AN OFFERING STATEMENT PURSUANT TO REGULATION A RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. INFORMATION CONTAINED IN THIS PRELIMINARY OFFERING CIRCULAR IS SUBJECT TO COMPLETION OR AMENDMENT. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED BEFORE THE OFFERING STATEMENT FILED WITH THE COMMISSION IS QUALIFIED. THIS PRELIMINARY OFFERING CIRCULAR SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR MAY THERE BE ANY SALES OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL BEFORE REGISTRATION OR QUALIFICATION UNDER THE LAWS OF SUCH STATE. THE COMPANY MAY ELECT TO SATISFY ITS OBLIGATION TO DELIVER A FINAL OFFERING CIRCULAR BY SENDING YOU A NOTICE WITHIN TWO BUSINESS DAYS AFTER THE COMPLETION OF THE COMPANY’S SALE TO YOU THAT CONTAINS THE URL WHERE THE FINAL OFFERING CIRCULAR OR THE OFFERING STATEMENT IN WHICH SUCH FINAL OFFERING CIRCULAR WAS FILED MAY BE OBTAINED.
PRELIMINARY OFFERING CIRCULAR DATED OCTOBER 28, 2022
ZERGRATRAN SA, INC.
501 East Las Olas Blvd., Suite 207
Fort Lauderdale, Florida 33301
754-755-1948
UP TO 15,000,000 SHARES OF COMMON STOCK OFFERED BY THE ISSUER
The minimum investment in this offering is 100 shares of Common Stock, or $500
SEE “SECURITIES BEING OFFERED” AT PAGE 27
| Price to Public | Underwriting discount and commissions (1) | Proceeds to issuer (2) | Proceeds
to other persons | |||||||||||||
| Per share | $ | 5.00 | $ | 0.05 | $ | 4.95 | — | |||||||||
| Total Minimum | — | — | — | — | ||||||||||||
| Total Maximum | $ | 75,000,000 | $ | 750,000 | $ | 74,250,000 | — | |||||||||
| (1) | The company has engaged Rialto Markets LLC (”Rialto”) to act as placement agent for this offering and to perform certain administrative technology-related functions as set forth in the “Plan of Distribution.” The company will pay a cash commission of 1% to Rialto on sales of the Common Stock. The Company has also engaged Rialto as a consultant to provide ongoing general consulting services related to the offering for a one-tie fee of $10,000. The company has paid $11,750 in advance fees for the FINRA review filing. The maximum amount the company may pay to Rialto is $760,000. |
| (2) | The company expects that the amount of expenses of the offering that it will pay will be approximately $1,870,000, assuming the maximum offering amount is raised and not including commissions or state filing fees. |
Sales of these securities will commence on approximately [date].
This offering (the “Offering”) will terminate at the earlier of the date at which the maximum offering amount has been sold, or the date at which the offering is earlier terminated by the company at its sole discretionAt least every 12 months after this offering has been qualified by the United States Securities and Exchange Commission (the “Commission”), the company will file a post-qualification amendment to include the company’s recent financial statements.
The company has engaged Wilmington Trust, National Association as agent to hold any funds that are tendered by investors. The offering is being conducted on a best-efforts basis without any minimum target. Provided that an investor purchases shares in the amount of the minimum investment, $500 (100 shares), 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, which may mean that the company does not receive sufficient funds to cover the cost of this Offering. The company may undertake one or more closings on a rolling basis. After each closing, funds tendered by investors will be made available to the company. After the initial closing of this offering, we expect to hold closings on at least a monthly basis.
Each holder of Common Stock is entitled to one vote for each share on all matters submitted to a vote of the stockholders. Holders of Common Stock will vote together on all matters (including the election of directors) submitted to vote or for the consent of the stockholders of the company. Zergratran, Inc., our sole shareholder, will continue to hold a majority of the voting power of the company’s stock at the conclusion of this Offering and therefore control the board.
THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS UPON THE MERITS OR GIVE ITS APPROVAL OF ANY SECURITIES OFFERED OR THE TERMS OF THE OFFERING, NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF ANY OFFERING CIRCULAR OR OTHER SOLICITATION MATERIALS. THESE SECURITIES ARE OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE COMMISSION; HOWEVER THE COMMISSION HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES OFFERED ARE EXEMPT FROM REGISTRATION
GENERALLY NO SALE MAY BE MADE TO YOU IN THIS OFFERING IF THE AGGREGATE PURCHASE PRICE YOU PAY IS MORE THAN 10% OF THE GREATER OF YOUR ANNUAL INCOME OR NET WORTH. DIFFERENT RULES APPLY TO ACCREDITED INVESTORS AND NON-NATURAL PERSONS. BEFORE MAKING ANY REPRESENTATION THAT YOUR INVESTMENT DOES NOT EXCEED APPLICABLE THRESHOLDS, WE ENCOURAGE YOU TO REVIEW RULE 251(d)(2)(i)(C) OF REGULATION A. FOR GENERAL INFORMATION ON INVESTING, WE ENCOURAGE YOU TO REFER TO www.investor.gov.
This offering is inherently risky. See “Risk Factors” on page 4.
The company is following the “Offering Circular” format of disclosure under Regulation A.
In the event that we become a reporting company under the Securities Exchange Act of 1934, we intend to take advantage of the provisions that relate to “Emerging Growth Companies” under the JOBS Act of 2012. See “Summary -- Implications of Being an Emerging Growth Company.”
TABLE OF CONTENTS
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In this Offering Circular, the term “Zergratran” or “the company” refers to Zergratran SA, Inc..
Other than in the table on the cover page, dollar amounts have been rounded to the closest whole dollar.
THIS OFFERING CIRCULAR MAY CONTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO, AMONG OTHER THINGS, THE COMPANY, ITS BUSINESS PLAN AND STRATEGY, AND ITS INDUSTRY. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON THE BELIEFS OF, ASSUMPTIONS MADE BY, AND INFORMATION CURRENTLY AVAILABLE TO THE COMPANY’S MANAGEMENT. WHEN USED IN THE OFFERING MATERIALS, THE WORDS “ESTIMATE,” “PROJECT,” “BELIEVE,” “ANTICIPATE,” “INTEND,” “EXPECT” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS, WHICH CONSTITUTE FORWARD LOOKING STATEMENTS. THESE STATEMENTS REFLECT MANAGEMENT’S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE THE COMPANY’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN THE FORWARD-LOOKING STATEMENTS. INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE ON WHICH THEY ARE MADE. THE COMPANY DOES NOT UNDERTAKE ANY OBLIGATION TO REVISE OR UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER SUCH DATE OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.
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Zergratran SA, Inc. (the “company”) was incorporated under the Delaware General Corporation Law in the State of Delaware on May 6, 2022.
Zergratran intends to develop and manage infrastructure projects around the world that have an environmental, social and governance (“ESG”) and technology focus that will boost the efficiency of the global shipping and transportation system. It intends to start with Puerto International Las Americas (“PILA”) in northern Colombia, which will use an underground tunnel to transfer shipping containers between ports on the Atlantic and Pacific Oceans.
To date, the company has a limited operating history and has not yet commenced any Pre-Feasibility work. The company intends to use the funds from this offering to fund its Pre-Feasibility phase. The company has corresponded with the Colombian National Agency for Infrastructure regarding PILA. The next regulatory step for the company will be to submit its Pre-Feasibility documentation and receive the necessary approvals afterward to move forward with the Feasibility stage of the project.
The Offering
| Securities Offered | 15,000,000 shares of Common Stock | |
| Minimum Investment | $ 500 | |
| Common Stock outstanding before the Offering (as of September 22, 2022) | 75,000,000 | |
| Common Stock outstanding after the Offering assuming a fully subscribed offering | 90,000,000 |
Implications of Being an Emerging Growth Company
We are not subject to the ongoing reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) because we are not registering our securities under the Exchange Act. Rather, we will be subject to the more limited reporting requirements under Regulation A, including the obligation to electronically file:
| ● | annual reports (including disclosure relating to our business operations for the preceding two fiscal years, or, if in existence for less than two years, since inception, related party transactions, beneficial ownership of the issuer’s securities, executive officers and directors and certain executive compensation information, management’s discussion and analysis (“MD&A”) of the issuer’s liquidity, capital resources, and results of operations, and two years of audited financial statements), |
| ● | semiannual reports (including disclosure primarily relating to the issuer’s interim financial statements and MD&A) and |
| ● | current reports for certain material events. |
In addition, at any time after completing reporting for the fiscal year in which our offering statement was qualified, if the securities of each class to which this offering statement relates are held of record by fewer than 300 persons and offers or sales are not ongoing, we may immediately suspend our ongoing reporting obligations under Regulation A.
If and when we become subject to the ongoing reporting requirements of the Exchange Act, as an issuer with less than $1.07 billion in total annual gross revenues during our last fiscal year, we will qualify as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) and this status will be significant. An emerging growth company may take advantage of certain reduced reporting requirements and is relieved of certain other significant requirements that are otherwise generally applicable to public companies. In particular, as an emerging growth company we:
| ● | will not be required to obtain an auditor attestation on our internal controls over financial reporting pursuant to the Sarbanes-Oxley Act of 2002; |
| ● | will not be required to provide a detailed narrative disclosure discussing our compensation principles, objectives and elements and analyzing how those elements fit with our principles and objectives (commonly referred to as “compensation discussion and analysis”); |
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| ● | will not be required to obtain a non-binding advisory vote from our shareholders on executive compensation or golden parachute arrangements (commonly referred to as the “say-on-pay,” “say-on-frequency” and “say-on-golden-parachute” votes); |
| ● | will be exempt from certain executive compensation disclosure provisions requiring a pay-for-performance graph and CEO pay ratio disclosure; |
| ● | may present only two years of audited financial statements and only two years of related Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A; and |
| ● | will be eligible to claim longer phase-in periods for the adoption of new or revised financial accounting standards. |
We intend to take advantage of all of these reduced reporting requirements and exemptions, including the longer phase-in periods for the adoption of new or revised financial accounting standards under Section 107 of the JOBS Act. Our election to use the phase-in periods may make it difficult to compare our financial statements to those of non-emerging growth companies and other emerging growth companies that have opted out of the phase-in periods under Section 107 of the JOBS Act.
Under the JOBS Act, we may take advantage of the above-described reduced reporting requirements and exemptions for up to five years after our initial sale of common equity pursuant to a registration statement declared effective under the Securities Act of 1933, as amended, or such earlier time that we no longer meet the definition of an emerging growth company. Note that this offering, while a public offering, is not a sale of common equity pursuant to a registration statement, since the offering is conducted pursuant to an exemption from the registration requirements. In this regard, the JOBS Act provides that we would cease to be an “emerging growth company” if we have more than $1.07 billion in annual revenues, have more than $700 million in market value of our common stock held by non-affiliates, or issue more than $1 billion in principal amount of non-convertible debt over a three-year period.
Certain of these reduced reporting requirements and exemptions are also available to us due to the fact that we may also qualify, once listed, as a “smaller reporting company” under the Commission’s rules. For instance, smaller reporting companies are not required to obtain an auditor attestation on their assessment of internal control over financial reporting; are not required to provide a compensation discussion and analysis; are not required to provide a pay-for-performance graph or CEO pay ratio disclosure; and may present only two years of audited financial statements and related MD&A disclosure.
