following administrative and technology related functions in connection with this offering, but not for underwriting or placement agent services:

 

 

 

The Company has agreed to pay Dalmore Group, LLC. (“Dalmore”) a service fee equal to 1% on all funds raised in the Offering. Dalmore will also be paid $10,000 for a consulting fee and up to $8,000 for other filing fees.

 

Funds will be deposited in an account and will be made immediately available to the Company. No escrow account will be utilized. If a subscription is rejected, funds will be returned to subscribers within ten days of such rejection without deduction or interest. Upon acceptance by us of a subscription, a confirmation of such acceptance will be sent to the subscriber by the Company. Dalmore has not investigated the desirability or advisability of investment in the shares nor approved, endorsed or passed upon the merits of purchasing the Shares. Dalmore is not participating as an underwriter and under no circumstance will it solicit any investment in the Company, recommend the Company's securities or provide investment advice to any prospective investor, or make any securities recommendations to investors. Dalmore is not distributing any securities offering prospectuses or making any oral representations concerning the securities offering prospectus or the securities offering. Based upon Dalmore 's anticipated limited role in this offering, it has not and will not conduct extensive due diligence of this securities offering and no investor should rely on Dalmore 's involvement in this offering as any basis for a belief that it has done extensive due diligence. Dalmore does not expressly or impliedly affirm the completeness or accuracy of the Form 1-A and/or Offering Circular presented to investors by the Company. All inquiries regarding this offering should be made directly to the Company.

 

This offering will commence immediately on the qualification of this Offering Circular, as determined by the Securities and Exchange Commission and continue indefinitely until all of the offered Shares are sold or the Offering is terminated in the Company’s sole discretion. Funds received from investors will be counted towards the Offering only if the form of payment clears the banking system and represents immediately available funds held by us prior to the termination of the subscription period, or prior to the termination of the extended subscription period if extended by the Company.

 

If you decide to subscribe for any Common Stock in this offering, you must deliver a check, certified funds or another acceptable form of payment for acceptance or rejection. The minimum investment amount for a single investor is 2,000 Shares of Common Stock in the cumulative principal amount of $5,000. All subscription checks should be sent to and be made payable to Legion Works, Inc. at the following address: _____________________________________________. If a subscription is rejected, all funds will be returned to subscribers within ten days of such rejection without deduction or interest. Upon acceptance by the company of a subscription, a confirmation of such acceptance will be sent to the investor.

 

The Company maintains the right to accept or reject subscriptions in whole or in part, for any reason or for no reason. All monies from rejected subscriptions will be returned by the Company to the investor, without interest or deductions.

 

This is an offering made under “Tier 2” of Regulation A, and the shares will not be listed on a registered national securities exchange upon qualification. Therefore, the shares will be sold only to a person if the aggregate purchase price paid by such person is no more than 10% of the greater of such person's annual income or net worth, not including the value of his primary residence, as calculated under Rule 501 of Regulation D promulgated under Section 4(a)(2) of the Securities Act of 1933, as amended. In the case of sales to fiduciary accounts (Keogh Plans, Individual Retirement Accounts (IRAs) and Qualified Pension/Profit Sharing Plans or Trusts), the above suitability standards must be met by the fiduciary account, the beneficiary of the fiduciary account, or by the donor who directly or indirectly supplies the funds for the purchase of the shares. Investor suitability standards in certain states may be higher than those described in this Form 1-A and/or Offering Circular. These standards represent minimum suitability requirements for prospective investors, and the satisfaction of such standards does not necessarily mean that an investment in the Company is suitable for such persons. Different rules apply to accredited investors.

 

Each investor must represent in writing that he/she/it meets the applicable requirements set forth above and in the Subscription Agreement, including, among other things, that (i) he/she/it is purchasing the shares for his/her/its own account and (ii) he/she/it has such knowledge and experience in financial and business matters that he/she/it is capable of evaluating without outside assistance the merits and risks of investing in the shares, or he/she/it and his/her/its purchaser representative together have such knowledge and experience that they are capable of evaluating the merits and risks of investing in the shares. Broker-dealers and other persons participating in the offering must make a reasonable inquiry in order to verify an investor's suitability for an investment in the company. Transferees of the shares will be required to meet the above suitability standards.

 

 

The shares may not be offered, sold, transferred, or delivered, directly or indirectly, to any person who (i) is named on the list of “specially designated nationals” or “blocked persons” maintained by the U.S. Office of Foreign Assets Control (“OFAC”) at www.ustreas.gov/offices/enforcement/ofac/sdn or as otherwise published from time to time, (ii) an agency of the government of a Sanctioned Country, (iii) an organization controlled by a Sanctioned Country, or (iv) is a person residing in a Sanctioned Country, to the extent subject to a sanctions program administered by OFAC. A “Sanctioned Country” means a country subject to a sanctions program identified on the list maintained by OFAC and available at www.ustreas.gov/offices/enforcement/ofac/sdn or as otherwise published from time to time. Furthermore, the shares may not be offered, sold, transferred, or delivered, directly or indirectly, to any person who (i) has more than fifteen percent (15%) of its assets in Sanctioned Countries or (ii) derives more than fifteen percent (15%) of its operating income from investments in, or transactions with, sanctioned persons or Sanctioned Countries.

 

The sale of other securities of the same class as those to be offered for the period of distribution will be limited and restricted to those sold through this Offering. Because the Shares being sold are not publicly or otherwise traded, the market for the securities offered is presently stabilized.

 

 

 

The Company is a newly organized software acquisition company incorporated as a Delaware corporation and formed for the purpose of pro-actively sourcing SaaS (Software as a Service) businesses in markets the Company understands that are ripe for a tech-enabled venture to scale. The Company identifies markets with specific and known needs with recurring revenue. The Company’s management team immediately adds expertise in tech, marketing, business development and operations to dramatically increase scale and profitability. Having multiple bites at the apple and receiving dividends along the way, reduces risk while increasing the chances for investors to enjoy venture sized returns.

 

The Company’s management team has had significant success sourcing, acquiring, growing and monetizing these types of companies and believes this experience makes the Company well suited to identify, source, negotiate and execute software company acquisitions with the ultimate goal of pursuing attractive risk-adjusted returns for our shareholders.

 

Business Strategy

 

The Company’s business strategy is to leverage their management team’s industry knowledge, strategic vision, operational expertise and business connections built up over decades in the technology industry to identify and acquire software companies that management and Board believes has compelling potential for value creation through the Company’s acquisition. Mr. Bettencourt and Mr. Kamo with the support of Mr. Flanigan and Mr. Bostron, will leverage their investment experience, deep network and technology industry expertise to identify and generate attractive acquisition opportunities among software companies with a unique advantage.

 

Our management team has experience in:

 

 

 

In evaluating prospective software company acquisitions, the Company expects to conduct a thorough due diligence review process that will encompass, among other things: an analysis of overall industry and competitive conditions, a review of historical financial and operating data, meetings with incumbent management and employees, interaction with third-parties who are industry experts, on-site inspection of facilities and assets, discussion with customers and suppliers, legal and other reviews as the Company deems appropriate. The Company will also utilize the expertise of their management team in analyzing and evaluating operating plans, financial projections and determining the appropriate return expectations given the risk profile of the target company as well as the suitability of the target to become a public company.