Selected Risks Associated with Our Business
| ● | We have not generated any revenues. |
| ● | Our business plan will require significant capital to achieve. |
| ● | We are currently in the pre-feasibility phase of operations. |
| ● | The company may not be able to successfully execute its business plan. |
| ● | The business and its prospects for success are dependent on key personnel who are not easy to recruit and retain. |
| ● | The projects that we intend to develop will take many years to be completed. |
| ● | We are reliant upon unproven technology. |
| ● | The company’s auditor has issued a going concern opinion. |
| ● | We will be subject to environmental risks and have to comply with strict environment regulation. |
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| ● | This Offering is only to raise funds for the first phase of our operations. |
| ● | There is no minimum offering amount, and the Maximum Amount may not be raised. |
| ● | The offering price of our Securities has been arbitrarily determined. |
| ● | Dilution risk exists for new shareholders. |
| ● | You should be aware of the illiquid and long-term nature of this investment. |
| ● | Investors in our Common Stock will not have control over the company’s business and affairs. |
| ● | The company’s board has significant discretion over the net proceeds of this Offering. |
| ● | Our certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees. |
| ● | The subscription agreement has a forum selection provision that requires disputes be resolved in the Court of Chancery of the State of Delaware regardless of convenience or cost to you, the investor. |
| ● | Investors in this offering may not be entitled to a jury trial with respect to claims arising under the subscription agreement, which could result in less favorable outcomes to the plaintiff(s) in any action under the agreement. |
| ● | Using a credit card to purchase shares may impact the return on your investment as well as subject you to other risks inherent in this form of payment. |
| ● | A significant percentage of our operations will be located in Colombia, which may make it more difficult for investors to understand and predict how changing market and economic conditions will affect our financial results. |
| ● | Economic and political conditions in Colombia may have an adverse effect on our financial condition and results of operations. |
| ● | The Colombian Government and the Central Bank exercise significant influence on the Colombia economy. |
| ● | Colombia has experienced and continues to experience internal security issues that have had or could have a negative effect on the Colombian economy, our operations, and our financial condition. |
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The SEC requires the company to identify risks that are specific to its business and its financial condition. The company is still subject to all the same risks that all companies in its business, and all companies in the economy, are exposed to. These include risks relating to economic downturns, political and economic events and technological developments (such as cyber-attacks and the ability to prevent those attacks). Additionally, early-stage companies are inherently more risky than more developed companies. You should consider general risks as well as specific risks when deciding whether to invest.
Risks Related to our Business
We have not generated any revenues.
To date, the company has limited operating history and has not recorded any revenues from operations nor has the company commenced production on any property. There can be no assurance that the company will always have sufficient capital resources to continue as a going concern, or that significant losses will not occur in the near future or that the company will be profitable in the future. The company’s expenses and capital expenditures will increase as consultants, personnel and equipment associated with the exploration and possible development of its properties are advanced. The company expects to continue to incur losses unless and until such time as the PILA is completed and operational. There can be no assurance that the company will continue as a going concern, generate any revenues or achieve profitability.
Our business plan will require significant capital to achieve.
The company might not sell enough shares of Common Stock in this Offering to meet its operating needs and fulfil its plans, in which case it will cease operating and you will get nothing.
Even if it sells all the shares of Common Stock it’s offering now, the company anticipates that in order to complete the PILA, the company will need to raise billions of dollars through equity or bond capital. This will require identifying sources of capital, engaging the assistance of securities intermediaries and securities platforms, and complying with the rules relating to capital-raising, all of which are difficult and time-consuming. If the company is unable to get the capital it needs, it will fail. Even if it has successful offerings in the future, the terms of those offerings might result in your investment in the company being worth less, because later investors (including institutional investors and financial institutions) might get better terms (a “down round”).
We are currently in the pre-feasibility phase of operations.
Construction of the PILA is a large undertaking. Prior to commencing construction, we will undergo substantial feasibility studies to determine if our business plans would be successful. If during the pre-feasibility (“Pre-Feasibility”) and feasibility (“Feasibility”) phases we determine that it is impossible to proceed with our business, we may have to shut down our operations and you could lose your entire investment.
The company may not be able to successfully execute its business plan.
In order to develop the PILA and execute the plans for growth outlined in “Description of Business”, the company must raise significant amounts of capital, attract talent, and receive critical government approvals. There is no guarantee that the company will be able to achieve or sustain any of the foregoing within the company’s anticipated timeframe or at all. The company anticipates that its current budget will significantly change upon completion of the Pre-Feasibility and Feasibility phases, and again, during the execution of its plan. The company may be unable to meet its capital requirements or encounter obstacles in research and development activities, either of which could imperil the company’s ability to execute its business plan.
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The business and its prospects for success are dependent on key personnel who are not easy to recruit and retain.
The company relies on key personnel of our sole shareholder, Zergratan, Inc., in management, research and development, and operations, and in order to execute its business plan the company will need to hire a significant amount of personnel with correct skill sets and qualification. The company intends to offer key personnel competitive compensation packages, but it cannot assure you that its key personnel will remain with the company or that the company will be able to hire the additional personnel that it will need with the correct skill sets and qualifications in the future. The company does not maintain any key person insurance and the loss of any of the key personnel of the sole shareholder could significantly impair the company’s ability to maintain a viable business. In the event one or more of the company’s or the company’s sole shareholder’s key personnel exit the business, it may experience financial loss, disruption to the operations and technology development, damage to the brand and reputation and, if any departing person joins a competitor, a weakening of its competitive position.
The projects that we intend to develop will take many years to be completed.
Our intended projects, including PILA, will take many years to reach completion, if they ever do, and in the process they could suffer delays for many different reasons, including environmental, funding, regulatory and social issues. Whether we will succeed will not be apparent for a significant period of time, and until then, the value of your investment will be uncertain.
We are reliant upon unproven technology.
The PILA will utilize Maglev technology to move containers through a subterranean tunnel across Colombia. While Maglev technology has been used in other contexts, in how we plan to utilize the technology it is unproven. If the technology is unsuitable for the uses we anticipate or needs further development, our operations could be adversely and materially affected.
The company’s auditor has issued a going concern opinion.
The company’s auditor has issued a “going concern” opinion on the company’s financial statements. The company has negative working capital, has incurred recurring losses and recurring negative cash flow from operating activities, and has an accumulated deficit which raises substantial doubt, in the opinion of the auditor, about its ability to continue as a going concern.
We will be subject to environmental risks and have to comply with strict environment regulation.
In the process of constructing the PILA we could encounter a variety of environmental problems.
As such, Pre-Feasibility will include determination of environmental activities, including environmental license, environmental project study and environmental management plan environmental feasibility of project implementation, and a review of water resources. For example, in order to complete the PILA we may have to remove trees and other plant life which could have a negative effect on the surrounding ecosystem. We would likely have to mitigate any such problems we encounter which could take substantial resources.
The company’s activities will be subject to extensive laws and regulations governing environmental protection and employee health and safety. Environmental legislation is evolving in a manner that is creating stricter standards, while enforcement, fines and penalties for non-compliance are more stringent. The cost of compliance with changes in governmental regulations has the potential to reduce the profitability of operations. Furthermore, any failure to comply fully with all applicable laws and regulations could have significant adverse effects on the company, including the suspension or cessation of operations.
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Risks Related to this Offering
This Offering is only to raise funds for the first phase of our operations.
Even if we raise the entire amount of securities offered, that will only fund the first phase of our business plan, consisting of our Pre-Feasibility and Feasibility phases where we will conduct initial research and development, feasibility studies, and certain government approvals. See “Use of Proceeds.” Once that phase of our plan is complete, we will have to raise more money to continue operations via debt or equity offerings, or a combination of both.
There is no minimum offering amount, and the Maximum Amount may not be raised.
The Offering does not have a minimum offering amount. All subscription payments received for our securities will, upon acceptance of the associated subscription, immediately available for use by the company, subject to the terms of the escrow arrangements described in “Plan of Distribution.” The company is seeking gross proceeds from the Offering of up to a maximum of $75,000,000 (the “Maximum Amount”). There can be no assurance that the maximum proceeds from the Offering will be raised. If the Maximum Amount is not raised, then the company may be required to obtain capital from other sources, including from debt or preferred stock offerings, diluting the ownership of investors in this Offering and potentially giving other investors superior rights and preferences.
The offering price of our Securities has been arbitrarily determined.
Our management has determined the number and price of shares of Common Stock offered by the company. The price of the shares we are offering was arbitrarily determined based upon our estimates of the current market value, illiquidity, and volatility of our common stock, our current financial condition, the prospects for our future cash flows and earnings, and market and economic conditions at the time of the Offering. Unlike listed companies that are valued publicly through market-driven stock prices, the valuation of private companies, especially early-stage companies, is difficult to assess and investors may risk overpaying for their investment.
Dilution risk exists for new shareholders.
Investors in this Offering will suffer immediate dilution with respect to their investments, compared to existing shareholders. See “Dilution”. Even if the company raises the maximum amount in this offering the company will need to incur debt and/or raise additional equity in order to finance its operations. Increasing the amount of debt will increase the company’s debt service obligations and make less cash available for distribution to its shareholders, in the event any such distributions are permitted. Furthermore, if we raise capital through debt, the holders of our debt would have priority over holders of equity, including the securities sold in this Offering, and we may be required to accept terms that restrict our ability to incur more debt. Increasing the amount of additional equity that the company will have to seek in the future will further dilute those investors participating in this Offering.
You should be aware of the illiquid and long-term nature of this investment.
There is no currently established market for reselling these securities and while the company’s plans include seeking a listing on a stock exchange or similar forum in the future, there can be no assurance that it will succeed in being accepted on such a forum or the extent to which liquidity will result from any such listing. The company has no immediate plans to list any of its shares on any over-the-counter (OTC) trading forum or similar exchange. If you decide that you want to resell these securities in the future, you may not be able to find a buyer. You should assume that you may not be able to liquidate your investment for some time, or be able to pledge these shares as collateral.
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Investors in our Common Stock will not have control over the company’s business and affairs.
Zergratran, Inc. owns 100% of the outstanding shares of Common Stock of the company. Even if the Maximum Amount is sold under this Offering, investors in this Offering would have approximately 16.67% of the voting power of the company’s shares. Thus, Zergratran, Inc. is expected to control a majority of the voting power for the foreseeable future and therefore control the business and affairs of the company.
The company’s board has significant discretion over the net proceeds of this Offering.
The company’s board of directors has significant discretion over the net proceeds of this Offering. As is the case with any business, 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. Investors are urged to consult with their attorneys, accountants, and personal investment advisors prior to making any decision to invest in the company’s Common Stock.
Our certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.
Our certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for the following types of actions or proceedings under Delaware statutory or common law:
| ● | any derivative action or proceeding brought on our behalf; | |
| ● | any action asserting a breach of fiduciary duty; | |
| ● | any action asserting a claim against us arising under the Delaware General Corporation Law, our amended and restated certificate of incorporation, or our amended and restated bylaws; and | |
| ● | any action asserting a claim against us that is governed by the internal-affairs doctrine. |
While the Delaware courts have determined that such choice of forum provisions are facially valid, a stockholder may nevertheless seek to bring a claim in a venue other than those designated in the exclusive forum provisions. In such instance, we would expect to assert the validity and enforceability of the exclusive forum provisions of our certificate of incorporation. This may require significant additional costs associated with resolving such action in other jurisdictions and there can be no assurance that the provisions will be enforced by a court in those other jurisdictions.
These exclusive forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees, which may discourage lawsuits against us and our directors, officers and other employees. If a court were to find either exclusive-forum provision in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could seriously harm our business.
Thisforum provision shall not apply to suits brought to enforce a duty or liability created by the Securities Exchange Act of 1934, as amended, the Securities Act of 1933, as amended, or any other claim for which the federal courts have exclusive jurisdiction.
The subscription agreement has a forum selection provision that requires disputes be resolved in the Court of Chancery of the State of Delaware regardless of convenience or cost to you, the investor.
In order to invest in this offering, investors agree to resolve disputes arising under the subscription agreement other than those arising under the federal securities laws in the Court of Chancery of the State of Delaware for the purpose of any suit, action or other proceeding arising out of or based upon the agreement. This forum selection provision may limit your ability to obtain a favorable judicial forum for disputes with us. Although we believe the provision benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies and in limiting our litigation costs, to the extent it is enforceable, the forum selection provision may limit investors’ ability to bring claims in judicial forums that they find favorable to such disputes, may increase investors’ costs of bringing suit and may discourage lawsuits with respect to such claims. Alternatively, if a court were to find the provision inapplicable to, or unenforceable in an action, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition or results of operations. You will not be deemed to have waived the company’s compliance with the federal securities laws and the rules and regulations thereunder.
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Investors in this offering may not be entitled to a jury trial with respect to claims arising under the subscription agreement, which could result in less favorable outcomes to the plaintiff(s) in any action under the agreement.
Investors in this offering will be bound by the subscription agreement, which includes a provision under which investors waive the right to a jury trial of any claim they may have against the company arising out of or relating to the agreement other than those arising under the federal securities laws.
If we opposed a jury trial demand based on the waiver, a court would determine whether the waiver was enforceable based on the facts and circumstances of that case in accordance with the applicable state and federal law. In determining whether to enforce a contractual pre-dispute jury trial waiver provision, courts will generally consider whether the visibility of the jury trial waiver provision within the agreement is sufficiently prominent such that a party knowingly, intelligently and voluntarily waived the right to a jury trial. We believe that this is the case with respect to the subscription agreement. You should consult legal counsel regarding the jury waiver provision before entering into the subscription agreement.
If you bring a claim not arising under the federal securities laws against the company in connection with matters arising under the subscription agreement, you may not be entitled to a jury trial with respect to those claims, which may have the effect of limiting and discouraging lawsuits against the company. If a lawsuit is brought against the company under the agreement, it may be heard only by a judge or justice of the applicable trial court, which would be conducted according to different civil procedures and may result in different outcomes than a trial by jury would have had, including results that could be less favorable to the plaintiff(s) in such an action.
Nevertheless, if the jury trial waiver provision is not permitted by applicable law, an action could proceed under the terms of the agreement with a jury trial. No condition, stipulation or provision of the subscription agreement serves as a waiver by any holder of the company’s securities or by the company of compliance with any substantive provision of the federal securities laws and the rules and regulations promulgated under those laws.
Using a credit card to purchase shares may impact the return on your investment as well as subject you to other risks inherent in this form of payment.
Investors in this offering have the option of paying for their investment with a credit card, which is not usual in the traditional investment markets. Transaction fees charged by your credit card company (which can reach 5% of transaction value if considered a cash advance) and interest charged on unpaid card balances (which can reach almost 25% in some states) add to the effective purchase price of the shares you buy. See “Plan of Distribution and Selling Securityholders.” The cost of using a credit card may also increase if you do not make the minimum monthly card payments and incur late fees. Using a credit card is a relatively new form of payment for securities and will subject you to other risks inherent in this form of payment, including that, if you fail to make credit card payments (e.g. minimum monthly payments), you risk damaging your credit score and payment by credit card may be more susceptible to abuse than other forms of payment. Moreover, where a third-party payment processor is used, as in this offering, your recovery options in the case of disputes may be limited. The increased costs due to transaction fees and interest may reduce the return on your investment.
The SEC’s Office of Investor Education and Advocacy issued an Investor Alert dated February 14, 2018 entitled: Credit Cards and Investments – A Risky Combination, which explains these and other risks you may want to consider before using a credit card to pay for your investment.
Risks Related to Doing Business in Colombia
A significant percentage of our operations will be located in Colombia, which may make it more difficult for investors to understand and predict how changing market and economic conditions will affect our financial results.
Our principal office and our management are located in Florida. However, we will oversee operations in Colombia and such operations are subject to the economic, political and tax conditions prevalent in that country. The economic conditions in Colombia are subject to different growth expectations, market weaknesses and business practices than economic conditions in other markets. We may not be able to predict how changing market conditions in Colombia will affect our financial results.
As of the date of this Offering Circular, Colombia’s long-term foreign currency sovereign credit ratings were affirmed “Baa2” by Moody’s, “BBB-” by S&P and “BBB-” by Fitch, three of the main rating agencies worldwide.
Colombia’s economy, like most Latin-American countries, continues to suffer from the effects of lower commodity prices, mainly oil, reflected in its elevated level of external debt. Even though the country has taken measures to stabilize the economy, it is uncertain how these measures will be perceived and if the intended goal of increasing investors’ confidence will be achieved.
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Economic and political conditions in Colombia may have an adverse effect on our financial condition and results of operations.
A significant portion of our operations are or will be located in Colombia. Consequently, our financial condition and results of operations depend significantly on macroeconomic and political conditions prevailing in Colombia. Decreases in the growth rate, periods of negative growth, increases in inflation, changes in law, regulation, policy, or future judicial rulings and interpretations of policies involving exchange controls and other matters such as (but not limited to) currency depreciation, inflation, interest rates, taxation, banking laws and regulations and other political or economic developments in or affecting Colombia may affect the overall business environment and may, in turn, adversely impact our financial condition and results of operations in the future. The Colombian government frequently intervenes in Colombia’s economy and from time to time makes significant changes in monetary, fiscal and regulatory policy. Our business and results of operations or financial condition may be adversely affected by changes in government or fiscal policies, and other political, diplomatic, social, environmental and economic developments that may affect Colombia. We cannot predict what policies the Colombian government will adopt and whether those policies would have a negative impact on the Colombian economy or on our business and financial performance in the future.
The Colombian Government and the Central Bank exercise significant influence on the Colombia economy.
Although the Colombian government does not impose foreign exchange controls on trade, Colombia’s foreign currency markets have historically been extremely regulated. Colombian law permits the Central Bank of Colombia (the “Central Bank”) to impose foreign exchange controls to regulate the remittance of dividends and/or foreign investments in the event that the foreign currency reserves of the Central Bank fall below a level equal to the value of three months of imports of goods and services into Colombia. An intervention that precludes us from possessing, utilizing or remitting U.S. Dollars would impair our financial condition and results of operations, and would impair our ability to convert any dividend payments to U.S. dollars.
Colombia has experienced and continues to experience internal security issues that have had or could have a negative effect on the Colombian economy, our operations, and our financial condition.
Colombia is subject to sustained internal security issues, primarily due to the activities of guerrilla groups, such as dissidents from the former Revolutionary Armed Forces of Colombia (Fuerzas Armadas Revolucionarias de Colombia), or “FARC,” the National Liberation Army (Ejército de Liberación Nacional), or “ELN,” paramilitary groups, drug cartels and criminal gangs (Bacrim). In remote regions of the country with minimal governmental presence, these groups have exerted influence over the local population and funded their activities by protecting and rendering services to drug traffickers and participating in drug trafficking activities. Even though the Colombian government’s policies have reduced guerrilla presence and criminal activity, particularly in the form of terrorist attacks, homicides, kidnappings and extortion, such activity persists in Colombia, and possible escalation of such activity and the effects associated with them have had and may have in the future a negative effect on the Colombian economy and on us, including on our customers, employees, results of operations and financial condition. The Colombian government commenced peace talks with the FARC in August 2012, and peace negotiations with the ELN began in November 2016. The Colombian government and the FARC signed a peace deal on September 26, 2016, which was amended after voters rejected it in the referendum held on October 2, 2016. The new agreement was signed on November 24, 2016 and was ratified by the Colombian Congress on November 30, 2016 and is being implemented after four years of negotiations. Pursuant to the peace agreements negotiated between the FARC and the Colombian government in 2016, the FARC occupies five seats in the Colombian Senate and five seats in the Colombian House of Representatives. The new deal clarifies protection to private property, is expected to increase the government’s presence in rural areas and bans former rebels from running for office in certain newly created congressional districts in post-conflict zones. As a result, during the transition process, Colombia may experience an increase in internal security issues, drug-related crime and guerilla and paramilitary activities, which may have a negative impact on the Colombian economy. Our business or financial condition could be adversely affected by rapidly changing economic or social conditions, including the Colombian government’s response to implementation of the agreement with FARC and ongoing peace negotiations, if any, which may result in legislation that increases the tax burden of Colombian companies.
Despite efforts by the Colombian government, drug-related crime, guerrilla paramilitary activity and criminal bands continue to exist in Colombia, and allegations have surfaced regarding members of the Colombian congress and other government officials having ties to guerilla and paramilitary groups. The Colombian government and ELN reopened peace talks in August 2022 after a three-year suspension of the talks to end a five-decade war, the Colombian government. Any terrorist activity in Colombia generally may disrupt supply chains and discourage qualified individuals from being involved with our operations.
Political and economic instability in the region may affect the Colombian economy and our operations and, consequently, our results of operations and financial condition.
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Dilution means a reduction in value, control or earnings of the shares the investor owns.
Immediate dilution
An early-stage company typically sells its shares (or grants options over its shares) to its founders and early employees at a very low cash cost, because they are, in effect, putting their “sweat equity” into the company. When the company seeks cash investments from outside investors, like you, the new investors typically pay a much larger sum for their shares than the founders or earlier investors, which means that the cash value of your stake is diluted because all the shares are worth the same amount, and you paid more than earlier investors for your shares.
The following table demonstrates the price that new investors are paying for their shares with the effective cash price paid by existing shareholders. This method gives investors a better picture of what they will pay for their investment compared to the company’s insiders than just including such transactions for the last 12 months, which is what the SEC requires.
As of September 22, 2022, the net tangible book value of the Company was $7,500. Based on the number of shares of Common Stock issued and outstanding as of the date of this Offering Circular (75,000,000 shares) that equates to a net tangible book value of approximately $0.0001 per share of Common Stock on a pro forma basis. Without giving effect to any changes in such net tangible book value after September 22, 2022, other than to give effect to the sale of 15,000,000 shares of Common Stock being offered by the company in this Offering Circular for the subscription amount of $75,000,000, the pro forma net tangible book value, assuming full subscription, would be $74,257,500. Based on the total number of shares of Common Stock that would be outstanding assuming full subscription (90,000,000) that equates to approximately $0.8251 of tangible net book value per share.
Thus, if the Offering is fully subscribed, the net tangible book value per share of Common Stock owned by our current stockholders will have immediately increased by approximately $0.8250 without any additional investment on their behalf and the net tangible book value per Share for new investors will be immediately diluted by $4.1749 per share. These calculations do not include the non-variable costs of the offering, and such expenses will cause further dilution.
Assuming sale of | Assuming sale of 11,250,000 shares | Assuming sale of 7,500,000 shares | Assuming sale of 3,750,000 shares | |||||||||||||
| Offering price per Share* | $ | 5.0000 | $ | 5.0000 | $ | 5.0000 | $ | 5.0000 | ||||||||
| Net Tangible Book Value per Share before Offering (based on 75,000,000 shares) | $ | 0.0001 | $ | 0.0001 | $ | 0.0001 | $ | .0.0001 | ||||||||
| Increase in Net Tangible Book Value per Share Attributable to Shares Offered in Offering | $ | 0.8250 | $ | 0.6457 | $ | 0.4500 | $ | 0.2357 | ||||||||
| Net Tangible Book Value per Share after Offering | $ | 0.8251 | $ | 0.6457 | $ | 0.4501 | $ | 0.2358 | ||||||||
| Dilution of Net Tangible Book Value per Share to Purchasers in this Offering | $ | 4.1749 | $ | 4.3543 | $ | 4.5499 | $ | 4.7642 | ||||||||
| * | Before deduction of offering expenses. |
Since inception, the sole shareholder of the Company, Zergratran, Inc., has paid an aggregate average price of $0.0001 per share of Common Stock in comparison to the offering price of $5.00 per share.
Future dilution
Another important way of looking at dilution is the dilution that happens due to future actions by the company. The investor’s stake in a company could be diluted due to the company issuing additional shares. In other words, when the company issues more shares, the percentage of the company that you own will go down, even though the value of the company may go up. You will own a smaller piece of a larger company. This increase in number of shares outstanding could result from a stock offering (such as an initial public offering, another crowdfunding round, a venture capital round, angel investment), employees exercising stock options, or by conversion of certain instruments (e.g. convertible bonds, preferred shares or warrants) into stock.
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If the company decides to issue more shares, an investor could experience value dilution, with each share being worth less than before, and control dilution, with the total percentage an investor owns being less than before. There may also be earnings dilution, with a reduction in the amount earned per share (though this typically occurs only if the company offers dividends, and most early stage companies are unlikely to offer dividends, preferring to invest any earnings into the company).