 

The Company is not prohibited from pursuing an acquisition of a software company that is affiliated with their officers, directors subject to certain approvals and consents. In the event the Company seeks to complete an acquisition of software company that is affiliated with their officers, directors or their affiliates, they, or a committee of independent directors, will obtain an opinion from an independent investment banking firm or another independent firm that commonly renders fairness opinions that an acquisition of a software company is fair to the Company from a financial point of view.

 

 

The Company’s software company acquisition criteria will seek to identify SaaS companies that have recurring revenue, already have achieved product-market fit that show a unique advantage and which are not overly complex technologically. The targeted companies will not be limited to a particular industry or geographic sector.

 

The Company has identified the following general criteria and guidelines they believe are consistent with their acquisition philosophy and their management’s experience, and that they believe are important in evaluating prospective software company acquisition opportunities. The Company intends to use these criteria and guidelines to evaluate software company acquisition opportunities, but they may decide to consummate software company acquisition with a target company that does not meet one or more of these criteria and guidelines.

 

 

 

These criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular software company acquisition may be based, to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that their management team may deem relevant. In the event that the Company finds an opportunity that has characteristics more compelling to them than the characteristics described above, they would pursue such opportunity.

 

Competitive Strengths

 

The Company intends to leverage the following sources of competitive strength in seeking to achieve their business strategy:

 

   

 

The Company currently owns no real property. With the proceeds from this Offering, The Company has procured appropriate office to satisfy its current requirements but may require additional space as discussed in our section entitled “Use of Proceeds.”

 

 

The following summary financial data should be read in conjunction with “MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION and the Financial Statements and Common Stock thereto, included elsewhere in this Offering. The statement of operations and balance sheet data from inception through the period ended December 31, 2019 are derived from our audited financial statements.

 

 

 

 

 

 

 

Legion Works, Inc. (the “Company”) was formed on November 4, 2019 as a Delaware Corporation for the general purpose of engaging in any lawful activity for which corporations may be organized under the law of the State of Delaware.

 

There are two classes of stock in the Company:

 

 

The total number of shares of both classes of stock the Company is authorized to issue is 100,000,000 shares, 20,000,000 of which are Super Voting Common Stock and 80,000,000 of which are Voting Common Stock. The Shares being sold in this Offering are all Voting Common Stock.

 

 

All Shares of Voting Common Stock shall be identical and are voting with one vote per share. The Shares to be issued pursuant to this Offering will be Voting Common Stock. All holders of shares of Super Voting Common Stock (which are not being sold in this Offering) shall be identical and shall at every meeting of the stockholders be entitled to twenty votes for each share of the capital stock held by such stockholder. All of the other terms (except for voting) of the Voting Common Stock shall be identical to the Super Voting Common Stock.

 

 

 

The Company currently does not have any warrants outstanding.

 

 

 

. Total revenue for the six-months ended December 31, 2019 was $0. The Company continues to be in the start-up phase.

 

Operating expenses for the period ended December 31, 2019 were $0. Operating expenses for the period were comprised of insurance costs, legal and professional fees (including accounting costs), office supplies, and overall operating expenses such as utilities and travel.

 

. Net loss for the period ended was ($0) which included interest expense of ($0) and interest income of $0.

 

 

The Company had net cash of $500 at December 31, 2019.

 

For the six-months ended December 31, 2019, the Company used $0 to cover operating expenses.

 

 

As of December 31, 2019, the Company has recorded liability of $31,000 payable to the founders for certain syndication expenses paid during the period then ended. The payables do not have a written agreement and are not interest bearing.

 

 

Management of the Company intends to use a substantial portion of the net proceeds for general working capital and, once certain funding milestones are met, to identify and acquire targeted software companies that meet the Company’s investment criteria. The Company will also likely reach out to strategic partners for alliances to further strengthen its positions.

 

In our opinion, the proceeds from this Offering may not satisfy our cash requirements indefinitely, so we anticipate that it will be necessary to raise additional funds to implement the plan of operations as it evolves over time. During that time frame, we may not be able to satisfy our cash requirements through sales and the proceeds from this Offering alone, and therefore we anticipate that we will need to attempt to raise additional capital through the sale of additional securities in additional offerings, or through other methods of obtaining financing such as through loans or other types of debt. We cannot assure that we will have sufficient capital to finance our growth and business operations or that such capital will be available on terms that are favorable to us or at all. We are currently incurring operating deficits that are expected to continue for the foreseeable future.

 

 

Because we are still in the initial phase of research and development we are unable to identify any recent trends in site visitations, revenue or expenses since the latest financial year. Thus, we are unable to identify any known trends, uncertainties, demands, commitments or events involving our business that are reasonably likely to have a material effect on our revenues, income from continuing operations, profitability, liquidity or capital resources, or that would cause the reported financial information in this Offering to not be indicative of future operating results or financial condition.

 

 

 

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

 

 

We have identified the policies outlined in this Offering Circular and attachments as critical to our business operations and an understanding of our results of operations. Those policies outlined are not intended to be a comprehensive list of all of our accounting policies. In many cases, the accounting treatment of a particular transaction is specifically dictated by accounting principles generally accepted in the United States, with no need for management's judgment in their application. The impact and any associated risks related to these policies on our business operations is discussed throughout Management's Discussion and Analysis of Financial Condition and Results of Operation where such policies affect our reported and expected financial results. Note that our preparation of the consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of our consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. There can be no assurance that actual results will not differ from those estimates.

 

 

The Company had no revenue as of the time of this offering. The Company had no product returns to date.

 

 

The Company has not filed for bankruptcy protection nor has it ever been involved in receivership or similar proceedings. The Company is not presently involved in any legal proceedings material to the business or financial condition of the Company. The Company does not anticipate any material reclassification, merger, consolidation, or purchase or sale of a significant proportion of assets (not in the ordinary course of business) during the next 12 months.

  

 

The directors, executive officers and significant employees of the Company as of the date of this filing are as follows:

 

__________ 

 

 

 

As of the date of this filing, Legion Works has-four full-time employees and several part time employees. In addition, Legion Works has engaged with other key individuals possessing a range of expertise including mechanical engineering, process engineering, software engineering, computational modeling and other areas. These additional key individuals could start employment at Legion Works at such time as the company has sufficient capital or financing to fund the expanded launch of its business activities and research and development.

 

The number of business and direct research personnel hired by Legion Works will scale based upon funds raised in the equity crowdfunding offering and as operating needs warrant.