The type of dilution that hurts early-stage investors most occurs when the company sells more shares in a “down round,” meaning at a lower valuation than in earlier offerings. An example of how this might occur is as follows (numbers are for illustrative purposes only):
| ● | In June 2021 Jane invests $20,000 for shares that represent 2% of a company valued at $1 million. |
| ● | In December the company is doing very well and sells $5 million in shares to venture capitalists on a valuation (before the new investment) of $10 million. Jane now owns only 1.3% of the company, but her stake is worth $200,000. |
| ● | In June 2022 the company has run into serious problems and in order to stay afloat it raises $1 million at a valuation of only $2 million (the “down round”). Jane now owns only 0.89% of the company, and her stake is worth only $26,660. |
This type of dilution might also happen upon conversion of convertible notes into shares. Typically, the terms of convertible notes issued by early-stage companies provide that in the event of another round of financing, the holders of the convertible notes get to convert their notes into equity at a “discount” to the price paid by the new investors, i.e., they get more shares than the new investors would for the same price. Additionally, convertible notes may have a “price cap” on the conversion price, which effectively acts as a share price ceiling. Either way, the holders of the convertible notes get more shares for their money than new investors. In the event that the financing is a “down round” the holders of the convertible notes will dilute existing equity holders, and even more than the new investors do, because they get more shares for their money. Investors should pay careful attention to the amount of convertible notes that the company has issued (and may issue in the future, and the terms of those notes.
If you are making an investment expecting to own a certain percentage of the company or expecting each share to hold a certain amount of value, it’s important to realize how the value of those shares can decrease by actions taken by the company. Dilution can make drastic changes to the value of each share, ownership percentage, voting control, and earnings per share.
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PLAN OF DISTRIBUTION AND SELLING SECURITYHOLDERS
Plan of Distribution
The company is offering a maximum of $75,000,000 in shares of Common Stock at a $5.00 per share, which represents the value of Common Stock available to be offered as of the date of this Offering Circular. Under Regulation A, the company may only offer $75 million in Common Stock during a rolling 12-month period. From time to time, we may seek to qualify additional shares. Each investor must invest a minimum of $500. There is no minimum amount we are required to raise from the shares of Common Stock being offered hereby. There is no guarantee that we will sell any of the shares of Common Stock being offered in this Offering. Additionally, there is no guarantee that this Offering will successfully raise enough funds to implement our company’s business plan or pay for the expenses of this Offering, which we estimate to be approximately $1,870,000, excluding commissions and state filing fees, for a fully subscribed offering.
The approximate date of the commencement of the sales of the shares of Common Stock will be within two calendar days from the date on which the Offering is qualified by the SEC and on a continuous basis thereafter until the maximum number of shares of Common Stock offered hereby are sold or the Offering is earlier terminated. All offering expenses will be borne by us and will be paid out of the proceeds of this Offering. The company may undertake one or more closings on an ongoing basis. After each closing, funds tendered by investors will be available to the company.
This Offering will terminate at the earlier of the date at which the Maximum Amount has been sold or the date at which the offering is earlier terminated by the company at its sole discretion. The Offering covers an amount of securities that we reasonably expect to offer and sell within two years, although the offering statement of which this offering circular forms a part may be used for up to three years under certain conditions. At least every 12 months after this offering has been qualified by the United States Securities and Exchange Commission (the “Commission”), the company will file a post-qualification amendment to include the company’s recent financial statements. The company may undertake one or more closings on a rolling basis. After each closing, funds tendered by investors will be available to the company. No sales of shares of Common Stock will be made prior to the qualification of the Offering statement by the SEC.
Placement Agent
Rialto Markets LLC (“Rialto”) has agreed to act as placement agent to assist in connection with this offering. The placement agent is not purchasing or selling any securities offered by this offering circular, nor is it required to arrange the purchase or sale of any specific number or dollar amount of securities but have agreed to use their best efforts to arrange for the sale of all of the securities offered hereby. In addition, the placement agent may engage other brokers to sell the securities on their behalf. Rialto will receive compensation for sales of the shares offered and sold through its platform (“Rialto Platform”). Persons who desire information about the offering may find it at www.zergratran.com/invest.
The company will also publicly market the offering using general solicitation through methods that include emails to potential investors, the internet, social media, and any other means of widespread communication.
This Offering Circular will be furnished to prospective investors via download 24 hours per day, 7 days per week on the company’s website at www.zergratran.com.
The following table shows the total discounts and commissions payable to Rialto in connection with this offering by the company:
| Per Share | Total | |||||||
| Public Offering Price | $ | 5.00 | $ | 75,000,000 | ||||
| Placement Agent Commissions | $ | 0.05 | $ | 750,000 | ||||
Rialto has also agreed to perform the following services in exchange for the compensation discussed below:
| ● | Manage the Blue-Sky filing and fee payment process for $5,000. | |
| ● | Provide ongoing general consulting services related to the Offering for a one-time fee of $10,000. |
Rialto has also agreed to Provide ongoing general consulting services related to the Offering for a one-time fee of $10,000. In addition to the commission described above, the company has paid $11,750 to Rialto for The FINRA filing fee. Assuming the full amount of the offering is raised, totaling sales of $75,000,000, we estimate that the total fees and expenses of the offering payable by the Company to Rialto will be approximately $760,000.
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Procedures for Subscribing
After the qualification of this Offering Statement by the SEC, if you decide to subscribe for any shares of Common Stock in this Offering, you should complete the following steps:
| (1) | Go to www.zergratran.com/invest and click on the “Invest Now” button |
| (2) | Complete the online investment form. |
| (3) | Deliver funds directly by check, wire, credit or debit card, or electronic funds transfer via ACH to the specified account or deliver evidence of cancellation of debt. |
| (4) | Once funds or documentation are received an automated AML check will be performed to verify the identity and status of the investor |
| (5) | Once AML is verified, investor will electronically receive, review, execute and deliver to us a Subscription Agreement |
A form of our Subscription Agreement is filed as Exhibit 4.1 to the Offering Statement.
The shares of Common Stock acquired under the Subscription Agreement will be issued to you by our transfer agent in book entry form upon acceptance of your Subscription Agreement and confirmation of funds received by the company.
Selling Shareholders
There are no selling shareholders.
Investors’ Tender of Funds
After the SEC has qualified the Offering Statement, the company will accept tenders of funds to purchase our Common Stock. The company may close on investments on a “rolling” basis (so not all investors will receive their securities on the same date). Investors may subscribe by tendering funds via ACH, debit card, or wire. Investors should note that processing of checks by financial institutions has been impacted by restrictions on businesses due to the coronavirus pandemic. Delays in the processing and closing of subscriptions paid by check may occur. Upon closing, funds tendered by investors will be made available to the company for its use.
The company maintains the right to accept or reject subscriptions in whole or in part, for any reason or for no reason, including, but not limited to: in the event that an investor fails to provide all necessary information, even after further requests; in the event an investor fails to provide requested follow up information to complete background checks or fails background checks; or in the event the Offering is oversubscribed in excess of the Maximum Amount.
Escrow Agent
The company has entered into an Escrow Agreement with Wilmington Trust, National Association (the “Escrow Agent”). Investor funds will be held in an account by the Escrow Agent pending a closing or the termination of the Offering. While funds are held the escrow account and prior to a closing of the sale of our Common Stock in bona fide transactions that are fully paid and cleared, (i) the escrow account and escrowed funds will be held for the benefit of the investors, (ii) the company will not be entitled to any funds received into the escrow account, and (iii) no amounts deposited into the escrow account shall become the property of the company, or be subject to any debts, liens or encumbrances of any kind of the company. No interest shall be paid on balances in the escrow account.
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The Escrow Agent has not investigated the desirability or advisability of investment in the shares nor approved, endorsed or passed upon the merits of purchasing the securities.
Provisions of Note in Our Subscription Agreement
Forum Selection Provision
The subscription agreement that investors will execute in connection with the offering includes a forum selection provision that requires any claims against the company based on the subscription agreement to be brought in the Court of Chancery of the State of Delaware for the purpose of any suit, action or other proceeding arising out of or based upon the agreement. Although we believe the provision benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies and in limiting our litigation costs, to the extent it is enforceable, the forum selection provision may limit investors’ ability to bring claims in judicial forums that they find favorable to such disputes and may discourage lawsuits with respect to such claims. The company has adopted the provision to limit the time and expense incurred by its management to challenge any such claims. As a company with a small management team, this provision allows its officers to not lose a significant amount of time travelling to any particular forum so they may continue to focus on operations of the company. The exclusive forum provision does not apply to claims arising under the Securities Act or the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. Investors will not be deemed to have waived the company’s compliance with the federal securities laws and the rules and regulations thereunder.
Jury Trial Waiver
The subscription agreement that investors will execute in connection with the offering provides that subscribers waive the right to a jury trial of any claim they may have against us arising out of or relating to the agreement, other than claims arising under federal securities laws. If we opposed a jury trial demand based on the waiver, a court would determine whether the waiver was enforceable given the facts and circumstances of that case in accordance with applicable case law. In addition, by agreeing to the provision, subscribers will not be deemed to have waived the company’s compliance with the federal securities laws and the rules and regulations promulgated thereunder.
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The table below sets forth our estimated use of proceeds from the common shares being offered in this offering circular, assuming we sell $75,000,000 in common shares, which represents the value of shares available to be offered as of the date of this offering circular out of the rolling 12-month maximum offering amount of $75 million in our common shares. The net proceeds from the total maximum offering are expected to be approximately $72,380,000, after the payment of offering costs (including legal, accounting, printing, due diligence, marketing, selling and other costs incurred in the Offering). Our estimated offering costs of $2,620,000 include a deduction of 1% of the total gross proceeds for commissions payable to Rialto on all the Securities being offered. The estimate of the budget for offering costs is an estimate only and the actual offering costs may differ. The following table represents management’s best estimate of the uses of the net proceeds, assuming the sale of, respectively, 25%, 50%, 75% and 100% of the Securities offered for sale in this Offering.
| 25% | 50% | 75% | 100% | |||||||||||||
| $ | 18,095,000 | $ | 36,190,000 | $ | 54,285,000 | $ | 72,380,000 | |||||||||
| Sales & Marketing | $ | 1,053,750 | $ | 1,747,500 | $ | 2,441,250 | $ | 3,135,000 | ||||||||
| Research & Development | $ | 1,875,000 | $ | 3,750,000 | $ | 5,625,000 | $ | 7,500,000 | ||||||||
| General & Administrative | $ | 15,166,250 | $ | 30,692,500 | $ | 46,218,750 | $ | 61,745,000 | ||||||||
| Total | $ | 18,095,000 | $ | 36,190,000 | $ | 54,285,000 | $ | 72,380,000 |
Because the offering is a “best efforts” offering without a minimum offering size, we may close the offering without sufficient funds for all the intended purposes set out above.
The company can proceed with and complete its Pre-Feasibility stage of its proposed plan of operations with $5 million. In the event the company is only able to raise 25% of the funds sought in this Offering, any funds received in addition to the amounts needed to complete our Pre-Feasibility phase would be used on (i) research and development to jumpstart our Feasibility phase, (ii) down payments for equipment needed to begin construction on the tunnel, and (iii) building our reserves. We currently estimate that the Feasibility phase will cost $500 million and the construction phase will cost $15 billion. These amounts may vary significantly, including based on the results from the Pre-Feasibility and Feasibility phases.
A large portion of the general and administrative expenses in the table above will be used for deposits for our tunnel boring machinery and reserves for Feasibility.
The Company reserves the right to change the use of proceeds at management’s discretion.
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Overview
The company was incorporated under the Delaware General Corporation Law in the State of Delaware on May 6, 2022. Initially, the company is aiming to develop a new container shipping route across northern Colombia for sustainable and efficient global trade. With the proceeds from this Offering, the company plans to enter the Pre-Feasibility phase of its business operations.
Zergratran intends to develop and manage infrastructure projects around the world that have an environmental, social and governance (“ESG”) and technology focus that will boost the efficiency of the global shipping and transportation system. It intends to start with Puerto International Las Americas (“PILA”) in northern Colombia, which will use an underground tunnel to transfer shipping containers between ports on the Atlantic and Pacific Oceans.
Principal Products and Services
The Problem
There is an unprecedented crisis in shipping and global trade. 90% of the world trade is carried by the sea and mostly between the North Atlantic and North Pacific. Global sea trade is experiencing rapidly growing demand, but is very stressed with increasing port congestion, prices, shortages, and risks. The Evergreen incident in the Suez Canal is a recent and dramatic example of the present challenges. Many, including the G7 nations, are now predicting that the situation will take years of coordinated effort to sort out the problem.
There is a lot of traffic on the waterways and several critical bottlenecks that slow trade down. 15% of all global container traffic passes through Suez Canal and only 3% of all world trade can actually pass through the Panama Canal. The current wait time for container ships to cross the Panama Canal is anywhere from 2-3 days all the way up to 12 days, depending on the size and type of ship. Once the ship is ready to cross the canal, it takes about 10 hours to get from one side to the other. Moreover, our facility's planned location in South America will allow ships, after unloading their cargo, to be filled with goods from South America that are desired in Asia and elsewhere, thereby giving the shippers loads in both directions...
Due to the continuous push for higher GDPs and increase efforts to reduce the burning of fossil fuel to prioritise sustainability and the impacts of man-related climate change – there is an urgent need to introduce a fully sustainable, zero-emission solution for global shipping and transportation.
The Solution
Our solution, PILA - the “Green Gateway”, is a tunnel that will use Maglev technology to transport goods faster, cheaper and more efficiently while tackling the dramatic growth in online shopping and freight traffic. PILA would add a new container shipping route across the Central America region in Northern Colombia and be the focal point of a system wide efficiently upgrade that is driven by automation, containerization, digitization, technology and connections to neighbouring port facilities. The new system could clear backlogs of ships waiting to dock and containers waiting to flow into the destination country, while breaking a logjam that pumped up prices as the world began to recover from the Covid19 pandemic.
Traditionally, each shipment of goods and products weighing over 100kg is sent by sea freight. Containers are designed and built for intermodal freight transport – which means they can be used across various transportation modes – from ship to rail to truck – without unloading and reloading the cargo. Our Atlantic port sorting robots would transfer freight from the ship to tunnel carriers which will be pulled via Maglev and transported to the Pacific port (and vice versa) in 3 – 4 hours, and onto the ships (or trucks) waiting to be loaded instead of traveling back empty.
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Our optimized Maglev technology and linear induction propulsion would be entirely electric. Maglev transportation is a system that employs a high-tech guideway, generating powerful magnetic forces that yield very high speeds and utilize very sophisticated electronic controls. The Maglev system, used in high speed trains, has already demonstrated the core components of safety, levitation, propulsion, stability, loading, and speed.
By avoiding the bottlenecks in the Panama Canal, PILA would also get goods to consumers and businesses faster and cheaper, and in a more sustainable way while accelerating maritime shipping's decarbonisation. We believe that our “Green Gateway” would be the first “green corridor” in the world.
We also believe this new “Green Gateway” transportation system would have positive impacts across the global economy, from boosting small and medium sized businesses to improving logistics and the efficiency of supply chains. This would, in turn, support the growth of businesses and boost the productivity and output of the global economy.
Based on our research, we believe that the PILA project would be contributing to the global supply chain and logistic profitability.
Monetization
The company’s customers will consist of container shippers. We anticipate that our revenues will comprise fees paid for each container transported through the PILA; port and pipeline fees, product sales, consisting of bricks, soil and water; energy sales from hydroelectric and solar, and licensing fees from crane and other technologies.
The prices we will charge for each of these goods and services have not been determined. The company aims to determine initial estimates for our prices during the Pre-Feasibility stage and to finalize them during the Feasibility stage.
Current Stage
To date, the company has a limited operating history and the company has not yet commenced any Pre-Feasibility work. The company has corresponded with the Colombian National Agency for Infrastructure regarding PILA. The next regulatory step for the company will be to submit its Pre-Feasibility documentation and receive the necessary approvals afterward to move forward with the Feasibility stage of the project.
The company anticipates commencing the bulk of the Pre-Feasibility work upon receipt of $5,000,000 in proceeds from this Offering. Successfully completing the Pre-Feasibility phase will require dozens of expert consultants to assist in completing the required documentation. We anticipate that the Pre-Feasibility phase will take 9-12 months to complete. We will submit the Pre-Feasibility paperwork to the Colombian National Agency for Infrastructure for consideration and review. If we have satisfied the legal requirements and obtain the necessary approvals, we will be permitted to move into the Feasibility phase. During the Feasibility phase we will be undertaking numerous physical studies as well as planning and sourcing for PILA. We anticipate an additional 12-18 months to complete the Feasibility phase. Additionally, during the Feasibility phase we intend to apply to be included in the Colombian national budget. Companies and/or projects included in the national budget are entitled to additional funding options including the ability to sell bonds backed by the Colombian government. If we are unsuccessful at being included in the Colombian national budget, we will need to find alternative means of raising the necessary capital. We currently estimate that the Feasibility phase will cost $500 million, and the construction phase will cost $15 billion.
Market
According to ResearchandMarkets.com, the global supply chain market value is expected to increase from $15.85 billion in 2019 to $37.41 billion in 2027. Additionally, according to ResearchandMarkets.com, the Global Logistics Automation Market size was $50.9 billion and is expected to grow to $82.3 billion by 2026. By using Maglev technology to transform logistics automation, Zergratran aims to grow together with the market.
Competition
The company’s PILA project would compete with the Panama Canal, the Suez Canal and similar shipping hubs and routes. We believe we are different from alternatives in a variety of ways. From the viewpoint of port management and operation, cost, consistency and capacity are the crucially important determinants as the shipping gateway through which Asian imports enter the USA and Europe. The initial competition for the US business has historically less to do with where the container ship originates from (i.e., West coast versus East coast), but rather with which route is faster and cheaper between the Panama Canal, the Suez Canal and other routes. Recent Suez Canal challenges have created an urgent demand for a new solution.
In addition to being a shorter distance to the east coast of North America from major loading hubs in Asia, the region around the Panama Canal route is considered more efficient with fewer intermediate stops. More specifically, it will take 10 days less for an exported container ship to travel from a major Chinese port, such as Shanghai Port or Dalian Port, to the US East Coast via the PILA compared to the Suez Canal route.
Employees
As of the date of this offering circular, the company has two employees. In addition, the company has entered into an agreement with its primary shareholder, Zergratran, Inc., pursuant to which, Zergratran, Inc. will provide certain administrative services including operations services to support Zergratran’s operations to the extent the company believes in its reasonable discretion that such support is needed and is not available in a timely fashion from the company’s personnel and contractors (the “Intercompany Services Agreement”). See “Interest of Management and Others In Certain Transactions”.
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Regulation
We will be subject the public private partnership rules of the government of Colombia. Public private partnerships are regulated by Colombian Law 1508 of 2012 and its Regulatory Decree 1082 of 2015. To be selected a partner for one of these partnerships, a private company, in addition to meeting requirements regarding legal capacity, financial or financing capacity, and experience in investment or project structuring, must provide certain required information, which is defined in two stages -- Pre-Feasibility and Feasibility. The government will provide a review process at each stage to determine eligibility and moving onto the next stage.
More specifically, for these phases, the company will need to provide the government of Colombia with the following:
| - | A determination of scope and estimated cost to carry out its proposed business operations (including location, limits, geology, oceanography, etc.). | |
| - | General study of the Project Areas (current population, stratification, etc.). | |
| - | Estimated costs | |
| - | Forecast of demand and supply | |
| - | An analysis of alternatives | |
| - | Estimated Operation and Maintenance Costs | |
| - | Environmental Studies | |
| - | Financial Analysis | |
| - | Studies on the effect of the project on local populations | |
| - | Technical studies |
The process for companies that will not use public funds is abbreviated. As this project is not currently prioritized by the International Transport Master Plan, there are currently no public funds available for it.
Our timing
| ● | Pre-Feasibility Phase. We have budgeted 6-12 months for Pre-Feasibility. The completed Pre-Feasibility study will be submitted to ANI for completeness. | |
| ● | Feasibility Phase: We hope to jumpstart the Feasibility phase with R&D on our cranes and Maglev track systems. We also intend to put a deposit down on 8 mixed use tunnel boring machines. We estimate this deposit to be $20,000,000. Feasibility is estimated at 12-18 months. Construction is estimated at 6 years. |
Intellectual Property
The company does not have any registered intellectual property. The company intends to discuss the registration of trademarks with counsel.
Litigation
There are currently no legal proceedings pending against the company.
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The company maintains an office located at 501 East Las Olas Blvd., Suite 207 Fort Lauderdale, Florida 33301. This office is leased by the company’s sole shareholder, Zergratran, Inc. and is shared with the company. After completion of the Offering, the sole shareholder will move to a separate office and the company will be the sole occupant of the office.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion includes information from the audited financial statements for the period from inception (May 16, 2022) through June 30, 2022 (the “Audit Period”).
The following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements.
Overview
The company intends to develop a new container shipping route across northern Colombia for sustainable and efficient global trade. The company was incorporated under the Delaware General Corporation Law in the State of Delaware on May 6, 2022. To date, the company has not generated any revenues.
Results of Operations
Revenues
The company has not yet generated any revenue.
Operating Expenses
The company’s operating expenses for the Audit Period were $25,000 for organizational expenses.
Net Loss
Accordingly, the company had a net loss of $25,000 for the Audit Period.
Liquidity and Capital Resources
As of the date of this Offering Circular, the company has not generated any revenues from operations. As of June 30, 2022, the company had no cash. During the next twelve months, the company intends to fund its operations with the proceeds in this Offering.
Historically, the company has been funded through the company’s parent and its affiliate. The Company has incurred and accumulated deficit of $25,000 as of June 30, 2022, and anticipates additional deficits for the foreseeable future. The company will need to raise significant amounts of capital to accomplish its business objectives.
The company estimates that if it raises the Maximum Amount sought in this Offering, it could continue at its current rate of operations through September 2025.
Plan of Operations
Over the next 36 months the company intends to accomplish the following:
| ● | Pre-Feasibility (Present – March 2024) |
| o | Raise $75,000,000 in this Offering |
| o | Conduct our initial research and development on: |
| o | Independent robot cranes, which will be untethered from arms and run across our ceiling structure like robots in a warehouse |
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| o | Maglev track for transporting the containers between ports |
| o | File provisional patent applications for the crane and Maglev system in the USA and internationally, as necessary, thereafter |
| o | Satisfy our project submission requirements and submit our completed Pre-Feasibility studies to the Colombian Ministries of Infrastructure and Transportation by May 2023. If we fully and satisfactorily meet the Pre-Feasibility requirements, we could receive approval to move forward with Feasibility phase, at which point we will submit for the qualification process so that we can gain inclusion in the national plan and sell government backed bonds to raise the funds for Feasibility and Construction. |
| o | Obtain approval from the National Infrastructure Agency of Colombia by June 2023 |
| o | Gain inclusion in the Colombian national budget by December 2023 and approval to sell government backed bonds |
| ● | Feasibility (March 2024 – September 2025) |
| o | Commence Feasibility in full by March 2024 |
| o | Submit for the qualification process so that we can gain inclusion in the national plan and sell government backed bonds to raise the funds for Feasibility and Construction. |
| o | If approved, raise $15.5 billion in a bond offering to fund Feasibility and Construction by March 2024 |
| ● | Construction (2025 – 2031) |
| o | Commence construction of the PILA |
Trend Information
90% of world trade goes by sea. Percentage of global trade that goes through the Panama Canal is down from 5% in 2016 to 3.5% in 2021. The global supply chain market value is expected to increase from $15.85 billion in 2019 to $37.41 billion in 2027. Even though global shipping volume is rising, the Panama Canal has a capacity limit of about 50 ships per day. As a result its overall percentage of global trade is decreasing. We believe that Zergratran's shipping model expedites the supply chain and increases the amount of global trade that can pass through Central America.
Transportation management systems are expected to increase from a market value of $120.70 billion in 2021 to $261.89 billion in 2028. Zergratran is offering a more efficient transportation management system, via the tunnel.