 

Legion Works board of directors serve unless and until a successor is elected and qualified. board of directors will not receive compensation for attendance in board meetings, but may be reimbursed for reasonable expenses incurred during the course of their performance. Personnel currently serving as officers, board of director members and advisory board members of Legion Works include:

 

– CEO, President, Secretary and Chairman of the Board of Directors

 

Ryan Bettencourt has been the CEO of Hello Bar LLC (owner of Hello Bar and Subscribers) since January 2019. He will take on a Chairman role of Hello Bar so he can assume the role of CEO of Legion Works. From January 2018 to January of 2019 Ryan was the Head of Product for One Vigor, a media distribution company and the GM of Edisen, a spinoff product/company. Ryan was recruited to assume the role of CEO at Hello Bar LLC in January 2019. From 2014-2018 Ryan was the CEO of Cursive Labs, a Venture Studio formed to develop multiple companies. Ryan was the Founding CEO of Spouatble, an ad tech platform. Spoutable was acquired by Proper Media in 2018. From 2012-2014 Ryan was the VP, Digital for Saban Brands. Ryan joined Saban Brands after his former company was acquired by Saban. From 2008-2012 Ryan was Co-Founder/President of KidZui, a leading internet browser for children. The company was acquired by Saban Brands. Ryan has his MBA, Magna Cum Laude, from Babson College where he was a Babson Fellow and his BA, Cum Laude, From the University of San Francisco.

 

– Chief Operating Officer

 

From 2017 to present, Mike has been the Co-Founder and CEO of Neil Patel, a $20M per year digital agency. From 2017 to 2019 he was the Co-Founder and CEO of Hello Bar LLC. From 2011 to 2015, Mike was Founder and CEO of Stride App. From 2005-2013, Mike was the General Manager of Westcott Mazda, a large volume dealership in San Diego.

 

– Head of Products

 

Keiran is Head of Products for the Company. He serves as Head of Product for Hello Bar LLC, creator of Hello Bar and Subscribers. Keiran will become an advisor to the company to assume the role for Legion Works. He has been a web and mobile designer and developer since 2007, both in freelance and as an employee/founder. From 2014-2018 he was the Co-Founder and Head of Product/Creative for Cursive Labs and its flagship product, Spoutable. From 2009-2012 Keiran was the Lead iOS Developer for Rage Digital, a design and development company. Keiran has done freelance projects for the likes of the NFL, Hyundai, 24-Hour Fitness and dozens of start-ups.

 

 

– Head of Ventures  

 

Since 2017, Grant has been the Founder/CEO of Hellaworks, creator of TapHype. TapHype is an ad tech platform. From 2014-2017, Grant was a Co-Founder of Cursive Labs, a Venture Studio and Head of Product for Spoutable. From 2012-2014, Grant was Co-Founder of Blurtopia and Head of Business Development and Special Projects for KidZui. Grant has an MBA from San Diego State University, a Masters in Advertising from the University of Texas at Austin and a BA from UCLA. 

 

 

From November 4, 2019 to the date of this Offering, the Company has paid no compensation to its - directors for services rendered as a Director. The Company may choose to compensate its directors in the future.

 

 

 

The Company has agreed to pay Dalmore Group, LLC , a service fee equal to 1% on all funds raised in the Offering. Dalmore Group, LLC will also be paid $10,000 for investor onboarding fees and $8,000 for filing fees.

 

 

Our Board of Directors have not received any compensation for serving on the Board. There are currently no employment agreements. However, it is expected that some of the proceeds from this Offering will be utilized to compensate officers and directors for their services. Although we do not have any agreements in place, it is expected that if fully funded, the Company will pay the following salaries to officers and directors.

 

 

 

 

In the future, the Company may establish a management stock incentive plan pursuant to which stock options and awards may be authorized and granted to our directors, executive officers, employees and key employees or consultants. Details of such a plan, should one be established, have not been decided upon as of the date of this Offering. Stock options or a significant equity ownership position in the Company may be utilized by us in the future to attract one or more new key senior executives to manage and facilitate our growth. We have entered into Advisory Board agreements with various individuals that include 2,500 shares of stock issued upon execution of the agreements and a provision for 10,000 stock options in the future.

 

 

Our board of directors currently consists of two directors:

 

 

None of our directors are “independent” as defined in Rule 4200 of FINRA’s listing standards. We may appoint an independent director(s) to our board of directors in the future, particularly to serve on appropriate committees should they be established.

 

 

We may establish an audit committee, compensation committee, a nominating and governance committee and other committees to our Board of Directors in the future, but have not done so as of the date of this Offering Circular. Until such committees are established, matters that would otherwise be addressed by such committees will be acted upon by the entire Board of Directors.

 

 

We currently do not pay our directors any compensation for their services as board members, with the exception of reimbursing and board related expenses. In the future, we may compensate directors, particularly those who are not also employees and who act as independent board members, on either a per meeting or fixed compensation basis.

 

 

Our Bylaws limit the liability of directors and officers of the Company. The Bylaws state that the Company shall indemnify, in accordance with and to the full extent now or hereafter permitted by law, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (including, without limitation, an action by or in the right of the corporation), by reason of his or her acting as a director or officer of the corporation (or a director or officer serving at the request of the corporation in any other capacity for or on behalf of the corporation) against any expenses (including attorneys’ fees, judgments, fines, ERISA or other excise taxes, penalties and amounts paid in settlement) actually and reasonably incurred by such director or officer in respect thereof; provided, however, that, the corporation shall not be obligated to indemnify any such director or officer with respect to proceedings, claims or actions initiated or brought voluntarily by such director and not by way of defense. Expenses that may be subject to indemnification hereunder shall be paid in advance of the final disposition of the action, suit or proceeding to the full extent permitted by Delaware law subject to the corporation’s receipt of any undertaking required thereby. The provisions of this article of the Company’s Bylaws shall be deemed to constitute a contract between the Company and each director or officer who serves in such capacity at any time while this article and the relevant provisions of Delaware law are in effect, and each such director or officer shall be deemed to be serving as such in reliance on the provisions of this article of the Company’s Bylaws, and any repeal of any such provisions or of such article of the Company’s Bylaws shall not affect any rights or obligations then existing with respect to any state of facts then or theretofore existing or any action, suit or proceeding theretofore or thereafter brought or threatened based in whole or in part upon any such state of facts. If a claim under this article of the Company’s Bylaws is not paid in full within thirty (30) days after a written claim has been received by the corporation, the claimant may at any time thereafter bring suit against the corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant also shall be entitled to be paid the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any, has been provided to the corporation) that the claimant has not met the standards of conduct that make it permissible under Delaware law for the corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the corporation. Neither the failure of the corporation to have made a determination prior to the commencement of such action that indemnification of the claimant is proper under the circumstances because the claimant has met the applicable standard of conduct set forth in the Delaware law, nor an actual determination by the corporation that the claimant has not met such standard of conduct shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct. The rights of indemnification and advancement provided by this article of the Company’s Bylaws are not exclusive of any other right to indemnification or advancement provided by law, agreement or otherwise, and shall apply to actions, suits or proceedings commenced after the date hereof, whether or not arising from acts or omissions occurring before or after the adoption hereof, and shall continue as to a person who has ceased to be a director or officer of the corporation and shall inure to the benefit of the heirs, executors and administrators of such a person.

 

 

There is no pending litigation or proceeding involving any of our directors or officers as to which indemnification is required or permitted, and we are not aware of any threatened litigation or proceeding that may result in a claim for indemnification.

 

For additional information on indemnification and limitations on liability of our directors and officers, please review the Company’s Bylaws, which are attached to this Offering Circular.

 

 

Beneficial ownership and percentage ownership are determined in accordance with the rules of the Securities and Exchange Commission and includes voting or investment power with respect to shares of the Company’s stock. This information does not necessarily indicate beneficial ownership for any other purpose.

 

Unless otherwise indicated and subject to applicable community property laws, to our knowledge, each shareholder named in the following table possesses sole voting and investment power over their shares of the Company’s stock.

 

The following table sets forth information regarding beneficial ownership of all classes of our stock by any of our directors or executive officers as of the date of the Regulation A offering:

 

___________ 

1. Keiran Flanigan’s total shares are scheduled to vest over a period of four years. In the event that Mr. Flanigan is terminated by the Company or chooses to leave his position, any shares that have not vested will be surrendered to the Company.

 

2. Grant Bostrom’s total shares are scheduled to vest over a period of four years. In the event that Mr. Bostrom is terminated by the Company or chooses to leave his position, any shares that have not vested will be surrendered to the Company.

 

3. Mr. Beri is a consultant of the Company. His shares are scheduled to vest over a period of six months. In the event that Mr. Beri’s services are no longer needed by the Company, shares that have not vested shall be surrendered to the Company.

 

 

 

The Company has issued the shares listed in “SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITYHOLDERS” to certain officers, employees and consultants in exchange for cash and services.

 

In exchange for 140,000 shares of Super Voting Common Stock, Amit Raj Beri is providing advisory services to the Company related to formation, structure, and this Offering. The agreement between Mr. Beri and the Company is provided as an exhibit.

 

 

The Company is offering Shares of its Common Stock. Except as otherwise required by law, the Company’s Bylaws or its Certificate of Incorporation, each Common Stock shareholder shall not be entitled to vote. The Shares of Common Stock, when issued, will be fully paid and non-assessable. Since the holders of Common Stock issued pursuant to this Offering Circular do not have voting rights, they should not expect to be able to influence any decisions by management of the Company through voting on Company matters.

 

There is one other class of stock in the Company as of the date of this Offering Circular. The Company does not expect to create any additional classes of stock during the next 12 months, but the Company is not limited from creating additional classes which may have preferred dividend, voting and/or liquidation rights or other benefits not available to holders of its Common Stock if it chooses to do so.

 

Dividends will be declared, if at all (and subject to the rights of holders of additional classes of securities, if any), in the discretion of the Company’s Board of Directors. Dividends, if ever declared, may be paid in cash, in property, or in shares of the capital stock of the Company, subject to the provisions of law, the Company’s Bylaws and the Certificate of Incorporation.

 

While not guaranteed, the Company intends to pay dividends after the end of twelve (12) calendar months after the Offering’s final closing in the 2020 calendar year. Before payment of any dividend, there may be set aside out of any funds of the Company available for dividends such sums as the Board of Directors, in its absolute discretion, deems proper as a reserve for working capital, to meet contingencies, for equalizing dividends, for repairing or maintaining any property of the Company, or for such other purposes as the Board of Directors shall deem in the best interests of the Company. The Company anticipates that the amount set aside out of company profits will be twenty-five percent (25%) of net profits. Additionally, until the Company fully pays stockholders back the full invested capital, each investor will receive a dividend greater than his ownership percentage. Specifically, sixty-five percent (65%) of all net profits after funds are set aside (currently anticipated to be twenty-five percent (25%)) will be divided among all Common Stock shareholders, with the remaining thirty-five percent (35%) being divided among the Super Commons Stock shareholders. After the Company fully pays stockholders back the fully invested capital, all dividends will be equal to the percentage owned by each stockholder (after funds are set aside) The Board of Directors reserves the right, in its full discretion, to adjust this arrangement should it reasonably believe that this arrangement is limited the company’s ability to grow. There is no minimum number of Shares that needs to be sold in order for funds to be released to the Company and for this Offering to close. The Company anticipates numerous closings to take place during the Offering.

 

 

The minimum subscription that will be accepted from an investor is One Thousand Dollars ($1,000) (the "Minimum Subscription"). A subscription for $1,000.00 or more in the Shares may be made only by tendering to the Company the executed Subscription Agreement (electronically or in writing) delivered with the subscription price in a form acceptable to the Company, via check, wire or ACH (or other payment methods the Company may later add). The execution and tender of the documents required, as detailed in the materials, constitutes a binding offer to purchase the number of Shares stipulated therein and an agreement to hold the offer open until the expiration date or until the offer is accepted or rejected by the Company, whichever occurs first.

 

The Company reserves the unqualified discretionary right to reject any subscription for Shares, in whole or in part. If the Company rejects any offer to subscribe for the Shares, it will return the subscription payment, without interest or reduction. The Company's acceptance of your subscription will be effective when an authorized representative of the Company issues you written or electronic notification that the subscription was accepted.

 

There is a right of first refusal attached to the Common Stock in this Offering. Aside from this restriction, there are no liquidation rights, preemptive rights, conversion rights, redemption provisions, sinking fund provisions, impacts on classification of the Board of Directors where cumulative voting is permitted or required related to the Common Stock, provisions discriminating against any existing or prospective holder of the Common Stock as a result of such Shareholder owning a substantial amount of securities, or rights of Shareholders that may be modified otherwise than by a vote of a majority or more of the Shares outstanding, voting as a class defined in any corporate document as of the date of filing. The Common Stock will not be subject to further calls or assessment by the Company. There are no restrictions on alienability of the Common Stock in the corporate documents other than a right of first refusal and those disclosed in this Offering Circular. The Company intends to engage a transfer agent and registrant for the Shares. For additional information regarding the Shares, please review the Company’s Bylaws, which are attached to this Offering Circular. There are no restrictions on alienability other than the right of first refusal.

 

The right of first refusal is defined in the Company’s Bylaws as follows:

 

. Until the Common Stock of the corporation is listed on an exchange and is made available for trading, no stockholder shall sell, assign, pledge or in any manner transfer any of the shares of Common Stock of the corporation or any right or interest therein, whether voluntarily or by operation of law, or by gift or otherwise, except by a transfer which meets the requirements hereinafter set forth in this Section.

 

 

 

 

 

 

  

 

No expert or counsel named in this Offering as having prepared or certified any part of this Offering or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the Shares was employed on a contingency basis, or had, or is to receive, in connection with the Offering, a substantial interest, direct or indirect, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee.

 

The financial statements included in this Offering and the registration statement have been audited by Alan T. Schiffman, CPA, PC to the extent and for the period set forth in their report appearing elsewhere herein and in the registration statement, and are included in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.

 

Trowbridge Sidoti LLP is providing legal services relating to this Form 1-A.