21
DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
As of September 22, 2022, the Company’s executive officers and directors and significant employees are as follows:
| Name | Position | Age | Term
of Office (Date of Appointment) |
Approximate
hours per week | ||||
| Executive Officers | ||||||||
| Byron Bennett | President & Treasurer | 50 | May 6, 2022 – Present | 20 | ||||
| Katarina Galic | Secretary | 46 | May 6, 2022 – Present | 20 | ||||
| Directors | ||||||||
| Byron Bennett | Chairman | 50 | May 6, 2022 – Present | |||||
| Katarina Galic | Director | 46 | May 6, 2022 – Present | |||||
| Herbert M. Chain | Director | 70 | May 6, 2022 – Present | |||||
| Robert C. Bohorad | Director | 50 | May 6, 2022 – Present | |||||
| Thomas M. Lee | Director | 53 | May 6, 2022 – Present | |||||
| Javier Leon | Director | 68 | May 22, 2022 – Present | |||||
| Lakshman Hari Gopal | Director | 63 | August 30, 2022 – Present | |||||
Byron Bennett, President, Treasurer & Chairman
Byron L Bennett is currently President of Zergratran SA, Inc. and has served in that position since May 2021. Byron also serves as CEO of Zergratran, Inc. and has served in that position since its formation in March 2021. Byron currently splits his time between the two companies and the amount of time in a particular week will vary depending on the needs of the companies. Prior to starting Zergratran, Inc. he was the founder of Liquidity 10 X in New York from April 2019 to May 2020. In that position he was responsible for building the company’s business plan and running the company on a daily basis. From January 2018 to November 2018, he was founder and CEO of Collective Wisdom Technologies (“CWT”) in New York. Before joining CWT, he was founder and CEO of Springtime Solutions in New York from January 2014 to September 2017. He holds a BS degree in Economics from University of Pennsylvania’s Wharton School.
Katarina Galic, Secretary & Director
Katarina M V Galic is currently Secretary of Zergratran SA, Inc. and has served in that position since May 2022. Katarina also serves as President of Zergratran, Inc. and has served in that role in since April 2022. Katrina currently splits her time between the two companies and the amount of time in a particular week will vary depending on the needs of the companies. Prior to joining Zergratran, she has been an advisor to the CEO of Zergratran, Inc. since April 2021. Katarina is also currently a Co-Chair of the ESG World Summit and GRIT Awards in Singapore and has served in that role since June 2022.
From January 2021 to March 2022, she was with the EU Tech Chamber in Switzerland holding two executive positions – Director, Women in Tech Alliance and Director, SDG and Ethics Alliance. From January 2018 to December 2020, she was a Board Member and Director of Development at CIFF, Canada and Chair, Fundraising portfolio. From March 2015 – January 2018, she was the Development Director with Canada Bridges, an international development organizations established in Yemen.
Katarina holds an MBA from Institut Franco Américain de Management, a BBA from IFAM, and an Executive Program Certificate from the JFK School of Government, Harvard University (Canadian Federal Government scholarship). She has recently completed the Management of International Development Towards UN Agenda 2030 program with the Università Bocconi, Italy. She is currently enrolled into the PhD program “Sustainable Energy Systems” at the MIT Portugal.
Thomas M. Lee, Director
Thomas Lee is the currently a Director of Zergratran SA, Inc. and has served in that position since May 2022. Tom is also a Director in Zergratran, Inc. and served in that role since April 2022. Prior to joining Zergratran, Tom was the VP of Business Development for G2 Reverse Logistics from June 2021 to March 2022. Prior to this position, he was VP of Professional Services for Körber Supply Chain from September 2020 to May 2021. Prior to his position at Körber, Tom was a Founder and President of DMLogic and held that position from 2009 though 2020 when the acquisition was complete by Körber. His responsibilities included operations, finance, client management, HR and legal and he was also responsible for the items surrounding the due diligence, acquisition, and post merger activities with Körber. Tom holds a BS degree in Industrial Engineering from Lehigh University, and an MBA from the University of Pittsburgh.
22
Robert Bohorad, Director
Robert C Bohorad is currently a Director of Zergratran SA, Inc and has served in that position since May 2022. Rob is also a Director of Zergratran, Inc and has served in that role since its formation in March 2021. Rob is also the President and CEO of the public company Yuengling’s Ice Cream, which he and David Yuengling relaunched in 2014. Rob started as Chief Financial Officer, became the Chief Operating Officer in 2015 and was promoted to President and CEO in October 2021. Prior to Yuengling’s, Rob ran his own company, which provided logistics, tracking and security solutions for companies and government organizations. He also consulted for several start up and early-stage companies. Throughout his career, Rob worked in numerous capacities, including business development, strategic development, marketing, finance, accounting, operations and human resources. He also has worked in several industries, with a focus on medical and software/technology. Rob holds a BS degree in Economics from the Wharton School at the University of Pennsylvania and an MBA from Fordham University.
Herbert M. Chain, Director
Herb Chain is a Director of Zergratran SA and has served in that position since May 2022. Herb is also a director of Zergratran, Inc. and has served in that role since its formation in March 2021. Herb also serves as a Director of CBIZ Marks Paneth and Shareholder in Mayer Hoffman McCann, CPAs, a large accounting firm and has done so since February 2022. Prior to this position, Herb was a Senior Director at Marks Paneth LLP and an Assistant Professor at St. John’s University from September 2017 to August 2020. He remains an adjunct professor at St. John’s University where he primarily teaches SEC reporting, professional ethics, and enterprise risk management. He is also principal and managing member of HMC Business Consulting, LLC. He is currently a member of the board and audit committee chair of two public companies, The RENN Fund and FROM Corporation, and a trustee or director of three nonprofit organizations, Qlarant, where he serves as chair of the audit and compliance committee, The Warrior Connection, a nonprofit organization serving military veterans, where he serves as treasurer and finance committee chair and The Kew Forest School, an independent school in Forest Hills, Queens, where he serves as treasurer and finance committee chair. Herb received his BS degree in Marine Geology from Duke University in May 1974 and his MBA from the Wharton Graduate School of Business, University of Pennsylvania, in May 1977. He received an MS in Global Studies (International Relations) from New York University in 2007 and is the process of completing his DBA from the International School of Management.
Javier Leon Molina, Director
Javier León Molina is currently a Director of Zergratran SA, Inc and has served in that position since its formation in May 2022. Javier also serves as Chief Operating Officer of Zergratran, Inc. and has served in that role since March 2021. Prior to joining Zergratran he founded and has been a managing partner of Proyecta Consulting providing engineering services since January 2016. For the last 20 years, he has been a Senior Project Manager with extensive experience in multidisciplinary projects, serving as Planning Director, Project Manager, and Commercial Director in the Oil Gas industry, thermoelectric, and water management. He has solid knowledge in programming and control, and KPI analysis. He is a Chemical Engineer from Universidad Nacional and Mechanical Engineer from Universidad Tecnológica de Pereira, he is Certified as Project Management Professional. He also has Finance Studies, and has a Grad Teaching Degrees.
Lakshman Hari Gopal - Director
Lakshman Hari Gopal is currently a Director of Zergratran SA, Inc. and has served in that position since August 2022. Hari is also a Director of Zergratran, Inc and has also served in that role since August 2022. Hari is also the Founder and General Manager at Kernel Technology Investments and served in that position since May 2020. Prior to Kernel Technology, he was the Chief Financial Officer for Unilog from December 2019 to April 2020. Prior to Unilog, Hari was the Founder and General Manager at Maple Home Care of NJ from August 2016 to December 2019. Prior to this, Hari has worked in global companies including FMC Corporation, Mettler Toledo Inc and Hay Group. Hari received a bachelor’s degree in business from Osmania University. He holds a CA certification from the Institute of Chartered Accountants in India and he received an MBA from the University of Chicago.
23
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The company has not compensated any of its employees or directors to date. There are 7 directors in this group. The company intends to pay each director a fee of $25,000 annually.
The company intends to begin paying its two employees as of September 30, 2022 as follows:
| Name | Title | Annual Salary | ||||||
| Byron Bennett | President | $ | 100,000 | |||||
| Katarina Galic | Secretary | $ | 75,000 | |||||
24
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITYHOLDERS
The following table displays, as of September 22, 2022, the voting securities beneficially owned by (1) any individual director or officer who beneficially owns more than 10% of any class of our capital stock, (2) all executive officers and directors as a group and (3) any other holder who beneficially owns more than 10% of any class of our capital stock:
| Beneficial owner (1) | Title
of class |
Amount
and nature of beneficial ownership |
Amount
and nature of beneficial ownership acquirable |
Percent of class | |||||
| Zergratran, Inc. (2) | Common shares | 75,000,000 Common Shares - voting | N/A | 100 | % |
| (1) | The address of the beneficial owner is the same as the company’s address provided herein. |
| (2) | Byron Bennett, a director and CEO of the company, holds 595,000 shares of Class A Common Stock of Zergratran, Inc. Our directors Mr. Lee and Mr. Gopal own, respectively, 112,500 shares and 102,500 shares of Class B Common Stock of Zergratran, Inc. Each such share of Class A Common Stock is entitled to 5 votes per share while each share of Class B Common Stock is entitled to 1 vote per share, giving Mr. Bennett 2,975,000 total votes, or approximately 91% of the voting power. |
25
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
On June 14, 2022, the company signed the Intercompany Services Agreement with its parent company, whereas the sole shareholder will provide certain administrative services including:
| ● | Operations services to support Zergratran’s operations to the extent the company believes in its reasonable discretion that such support is needed and is not available in a timely fashion from the company’s personnel and contractors. |
| ● | Asset management services consisting of managing the short-term and long-term investment portfolio of the company (the “Asset Management Services”). |
| ● | Assistance with Tax, Accounting, Legal, Human Resources, Information Technology, and Insurance Management functions. |
In exchange for the administrative services received, the company will pay 2% annual management fee on the total value of the assets managed under the Asset Management Services. The company will also bear and pay its allocable share of the costs incurred by the sole shareholder in providing the administrative services (“Management Fee”). The Management Fee is intended to equate to the fair market value of the administrative services provided covering the sum of all internal and external costs incurred by the sole shareholder in providing the administrative services. These internal and external costs include, but are not limited to, allocable salaries and wages, incentives, paid absences, payroll taxes, health care and retirement benefits, direct non-labor costs and similar expenses, and reimbursement of out-of-pocket third-party costs and expenses, and all internal and external indirect costs incurred by the sole shareholder in providing the administrative services.
Additionally, the company will have to make a one-time payment of $25,000 as full and complete reimbursement for services provided prior to the execution of the Intercompany Service Agreement.
Each of the officers of the company are officers of the company’s sole shareholder, Zergratran, Inc., and each of its directors are similarly directors of Zergratan, Inc.
The Intercompany Services Agreement appears as Exhibit 6.1 to the Offering Statement of which this Offering Circular forms a part.
26
General
The company is offering up to 15,000,000 shares of Common Stock in this Offering at a price of $5.00 per share. The company is authorized to issue 100,000,000 shares of Common Stock, par value $0.0001 per share. As of September 22, 2022, 75,000,000 shares of Common Stock have been issued. The terms of the company’s Common Stock are outlined below. For a complete description Zergratran’s capital stock, you should refer to our Amended and Restated Certificate of Incorporation and our Bylaws and applicable provisions of the Delaware General Corporation Law.
The company has not authorized or issued any class or series of preferred stock.
Terms of the Company’s Common Stock
Each holder of our Common Stock is entitled to one vote for each share owned of record on all matters voted upon by shareholders. In the event of a dividend distribution declared by the company, each holder of Common Stock is entitled to receive their applicable dividend distribution. In the event of a liquidation, dissolution or winding-up of the company, the holders of Common Stock are entitled to share equally and ratably in the assets of the company, if any, remaining after the payment of all debts and liabilities of the company. The Common Stock has no preemptive rights, no cumulative voting rights and no redemption, sinking fund or conversion provisions.
Forum Selection
Our certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for the following types of actions or proceedings under Delaware statutory or common law:
| ● | any derivative action or proceeding brought on our behalf; | |
| ● | any action asserting a breach of fiduciary duty; | |
| ● | any action asserting a claim against us arising under the Delaware General Corporation Law, our amended and restated certificate of incorporation, or our amended and restated bylaws; and | |
| ● | any action asserting a claim against us that is governed by the internal-affairs doctrine. |
The forum selection provision shall not apply to suits brought to enforce a duty or liability created by the Securities Exchange Act of 1934, as amended, the Securities Act of 1933, as amended, or any other claim for which the federal courts have exclusive jurisdiction.
27
ONGOING REPORTING AND SUPPLEMENTS TO THIS OFFERING CIRCULAR
We will be required to make annual and semi-annual filings with the SEC. We will make annual filings on Form 1-K, which will be due by the end of April each year and will include audited financial statements for the previous fiscal year. We will make semi-annual filings on Form 1-SA, which will be due by September 28 each year, which will include unaudited financial statements for the six months to June 30. We will also file a Form 1-U to announce important events such as the loss of a senior officer, a change in auditors or certain types of capital-raising. We will be required to keep making these reports unless we file a Form 1-Z to exit the reporting system, which we will only be able to do if we have less than 300 shareholders of record and have filed at least one Form 1-K.