 

 

Recent changes to Regulation A promulgated under the Securities Act prohibit an issuer from claiming an exemption from registration of its securities under such rule if the issuer, any of its predecessors, any affiliated issuer, any director, executive officer, other officer participating in the offering of the interests, general partner or managing member of the issuer, any beneficial owner of 20% or more of the voting power of the issuer’s outstanding voting equity securities, any promoter connected with the issuer in any capacity as of the date hereof, any investment manager of the issuer, any person that has been or will be paid (directly or indirectly) remuneration for solicitation of purchasers in connection with such sale of the issuer’s interests, any general partner or managing member of any such investment manager or solicitor, or any director, executive officer or other officer participating in the offering of any such investment manager or solicitor or general partner or managing member of such investment manager or solicitor has been subject to certain “Disqualifying Events” described in Rule 506(d)(1) of Regulation D subsequent to September 23, 2013, subject to certain limited exceptions. The Company is required to exercise reasonable care in conducting an inquiry to determine whether any such persons have been subject to such Disqualifying Events and is required to disclose any Disqualifying Events that occurred prior to September 23, 2013 to investors in the Company. The Company believes that it has exercised reasonable care in conducting an inquiry into Disqualifying Events by the foregoing persons and is aware of the no such Disqualifying Events.

 

It is possible that (a) Disqualifying Events may exist of which the Company is not aware and (b) the SEC, a court or other finder of fact may determine that the steps that the Company has taken to conduct its inquiry were inadequate and did not constitute reasonable care. If such a finding were made, the Company may lose its ability to rely upon exemptions under Regulation A, and, depending on the circumstances, may be required to register the Offering of the Company’s Common Stock with the SEC and under applicable state securities laws or to conduct a rescission offer with respect to the securities sold in the Offering.

 

 

Trustees and other fiduciaries of qualified retirement plans or IRAs that are set up as part of a plan sponsored and maintained by an employer, as well as trustees and fiduciaries of Keogh Plans under which employees, in addition to self-employed individuals, are participants (together, “ERISA Plans”), are governed by the fiduciary responsibility provisions of Title 1 of the Employee Retirement Income Security Act of 1974 (“ERISA”). An investment in the Shares by an ERISA Plan must be made in accordance with the general obligation of fiduciaries under ERISA to discharge their duties (i) for the exclusive purpose of providing benefits to participants and their beneficiaries; (ii) with the same standard of care that would be exercised by a prudent man familiar with such matters acting under similar circumstances; (iii) in such a manner as to diversify the investments of the plan, unless it is clearly prudent not do so; and (iv) in accordance with the documents establishing the plan. Fiduciaries considering an investment in the Shares should accordingly consult their own legal advisors if they have any concern as to whether the investment would be inconsistent with any of these criteria.

 

 

Fiduciaries of certain ERISA Plans which provide for individual accounts (for example, those which qualify under Section 401(k) of the Code, Keogh Plans and IRAs) and which permit a beneficiary to exercise independent control over the assets in his individual account, will not be liable for any investment loss or for any breach of the prudence or diversification obligations which results from the exercise of such control by the beneficiary, nor will the beneficiary be deemed to be a fiduciary subject to the general fiduciary obligations merely by virtue of his exercise of such control. On October 13, 1992, the Department of Labor issued regulations establishing criteria for determining whether the extent of a beneficiary’s independent control over the assets in his account is adequate to relieve the ERISA Plan’s fiduciaries of their obligations with respect to an investment directed by the beneficiary. Under the regulations, the beneficiary must not only exercise actual, independent control in directing the particular investment transaction, but also the ERISA Plan must give the participant or beneficiary a reasonable opportunity to exercise such control, and must permit him to choose among a broad range of investment alternatives.

 

Trustees and other fiduciaries making the investment decision for any qualified retirement plan, IRA or Keogh Plan (or beneficiaries exercising control over their individual accounts) should also consider the application of the prohibited transactions provisions of ERISA and the Code in making their investment decision. Sales and certain other transactions between a qualified retirement plan, IRA or Keogh Plan and certain persons related to it (a plan sponsor, fiduciary, or service provider) are prohibited transactions. The particular facts concerning the sponsorship, operations and other investments of a qualified retirement plan, IRA or Keogh Plan may cause a wide range of persons to be treated as parties in interest or disqualified persons with respect to it. Any fiduciary, participant or beneficiary considering an investment in Shares by a qualified retirement plan IRA or Keogh Plan should examine the individual circumstances of that plan to determine that the investment will not be a prohibited transaction. Fiduciaries, participants or beneficiaries considering an investment in the Shares should consult their own legal advisors if they have any concern as to whether the investment would be a prohibited transaction.

 

Regulations issued on November 13, 1986, by the Department of Labor (the “Final Plan Assets Regulations”) provide that when an ERISA Plan or any other plan covered by Code Section 4975 (, an IRA or a Keogh Plan which covers only self-employed persons) makes an investment in an equity interest of an entity that is neither a “publicly offered security” nor a security issued by an investment company registered under the Investment Company Act of 1940, the underlying assets of the entity in which the investment is made could be treated as assets of the investing plan (referred to in ERISA as “plan assets”). Programs which are deemed to be operating companies or which do not issue more than 25% of their equity interests to ERISA Plans are exempt from being designated as holding “plan assets.” Management anticipates that we would clearly be characterized as an “operating company” for the purposes of the regulations, and that it would therefore not be deemed to be holding “plan assets.”

 

Classification of our assets of as “plan assets” could adversely affect both the plan fiduciary and management. The term “fiduciary” is defined generally to include any person who exercises any authority or control over the management or disposition of plan assets. Thus, classification of our assets as plan assets could make the management a “fiduciary” of an investing plan. If our assets are deemed to be plan assets of investor plans, transactions which may occur in the course of its operations may constitute violations by the management of fiduciary duties under ERISA. Violation of fiduciary duties by management could result in liability not only for management but also for the trustee or other fiduciary of an investing ERISA Plan. In addition, if our assets are classified as “plan assets,” certain transactions that we might enter into in the ordinary course of our business might constitute “prohibited transactions” under ERISA and the Code.

 

Under Code Section 408(i), as amended by the Tax Reform Act of 1986, IRA trustees must report the fair market value of investments to IRA holders by January 31 of each year. The Service has not yet promulgated regulations defining appropriate methods for the determination of fair market value for this purpose. In addition, the assets of an ERISA Plan or Keogh Plan must be valued at their “current value” as of the close of the plan’s fiscal year in order to comply with certain reporting obligations under ERISA and the Code. For purposes of such requirements, “current value” means fair market value where available. Otherwise, current value means the fair value as determined in good faith under the terms of the plan by a trustee or other named fiduciary, assuming an orderly liquidation at the time of the determination. We do not have an obligation under ERISA or the Code with respect to such reports or valuation although management will use good faith efforts to assist fiduciaries with their valuation reports. There can be no assurance, however, that any value so established (i) could or will actually be realized by the IRA, ERISA Plan or Keogh Plan upon sale of the Shares or upon liquidation of us, or (ii) will comply with the ERISA or Code requirements.