At least every 12 months, we will file a post-qualification amendment to the Offering Statement of which this Offering Circular forms a part, to include the company’s recent financial statements.
We may supplement the information in this Offering Circular by filing a Supplement with the SEC.
All these filings will be available on the SEC’s EDGAR filing system. You should read all the available information before investing.
Relaxed Ongoing Reporting Requirements
If we become a public reporting company in the future, we will be required to publicly report on an ongoing basis as an “emerging growth company” (as defined in the Jumpstart Our Business Startups Act of 2012, which we refer to as the JOBS Act) under the reporting rules set forth under the Exchange Act. For so long as we remain an “emerging growth company”, we may take advantage of certain exemptions from various reporting requirements that are applicable to other Exchange Act reporting companies that are not “emerging growth companies”, including but not limited to:
| ● | not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act; |
| ● | taking advantage of extensions of time to comply with certain new or revised financial accounting standards; |
| ● | being permitted to comply with reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and |
| ● | being exempt from the requirement to hold a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. |
If we become a public reporting company in the future, we expect to take advantage of these reporting exemptions until we are no longer an emerging growth company. We would remain an “emerging growth company” for up to five years, although if the market value of our Common Stock that is held by non-affiliates exceeds $700 million as of any June 30 before that time, we would cease to be an “emerging growth company” as of the following December 31.
If we do not become a public reporting company under the Exchange Act for any reason, we will be required to publicly report on an ongoing basis under the reporting rules set forth in Regulation A for Tier 2 issuers. The ongoing reporting requirements under Regulation A are more relaxed than for “emerging growth companies” under the Exchange Act. The differences include, but are not limited to, being required to file only annual and semiannual reports, rather than annual and quarterly reports. Annual reports are due within 120 calendar days after the end of the issuer’s fiscal year, and semiannual reports are due within 90 calendar days after the end of the first six months of the issuer’s fiscal year.
In either case, we will be subject to ongoing public reporting requirements that are less rigorous than Exchange Act rules for companies that are not “emerging growth companies”, and our shareholders could receive less information than they might expect to receive from more mature public companies.
28
FINANCIAL STATEMENTS
June 30, 2022
With Independent Auditors’ Report
R&L Schuck – cpas, llc Accountants and Finance Consultants |
F-1
ZERGRATRAN SA, INC.
TABLE OF CONTENTS
| Page | ||
| Independent Auditors’ Report | F-3 | |
| Balance Sheet | F-5 | |
| Statement of Operations and Accumulated Deficit | F-6 | |
| Statement of Cash Flows | F-7 | |
| Notes to the Financial Statements | F-8 |
F-2
| R&L Schuck – CPAs, LLC Accountants and Finance Consultants |
6710
Main Street, Suite 233 Miami Lakes, Florida 33014 Phone: (305) 362-1040 | |
| Fax: (305) 362-3344 |
Management and Stockholder of
Zergratran SA, Inc.
Opinion
We have audited the financial statements of Zergratran SA, Inc., which comprise the balance sheet as of June 30, 2022, and the related statements of operations and changes in accumulated deficit, and cash flows for the period from inception (May 16, 2022) through June 30, 2022, and the related notes to the financial statements.
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of Zergratran SA, Inc. as of June 30, 2022, and the results of its operations and its cash flows for the period from inception (May 16, 2022) through June 30, 2022, in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of Zergratran SA, Inc. and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Emphasis of Matter Regarding Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, certain conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans regarding these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to this matter.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about Zergratran SA, Inc.'s ability to continue as a going concern for the one-year period from the date of this report.
F-3
| R&L Schuck – CPAs, LLC Accountants and Finance Consultants |
6710
Main Street, Suite 233 Miami Lakes, Florida 33014 Phone: (305) 362-1040 | |
| Fax: (305) 362-3344 |
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS, we:
| ● | Exercise professional judgment and maintain professional skepticism throughout the audit. |
| ● | Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. |
| ● | Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Zergratran SA, Inc's internal control. Accordingly, no such opinion is expressed. |
| ● | Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. |
| ● | Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about Zergratran SA, Inc's ability to continue as a going concern for a reasonable period of time. |
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control–related matters that we identified during the audit.
R&L Schuck CPAs LLC
Miami Lakes, FL
August 24, 2022
F-4
BALANCE SHEET
June 30, 2022
| ASSETS | ||||
| Current Assets | ||||
| Cash and Cash Equivalents | $ | - | ||
| Receivable from Related Party | 7,500 | |||
| Total Current Assets | 7,500 | |||
| Total Assets | $ | 7,500 | ||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||
| Current Liabilities | ||||
| Due to Related Party | $ | 25,000 | ||
| Total Current Liabilities | 25,000 | |||
| Commitments and Contingencies | - | |||
| Total Liabilities | 25,000 | |||
| Shareholders’ Equity | ||||
| Common Stock, $.0001 par value, 100,000,000 shares authorized, 75,000,000 issued and outstanding | 7,500 | |||
| Accumulated Deficit | (25,000 | ) | ||
| Total Shareholders’ Equity | (18,500 | ) | ||
| Total Liabilities and Shareholders’ Equity | $ | 7,500 | ||
The accompanying notes are an integral part of these financial statements.
F-5
STATEMENT OF OPERATIONS AND CHANGES IN ACCUMULATED DEFICIT
FOR THE PERIOD FROM INCEPTION (MAY 16, 2022) TO JUNE 30, 2022
| Revenues | $ | - | ||
| Operating Expenses: | ||||
| Organization Expenses | 25,000 | |||
| Total Operating Expenses | 25,000 | |||
| Loss before Provision for Income Taxes | (25,000 | ) | ||
| Provision for Income Taxes | - | |||
| Net Loss | $ | (25,000 | ) | |
| Balance at Inception | - | |||
| Accumulated Deficit, end of period | $ | (25,000 | ) |
The accompanying notes are an integral part of these financial statements.
F-6
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM INCEPTION (MAY 16, 2022) TO JUNE 30, 2022
| Cash Flows from Operating Activities | ||||
| Net Loss | $ | (25,000 | ) | |
| Adjustments to reconcile net loss to net cash provided by operating activities | ||||
| Increase in Receivable from Related Party | (7,500 | ) | ||
| Increase in Due to Related Party | 25,000 | |||
| Net Cash Used by Operating Activities | (7,500 | ) | ||
| Cash Flows from Investing Activities | - | |||
| Cash Flows from Financing Activities | ||||
| Issuance of Common Stock | 7,500 | |||
| Net Cash Provided by Financing Activities | 7,500 | |||
| Net Increase in Cash and Cash Equivalents | - | |||
| Cash and Cash Equivalents – at inception (May 16, 2022) | - | |||
| Cash and Cash Equivalents – June 30, 2022 | $ | - | ||
The accompanying notes are an integral part of these financial statements.
F-7
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
NOTE 1: ORGANIZATION AND NATURE OF OPERATIONS
Organization
Zergratran SA, Inc., (“Zergratran” or the “Company”) is a start-up company incorporated on May 16, 2022, in the state of Delaware. The Company is a wholly owned subsidiary of Zergratran Inc. (“Parent Company”), a Florida corporation which is also in the start-up phase. The Company intends to operate globally.
Business Description
Zergratran, Inc. will sponsor ESG and technology-focused infrastructure projects around the world that will boost the efficiency of the global shipping and transportation system. It has organized the Company for the purpose of carrying its initial project, Puerto International Las Americas (PILA), planned for northern Colombia. This project consists of construction of seaports and underground tunnels to transfer shipping containers between ports on the Atlantic and Pacific Oceans. The PILA project is slated to be completed in three phases, Pre-feasibility, Feasibility Study and Construction.
The Company expects revenues from multiple sources including Usage Fees, Product Sales, Energy Sales, and Licensing Fees from technologies.
Risks and Uncertainties
The Company has not commenced revenue generating activities. The Company’s business and operations are sensitive to general business and economic conditions worldwide, along with governmental policy decisions. A host of factors beyond the Company’s control could cause fluctuations in these conditions. Adverse developments may also include economic recessions, investor perception in the market and other such risks that could have a material adverse effect on the Company’s financial condition and the results of its operations.
The Company currently has no sales and is still in the planning process of Phase 1 of a multi-phase process. During Phase 1, the Company will be seeking capital to complete a Regulation A equity offering. The offering will solicit $75 million in exchange for approximately 20% in stock. The Company will be offering 15 million shares at $5 per share. The proceeds from the offering will be used to continue the process and complete project planning, financial modeling, defining externalities, adding technology details, and completing the Pre-Feasibility submission requirements. Phase 2 will require approximately $500 million in financing. The Company intends to sell high yield government backed bonds with an 18% coupon over 25 years plus pro-rata dividend based on profitability. Phase 3 will require additional financing through the sale of additional bonds. The Company projects that Phase 1 will take approximately one year, Phase 2, around 18 months and construction during Phase 3 about 6 years. The competitive landscape to raise funds and obtain all necessary approvals to continue to operate are additional inherent risks. The Company’s future success will depend on its ability to raise the capital necessary to complete each phase of the project. Additionally, at any stage, the Company may not obtain adequate capital resources or approvals to continue.
F-8
ZERGRATRAN SA, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
NOTE 2: GOING CONCERN
The accompanying financial statements have been prepared on a basis that the Company is a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company is a start-up company which carries a significant amount of risk.
The Company has not started operating, has not raised the required capital, and has not generated any revenues from product or service sales as of June 30, 2022. As a start-up company, funding for the business will come primarily through the issuance of stock and subsequently government-backed bonds. The Company will require important levels of funding to execute its objectives and to continue to operate in the normal course of business. Although the Company intends to file an offering statement under Regulation A to raise funds, there is no assurance that the Company will be successful. Accordingly, there is substantial doubt about the Company’s ability to continue as a going concern.
The Company's objective is to increase its cash flow from raising funds sufficient to generate positive operating and cash flow levels to complete Phase 1 of the PILA project, however, there can be no assurance that the Company will be successful in this regard. The Company will also need to raise additional capital to fund Phases 2 and 3 of the PILA project, which it intends to obtain through government backed bond offerings.
The Company intends to use the proceeds from the proposed Regulation A offering to fund the project planning and financial modeling and to complete the Pre-Feasibility submission requirements. The need for additional capital may be adversely impacted by uncertain market conditions or timing of regulatory reviews and governmental approvals. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
NOTE 3: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers deposits that can be redeemed on demand and investments that have original maturities of less than three months, when acquired, to be cash equivalents.
F-9
ZERGRATRAN SA, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
NOTE 3: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Offering Costs
The Company will account for offering costs in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 340, Other Assets and Deferred Costs. Prior to the completion of an offering, offering costs will be capitalized as deferred offering costs on the balance sheet. The deferred offering costs will be charged to stockholders’ equity upon the completion of an offering or to expense if the offering is not completed. As of June 30, 2022, there were no capitalized offering costs.
Revenue Recognition
The Company will recognize revenues from application fees and sales of products and services when (a) persuasive evidence that an agreement exists; (b) the service has been performed or the product has been delivered; (c) the prices are fixed and determinable and not subject to refund or adjustment; and(d) collection of the amounts due is reasonably assured. As of June 30, 2022, there has been no revenues.
Income Taxes
The Company will account for income taxes under an asset and liability approach for financial accounting and reporting for income taxes. Accordingly, the Company will recognize deferred tax assets and liabilities for the expected impact of differences between the financial statements and the tax basis of assets and liabilities. The Company has elected a December 31st year end. As of June 30, 2022, there were no deferred taxes. In addition, as of June 30, 2022, no tax filings were due nor were there any tax examinations in progress.
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not yet effective, authoritative guidance, if currently adopted, would have a material impact on the Company’s financial statement presentation or disclosures.