 

 

The income earned by a qualified pension, profit sharing or stock bonus plan (collectively, “Qualified Plan”) and by an individual retirement account (“IRA”) is generally exempt from taxation. However, if a Qualified Plan or IRA earns “unrelated business taxable income” (“UBTI”), this income will be subject to tax to the extent it exceeds $1,000 during any fiscal year. The amount of unrelated business taxable income in excess of $1,000 in any fiscal year will be taxed at rates up to 36%. In addition, such unrelated business taxable income may result in a tax preference, which may be subject to the alternative minimum tax. It is anticipated that income and gain from an investment in the Shares will not be taxed as UBTI to tax exempt shareholders, because they are participating only as passive financing sources.

 

 

The Shares will be sold to either Accredited investors or only to a person who is not an accredited investor if the aggregate purchase price paid by such person is no more than 10% of the greater of such non-accredited person’s annual income or net worth, not including the value of his primary residence, as calculated under Rule 501 of Regulation D promulgated under Section 4(a)(2) of the Securities Act of 1933, as amended. In the case of sales to fiduciary accounts (Keogh Plans, Individual Retirement Accounts (IRAs) and Qualified Pension/Profit Sharing Plans or Trusts), the above suitability standards must be met by the fiduciary account, the beneficiary of the fiduciary account, or by the donor who directly or indirectly supplies the funds for the purchase of Shares. Investor suitability standards in certain states may be higher than those described in this Offering Circular. These standards represent minimum suitability requirements for prospective investors, and the satisfaction of such standards does not necessarily mean that an investment in the Company is suitable for such persons.

 

Each investor must represent in writing that he/she/it meets the applicable requirements set forth above and in the Subscription Agreement, including, among other things, that (i) he/she/it is purchasing the Shares for his/her/its own account and (ii) he/she/it has such knowledge and experience in financial and business matters that he/she/it is capable of evaluating without outside assistance the merits and risks of investing in the Shares, or he/she/it and his/her/its purchaser representative together have such knowledge and experience that they are capable of evaluating the merits and risks of investing in the Shares. Transferees of Shares will be required to meet the above suitability standards.

 

 

The Company has filed a Regulation A Offering Statement on Form 1-A with the SEC under the Securities Act of 1933 with respect to the shares of the Common Stock offered hereby. This Preliminary 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 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, the Company will be required to file periodic reports 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 the Company, that file electronically with the SEC. The address of this site is www.sec.gov.

 

 

 

Pursuant to the requirements of Regulation A, the issuer certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form 1-A and has duly caused this offering statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Diego, State of California, on February 28,2020.

 

 

 

The undersigned hereby authenticate, acknowledge and otherwise adopt the typed signatures above and as otherwise appear in this filing and Offering.

 

 

  

 

 

 

  

  

Alan T. Schiffman, CPA, PC

Financial Strategists Business Consultants

1166 Dimock Lane Naples, FL 34110

Telephone 239-595-0314; Fax 239-594-7984

 

 

To the Board of Directors of

Legion Works, Inc

La Jolla, California

 

 

We have audited the accompanying financial statements of Legion Works, Inc. which comprise the balance sheet as of December 31, 2019 and the related statements of Operations, Shareholders’ Equity and cash flows for the period from inception (November 20, 2019) through December 31, 2019 and the related notes to the financial statements.

 

 

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

 

 

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with U.S. generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

 

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Legion Works, Inc. as of December 31, 2019, and the results of its operations and its cash flows for the period from inception (November 20, 2019) through December 31, 2019 in accordance with U.S. generally accepted accounting principles.

 

Alan T. Schiffman, CPA, PC

Naples, Florida

January 18, 2020

 

 

 

 

 

 

  

  

 

 

 

 

 

 

NOTE 1 - SUMMARY OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

 

Organization

 

Legion Works, Inc (the “Company”) was incorporated on November 20th, 2019 as a Delaware Corporation.

 

The Company’s corporate year-end will be December 31.

 

The Company is a newly organized software acquisition company incorporated as a Delaware corporation and located in San Diego, California. The Company was formed for the purpose of pro-actively sourcing SaaS (Software as a Service) businesses in markets the Company understands that are ripe for a tech-enabled venture to scale. The Company identifies markets with specific and known needs with recurring revenue and targets enterprises withing that market. The Company’s management enhances the target’s by providing expertise in tech, marketing, business development and operations to dramatically increase scale and profitability. The Company’s management team has had historic success sourcing, acquiring, growing and monetizing these types of companies and believes this experience makes the Company well suited to identify, source, negotiate and execute software company acquisitions with the ultimate goal of pursuing attractive risk-adjusted returns for our shareholders. The Company will seek business opportunities primarily in online software, including, but not limited to marketing and sales software tools and e-commerce software tools. The Company will be opportunistic in seeking acquisitions both in the United States and internationally.

 

Basis of Presentation and Use of Estimates

 

The Company’s financial statements are prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. These require the use of estimates and assumptions that affect the assets and liabilities reported in the financial statements, as well as amounts included in the notes thereto, including discussion and disclosure of contingent liabilities. Although the Company uses its best estimates and judgments, actual results could differ from these estimates as future confirming events occur.

 

Deferred Syndication Expenses

 

Financial Accounting Standard Board Accounting Standards Codification number 340-10-S99-1, Other Assets and Deferred Costs, allows specific, incremental costs directly related to securities offerings to be deferred and charged against the gross proceed of the offering. The Company defers applicable syndication expenses based on this criteria. The Company will write off all deferred syndication expenses if a securities offering is aborted.

 

 

Fair Value Measurements

 

In August 2018, the FASB issued ASU 2018-13, Disclosure Framework (Topic 820) - Changes to the Disclosure Requirement for Fair Value Measurement. This guidance removes or modifies various disclosures relating to the activity or reconciliation of Level 1, Level 2 and Level 3 fair value measurements. It is effective for interim and annual periods beginning after December 15, 2019. Management will evaluate this guidance and the impact it will have on the financial statements.

 

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. The Company determines the fair values of its assets and liabilities based on a fair value hierarchy that includes 3 levels of inputs that may be used to measure fair value. The 3 levels are as follows:

 

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

 

Level 2 inputs are those other than quoted prices that are observable for the asset or liability, either directly or indirectly.

 

Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs reflect the Company’s own assumptions about the inferences that market participants would use in pricing the asset or liability (including assumptions about risk). Unobservable inputs are developed based on the best information available in the circumstances and may include the Company’s own data.

  

Software Revenue Recognition

 

The AICPA’s Accounting Standards Executive Committee (AcSEC), issued SOP 97-2, which provided guidance on when and how to recognize revenue from the sale, lease or licensing of computer software. It does not apply to the sale of products containing software that is incidental to the product being sold. Accordingly, the Company complies with the standards set forth therein as follows:

 

 

If the sale of computer software involves significant customization, modification or production, the transaction will be accounted for as a long term contract. In all other cases, revenue will be recognized when the following four conditions are met:

 

1. Persuasive evidence of an arrangement exists

 

2. Delivery has occurred

 

3. The Company’s price is fixed or determinable

 

4. Collectability of the selling price is probable

 

Income Taxes

 

The Company is a C Corporation under the Internal Revenue Code and a similar section of the state code.

 

All income tax amounts reflect the use of the liability method under accounting for income taxes. Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes arising primarily from differences between financial and tax reporting purposes. Current year expense represents the amount of income taxes paid, payable or refundable for the period.

 

Deferred income taxes, net of appropriate valuation allowances, are determined using the tax rates expected to be in effect when the taxes are actually paid. Valuation allowances are recorded against deferred tax assets when it is more likely than not that such assets will not be realized. When an uncertain tax position meets the more likely than not recognition threshold, the position is measured to determine the amount of benefit or expense to recognize in the financial statements.

 

The Company’s income tax returns are subject to review and examination by federal, state and local governmental authorities. As of December 31, 2019, there is no year open to examination with federal, state and local governmental authorities. To the extent penalties and interest are incurred through an examination, they would be included in the income tax section of the statement of operations and comprehensive loss.

 

 

NOTE 2 - RISKS AND UNCERTAINTIES

 

The Company generated no revenue for the period from inception through December 31, 2019. The Company is currently in the process of securing investor financing and commencing operations. However, there can be no assurance that the Company will successfully be able to generate equity financing or fully commence operations. Failure to secure equity financing or fully commence operations could adversely affect the Company’s ability to achieve its business objective and the results of its operations.

 

NOTE 3 - CASH CONCENTRATION

 

The Company maintains funds in a financial institution that is a member of the Federal Deposit Insurance Corporation. As such, funds are insured based on the Federal Reserve limit. The Company has not experienced any losses to date, and management believes it is not exposed to any significant credit risk on the current account balance.

 

NOTE 4 - DEFERRED SYNDICATION EXPENSES

 

As of December 31, 2019, the Company has $31,000 in deferred syndication expenses that are related to this securities offering. The securities offering expenses are primarily comprised of legal and accounting expenses. The legal and accounting offering expenses are not expected to exceed $55,000.

 

NOTE 5 - RELATED PARTY TRANSACTIONS

 

Related Party Capital Contribution

 

As of December 31, 2019, an officer of the Company has contributed $500 to purchase super Voting Common Stock. (See Shareholder Equity below and in the Offering Memorandum)

 

Related Party Payables

 

As of December 31, 2019, the Company has recorded a Related Party Payable of $31,000, payable to the founders to pay Deferred syndication expenses in the amount of $31,000. The payable will be liquidated upon the successful raising of capital in the offering, without interest.

 

 

NOTE 6 - SHARHOLDER EQUITY

 

The Shareholders’ equity is comprised of two classes of common stock; Super Voting Common Stock and Common Stock Units more fully described below:

 

Super Voting Common Stock:

 

Super Voting Common Stock has a par value of $0.0001, has 100,000,000 shares authorized and 5,000,000 issued and outstanding as of December 31, 2019. Each shareholder shall have twenty votes (20) for each share held by such shareholder. Subsequent to December 31, 2019, 4,350,000 shares of Super Voting Common Stock have been issued to certain shareholders in exchange for cash and services.

 

Common Stock Units:

 

Each Common Stock Unit is comprised of (a) one common share, being sold at $0.50 per share, having no par value and (b) one-half of one common share purchase warrant to purchase one additional Common Share, being sold at $0.75 with an exercise price of $0.75 per common share, subject to customary adjustments over an 18-month period following the date of issuance of the warrant.

 

The Company is authorized to issue 57,000,000 Units through this Offering. (See discussion elsewhere in the Offering Memorandum).

 

NOTE 7 - FAIR VALUE MEASUREMENTS

 

Due to their short-term nature, the carrying values of cash, deferred syndication expenses and accounts payable approximate their fair values at December 31, 2019.

 

NOTE 8 - COMMITMENTS AND CONTINGENT LIABILITIES

 

Warrants

 

Pursuant to this Offering, the Company will issue warrants to purchase one-half common stock at a purchase price of $0.75 per share of common stock As of December 31, 2019, the Company has a remaining commitment with securities counsel to provide syndication related services in the amount of $25,000.

 

In the normal course of business, the Company may become a party to litigation matters involving claims against it. At December 31, 2019, there are no current matters that would have a material effect on the Company’s financial position or results of operations.

 

NOTE 9 - SUBSEQUENT EVENTS

 

During January 2020, the Company has issued an additional 4,350,000 common stock shares to related parties in exchange for proceeds amounting to $435.

 

The Company has evaluated subsequent events through February 22, 2020, the date the financial statements were available to be issued, and there were no other events to report.

 

 

 

 

   

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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(Adopted November 20, 2019)

 

 

. The registered office shall be in the City of Dover, County of Kent, State of Delaware.

 

. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require.

 

 

. All meetings of the stockholders for the election of directors shall be held within or outside the State of Delaware as may be fixed from time to time by the board of directors. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof.

 

. Annual meetings of stockholders, commencing with the year 2020, shall be held on the first day in December if not a legal holiday or weekend, and if a legal holiday, then on the next business day following, at 9:00 a.m., or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which time the voting stockholders by majority may elect a board of directors and transact such business as may properly be brought before the meeting.

 

. Notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten (10) or more than sixty (60) days before the date of meeting.

 

. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any voting stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of meeting during the whole time thereof, and may be inspected by any voting stockholder who is present.

 

 

. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the Chairman of the Board or may be called by the President or the Secretary at the request in writing of a majority of the board of directors, or at the request in writing of stockholders owning capital stock of the corporation representing a majority of the total votes entitled to be cast by stockholders of the corporation. Such request shall state the purpose or purposes of the proposed meeting.

 

. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting, to each stockholder entitled to vote at such meeting.

 

. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute, the certificate of incorporation or these bylaws. A quorum, once established, shall not be broken by the withdrawal of enough votes to leave less than a quorum and the votes present may continue to transact business until adjournment. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

 

When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any questions brought before such meeting, unless the question is one upon which by express provision of the statutes, the certificate of incorporation or these bylaws, a different vote is required in which case such express provision shall govern and control the decision of such questions.

 

. Unless otherwise specifically provided by statute or the certificate of incorporation, each stockholder shall at every meeting of the stockholders be entitled to one vote for each share of the capital stock having voting power held by such stockholder.

 

. Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for him or her by proxy, but no proxy shall be voted or acted upon after three (3) years from its date, unless the proxy provides for a longer period.

 

 

. Except as otherwise provided in the certificate of incorporation and subject to the requirements of statute, any action required or permitted to be taken at any annual or special meeting of stockholders may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of any corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing.

 

 

. The directors constituting the initial board of directors shall be that number so elected, pursuant to the Written Consent of the Incorporator of the corporation. The number of directors which shall constitute the whole board shall be such number of members, not less than one (1) but without a maximum number, as the board of directors may from time to time determine by resolution. The directors shall be elected at the annual meeting of the stockholders by voting stockholders, except as provided this Article, and each director elected shall hold office until his or her successor is elected and qualified, or until his or her earlier resignation or removal. Directors need not be stockholders.

 

. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by the affirmative vote of a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and any director so chosen shall hold office until the next annual election and until his or her successor is duly elected and shall qualify, or until his or her earlier resignation or removal. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent (10%) of the total number of the voting shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office.

 

. The business of the corporation shall be managed by its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by certificate of incorporation or by these bylaws directed or required to be exercised or done by the stockholders.

 

. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware.

  

 

. The first meeting of each newly elected board of directors shall be held immediately after, and at the same place as, the annual meeting of stockholders and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present.

 

. Regular meetings of the board of directors may be held at such time and at such place as shall from time to time be determined by the board.

 

. Special meetings of the board of directors may be called by the Chairman of the Board or CEO on two (2) days’ notice to each director; special meetings may also be called by the written request of.the majority of the board.

 

. At all meetings of the board, a majority of the directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the board of directors the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.

 

. Unless otherwise restricted by the certificate of incorporation or these bylaws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee.

 

. Unless otherwise restricted by the certificate of incorporation or these bylaws, members of the board of directors, or any committee designated by the board, may participate in a meeting of the board or such committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section shall constitute presence in person at such meeting.

 

. The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee; provided, however, that, if the resolution of the board of directors so provides, in the absence or disqualification of any such member or alternate member of such committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not he, she or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member or alternate member. Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation as provided for in the General Corporation Law of Delaware (the “Law”).

  

 

. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required.

 

. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed similar compensation for attending committee meetings.

 

 

. Except as otherwise provided herein, whenever under the provisions of the Law, of the certificate of incorporation or of these bylaws, notice of any meeting is required to be given to any director or stockholder, such notice (a) shall be given not less than ten (10) nor more than sixty (60) days before the date of said meeting, (b) shall be in writing and (c) shall be given in person or by mail or courier o such director or voting stockholder. If mailed or sent by courier, such notice shall be addressed to such director or voting stockholder at his or her address as it appears on the records of the corporation, with postage or freight thereon prepaid, and shall be deemed to be given at the time when the same shall be deposited in the United States mail or with such courier. Notice to directors may also be given by facsimile, which notice shall be deemed to be delivered upon receipt by the sender of transmission confirmation. Without limiting the manner by which notice otherwise may be given, under the provision of the statutes, as such laws may be amended from time to time, or of the certificate of incorporation or of these bylaws, such notice shall also be effective if given by a form of electronic transmission consented to by the stockholder or director to whom the notice is given. Any such consent shall be revocable by the stockholder or director by written notice to the corporation. Such consent shall be deemed revoked if (i) the corporation is unable to deliver by electronic transmission two (2) consecutive notices given by the corporation in accordance with such consent and (ii) such inability becomes known to the Secretary or an Assistant Secretary of the corporation, or to the transfer agent, or other person responsible for the giving of notice; provided, however, the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action.

 

. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these bylaws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. 

 

 

 

. The officers of the corporation shall be chosen by the board of directors and shall consist of a President, a Treasurer and a Secretary. The board of directors may also choose Vice-Presidents, and one or more Assistant Treasurers and Assistant Secretaries. The board of directors may appoint such other officers and agents as it shall deem desirable who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. Any number of offices may be held by the same person, unless the certificate of incorporation or these bylaws otherwise provide.

 

. The board of directors at its first meeting after each annual meeting of stockholders shall appoint a President, a Treasurer and a Secretary. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as is convenient. The officers of the corporation shall hold office until the earliest of the following events to occur: (a) their successors are chosen and duly qualified; (b) they resign, (c) they are removed as hereinafter provided or (d) their termination of employment with the corporation, if they were employed by the corporation at any time after their appointment.

 

. Any officer elected or appointed by the board of directors may be removed at any time by either the Chairman of the Board or the affirmative vote of a majority of the board of directors.

 

. Any vacancy occurring in any office of the corporation shall be filled by the board of directors.

 

. The salaries of all officers of the corporation shall be fixed by the board of directors.

 

. The Chairman of the Board, in the event of such appointment or election, shall preside at all meetings of the stockholders and directors and shall see that orders and resolutions of the board of directors are carried into effect. The Chairman of the Board shall perform such other duties and have such other powers as the board of directors or the Chief Executive Officer may from time to time prescribe.

 

. The Chief Executive Officer, in the event of such appointment or election, shall be the chief executive officer of the corporation, shall be responsible for the general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect; provided, however, that if there be no Chief Executive Officer, the President shall have all powers of the Chief Executive Officer. The Chief Executive Officer shall have the power to execute bonds, mortgages, deeds, contracts and other documents on behalf of the corporation. The Chief Executive Officer may vote all shares of stock of any other corporation standing in the name of the corporation, except where the voting thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation, and in general shall perform all duties incident to the office of the Chief Executive Officer and such other duties as may be prescribed by the board of directors from time to time. The Chief Executive Officer shall have general powers of supervision and management of the business of the corporation and shall be the final arbiter of all differences between officers of the corporation. The Chief Executive Officer’s decision as to any matter affecting the officers of the corporation shall be final and binding as between the officers of the corporation, subject only to the board of directors of the corporation.

  

 

. The President shall be the principal operating officer of the corporation, unless and until a Chief Operating Officer is appointed. In accordance with the policies and objectives prescribed by the board of directors, the President shall establish operating procedures for and administer and direct, all aspects of the corporation’s operations. In the absence of the Chairman of the Board or in the event of the Chairman of the Board’s inability to act, the President may preside at meetings of the voting stockholders and directors and shall have and exercise the duties of the Chairman of the Board including the power to execute bonds, deeds, mortgages, contracts and other documents on behalf of the corporation and to vote all shares of stock of any other corporation standing in the name of the corporation, except where the voting thereof shall be exclusively delegated by the board of directors to some other officer or agent of the corporation. In addition, the President shall have the power to execute documents where by law the signature of the President is required. In general, the President shall have all powers and shall perform all duties usually vested in the office of the President of a corporation and such other duties and powers as the board of directors or the Chief Executive Officer may from time to time prescribe.

 

. The Chief Financial Officer, in the event of such appointment or election, shall be the principal accounting and financial officer of the corporation and shall (a) have charge of and be responsible for the maintenance of adequate books of account for the corporation, (b) have charge of all funds and securities of the corporation and be responsible for the receipt and disbursement thereof and (c) perform all other duties incident to the office of Chief Financial Officer. If appointed, the Chief Financial Officer shall perform such other duties and have such other powers as the board of directors or the Chief Executive Officer may from time to time prescribe.

 

. The Chief Operating Officer, in the event of such appointment or election, shall be the principal operating officer of the corporation. Within the policies and objectives prescribed by the board of directors and under the general supervision of the Chief Executive Officer, the Chief Operating Officer shall establish operating procedures for, administer and direct all aspects of the corporation’s operations. Except in those instances in which the authority to execute is expressly delegated to another officer or agent of the corporation or a different mode of execution is expressly prescribed by the board of directors or these bylaws, the Chief Operating Officer may execute certificates for the corporation’s shares, and any contracts, deeds, mortgages, bonds, or other instruments which the board of directors has authorized to be executed. The Chief Operating Officer may vote all securities which the corporation is entitled to vote except as and to the extent such authority shall be vested in a different officer or agent of the corporation by the board of directors. The Chief Operating Officer shall perform such other duties and have such other powers as the board of directors or the Chief Executive Officer may from time to time prescribe.