NOTE 4: RELATED PARTY TRANSACTIONS – INTERCOMPANY SERVICE AGREEMENT
On June 14, 2022, the Company signed an Intercompany Services Agreement with its parent company, whereas the Parent Company will provide certain Administrative Services including:
| · | Operations services to support Zergratran’s operations to the extent the Company believes in its reasonable discretion that such support is needed and is not available in a timely fashion from the Company’s personnel and contractors. |
| · | Asset management services consisting of managing the short-term and long-term investment portfolio of the Company. |
| · | Assistance with Tax, Accounting, Legal, Human Resources, Information Technology, and Insurance Management functions. |
F-10
ZERGRATRAN SA, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
NOTE 4: RELATED PARTY TRANSACTIONS – INTERCOMPANY SERVICE AGREEMENT (Continued)
In exchange for the Administrative Services received, the Company will pay 2% annual management fee on the total value of the assets managed under the Asset Management Services. The Company will also bear and pay its allocable share of the costs incurred by the Parent Company in providing the Administrative Services (“Management Fee”). The Management Fee is intended to equate to the fair market value of the Administrative Services provided covering the sum of all internal and external costs incurred by the Parent Company in providing the Administrative Services. These internal and external costs include, but are not limited to, allocable salaries and wages, incentives, paid absences, payroll taxes, health care and retirement benefits, direct non-labor costs and similar expenses, and reimbursement of out-of-pocket third-party costs and expenses, and all internal and external indirect costs incurred by the Parent Company in providing the Administrative Services.
Additionally, Zergratran will have to make a one-time payment of $25,000 as full and complete reimbursement for services provided prior to the execution of the Intercompany Service Agreement.
NOTE 5: STOCKHOLDERS’ EQUITY
Common Stock
On May 17, 2022, the Parent Company purchased 75,000,000 shares of the $0.0001 common stock, which represent 100% of the original authorized shares of Common Stock.
On June 20, 2022, the Company adopted resolutions to amend the Company's certificate of incorporation to increase its authorized shares of Common Stock to 100,000,000.
NOTE 6: SUBSEQUENT EVENTS
The Company has evaluated subsequent events through August 24, 2022, which is the date the financial statements were available to be issued. The effects of any of these events have been considered in the preparation of the financial statements.
F-11
PART III
INDEX TO EXHIBITS
The documents listed in the Exhibit Index of this report are incorporated by reference or are filed with this report, in each case as indicated below.
| 1.1 | Broker-Dealer Onboarding Agent – Engagement Agreement* | |
| 2.1 | Amended and Restated Certificate of Incorporation | |
| 2.2 | Bylaws* | |
| 4.1 | Form of Subscription Agreement | |
| 6.1 | Intercompany Services Agreement* | |
| 8.1 | Escrow Agreement +* | |
| 11.1 | Auditor’s Consent - R&L Schuck – CPAs, LLC | |
| 12.1 | Opinion of CrowdCheck Law LLP** |
| + | Portions of the exhibit have been omitted |
| * | Previously filed |
| ** | To be filed by amendment |
III-1
SIGNATURES
Pursuant to the requirements of Regulation A, the issuer certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form 1-A and has duly caused this offering statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Fort Lauderdale, State of Florida, on October 28, 2022
| ZERGRATRAN SA, INC. | ||
| By: | /s/ Byron L. Bennett | |
| Name: | Byron L. Bennett | |
| Title: | President, Treasurer & Chairman | |
This offering statement has been signed by the following persons in the capacities and on the dates indicated.
| /s/ Byron L. Bennett | |
| Byron L. Bennett, principal executive officer, principal financial officer, and principal accounting officer, and Director. |
|
| Date: October 28, 2022 | |
| /s/ Katarina M. Galic | |
| Katarina M. Galic, Director | |
| Date: October 28, 2022 | |
| /s/ Thomas M. Lee | |
| Thomas M. Lee, Director | |
| Date: October 28, 2022 | |
| /s/ Robert C. Bohorad | |
| Robert Bohorad, Director | |
| Date: October 28, 2022 | |
| /s/ Herbert M. Chain | |
| Herbert M. Chain, Director | |
| Date: October 28, 2022 | |
| /s/ Javier Leon | |
| Javier Leon, Director | |
| Date: October 28, 2022 | |
| /s/ Lakshman Hari Gopal | |
| Lakshman Hari Gopal, Director | |
| Date: October 28, 2022 |
III-2
Exhibit 2.1
| State of Delaware Secretary of State DMslon of Corporations Delivered 10:08 PM 10/25/2022 FILED 10:08 PM 10/2512022 SR 20223860127 - File Number 6800809 | AMENDED
AND RESTATED CERTIFICATE OF INCORPORATION |
OF
ZERGRATRAN SA, INC.
Byron Bennett certifies that:
The original name of the corporation is Zergratran SA, Inc. (the “Corporation”) and the date of fiing of the original Certificate oflncorpoation of the Corporation with the Secretary of State of the State of Delaware was May 6, 2022, and such Certificate of Incorporation was amended on June 21, 2022.
He is the duly elected and acting President of the Corporation.
The Certificate oflncorporation filed on May 6, 2022 and amended on June 21, 2022 is amended and restated to read as follows:
ARTICLE I
The name of the Corporation is Zergratran SA, Inc.
ARTICLE II
The address of the registered office of the Corporation in the State ofDelaware is 16192 Coastal Highway, City of Lewes, County of Sussex, 19958. The name of its registered agent at such address is Harvard Business Services, Inc.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the Delaware General Corporation Law.
ARTICLE IV
The aggregate number of shares which the Corporation shall have authority to issue is One Hundred Million (100,000,000) shares of capital stock all of which shall be designated “Common Stock” and have a par value of$0.0001 per share.
ARTICLE V
The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. Elections of directors need not be by written ballot unless otherwise provided in the Bylaws of the Corporation. In furtherance of and not in limitation of the powers conferred by the laws of the state of Delaware, the Board of Directors of the Corporation is expressly authorize to make, amend or repeal Bylaws of the Corporation.
ARTICLE VI
To the fullest extent permitted by the Delaware General Corporation Law, as the same exists or as may hereafter be amended, a director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director.
The Corporation shall indemnify to the fullest extent permitted by law any person made or threatened to be made a party to an action or proceeding, whether criminal, civil, administrative or investigative, by reason of the fact that he, his testator or intestate is or was a director or officer of the Corporation or any predecessor of the Corporation, or serves or served at any other enterprise as a director or officer at the request of the Corporation or any predecessor to the Corporation.
Neither any amendment nor repeal of this Article VI, nor the adoption of any provision of the Corporation’s Certificate oflncorporation inconsistent with this Article VI, shall eliminate or reduce the effect of this Article VI in respect of any matter occurring, or any action or proceeding accruing or arising or that, but for this Article VI, would accrue or arise, prior to such amendment, repeal or adoption of an inconsistent provision.
ARTICLE VII
Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forums for (A) any derivative action or proceeding asserting a claim on behalf of the Corporation, (B) any action or proceeding asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, employee or agent of the Corporation to the Corporation or the Corporation’s stockholders, (C) any action or proceeding asserting a claim against the Corporation arising pursuant to any provision of the Delaware General Corporation Law or the Corporation’s Certificate oflncorporation or Bylaws, (D) any action or proceeding asserting a claim as to which the Delaware General Corporation Law confers jurisdiction upon the Court of Chancery of the State of Delaware, or (E) any action or proceeding asserting a claim governed by the internal affairs doctrine, in each case subject to said Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein. This Article VII shall not apply to suits brought to enforce a duty or liability created by the Securities Exchange Act of 1934, as amended, the Securities Act of 1933, as amended, or any other claim for which the federal courts have exclusive jurisdiction.
Executed on October 25, 2022
| /s/ Byron Bennett | |
| Byron Bennett, President |
Exhibit 4.1
SUBSCRIPTION AGREEMENT
THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. THIS INVESTMENT IS SUITABLE ONLY FOR PERSONS WHO CAN BEAR THE ECONOMIC RISK FOR AN INDEFINITE PERIOD OF TIME AND WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT. FURTHERMORE, INVESTORS MUST UNDERSTAND THAT SUCH INVESTMENT IS ILLIQUID AND IS EXPECTED TO CONTINUE TO BE ILLIQUID FOR AN INDEFINITE PERIOD OF TIME. NO PUBLIC MARKET EXISTS FOR THE SECURITIES, AND NO PUBLIC MARKET IS EXPECTED TO DEVELOP FOLLOWING THIS OFFERING.
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES OR BLUE SKY LAWS AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND STATE SECURITIES OR BLUE SKY LAWS. ALTHOUGH AN OFFERING STATEMENT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE “SEC”), THAT OFFERING STATEMENT DOES NOT INCLUDE THE SAME INFORMATION THAT WOULD BE INCLUDED IN A REGISTRATION STATEMENT UNDER THE ACT. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC, ANY STATE SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON THE MERITS OF THIS OFFERING OR THE ADEQUACY OR ACCURACY OF THE SUBSCRIPTION AGREEMENT OR ANY OTHER MATERIALS OR INFORMATION MADE AVAILABLE TO SUBSCRIBER IN CONNECTION WITH THIS OFFERING OVER THE WEB-BASED PLATFORM MAINTAINED BY THE COMPANY OR THROUGH RIALTO MARKETS, LLC (THE “BROKER”). ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
INVESTORS WHO ARE NOT “ACCREDITED INVESTORS” (AS THAT TERM IS DEFINED IN SECTION 501 OF REGULATION D PROMULGATED UNDER THE ACT) ARE SUBJECT TO LIMITATIONS ON THE AMOUNT THEY MAY INVEST, AS SET OUT IN SECTION 4. THE COMPANY IS RELYING ON THE REPRESENTATIONS AND WARRANTIES SET FORTH BY EACH SUBSCRIBER IN THIS SUBSCRIPTION AGREEMENT AND THE OTHER INFORMATION PROVIDED BY SUBSCRIBER IN CONNECTION WITH THIS OFFERING TO DETERMINE THE APPLICABILITY TO THIS OFFERING OF EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE ACT.
THE OFFERING MATERIALS MAY CONTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO, AMONG OTHER THINGS, THE COMPANY, ITS BUSINESS PLAN AND STRATEGY, AND ITS INDUSTRY. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON THE BELIEFS OF, ASSUMPTIONS MADE BY, AND INFORMATION CURRENTLY AVAILABLE TO THE COMPANY’S MANAGEMENT. WHEN USED IN THE OFFERING MATERIALS, THE WORDS “ESTIMATE,” “PROJECT,” “BELIEVE,” “ANTICIPATE,” “INTEND,” “EXPECT” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS, WHICH CONSTITUTE FORWARD LOOKING STATEMENTS. THESE STATEMENTS REFLECT MANAGEMENT’S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE THE COMPANY’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN THE FORWARD-LOOKING STATEMENTS. INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE ON WHICH THEY ARE MADE. THE COMPANY DOES NOT UNDERTAKE ANY OBLIGATION TO REVISE OR UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER SUCH DATE OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.
THE COMPANY MAY NOT BE OFFERING THE SECURITIES IN EVERY STATE. THE OFFERING MATERIALS DO NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY STATE OR JURISDICTION IN WHICH THE SECURITIES ARE NOT BEING OFFERED.
THE COMPANY RESERVES THE RIGHT IN ITS SOLE DISCRETION AND FOR ANY REASON WHATSOEVER TO MODIFY, AMEND AND/OR WITHDRAW ALL OR A PORTION OF THE OFFERING AND/OR ACCEPT OR REJECT IN WHOLE OR IN PART ANY PROSPECTIVE INVESTMENT IN THE SECURITIES OR TO ALLOT TO ANY PROSPECTIVE INVESTOR LESS THAN THE AMOUNT OF SECURITIES SUCH INVESTOR DESIRES TO PURCHASE. EXCEPT AS OTHERWISE INDICATED, THE OFFERING MATERIALS SPEAK AS OF THEIR DATE. NEITHER THE DELIVERY NOR THE PURCHASE OF THE SECURITIES SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THAT DATE.
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| TO: | Zergratran SA, Inc. |
| 501 East Las Olas Blvd., Suite 207 | |
| Fort Lauderdale, Florida 33301 |
Ladies and Gentlemen:
1. Subscription.
(a) The undersigned (“Subscriber”) hereby subscribes for and agrees to purchase Common Stock (the “Securities”), of Zergratran, Inc., a Delaware corporation (the “Company”), at a purchase price of $5.00 per share of Common Stock (the “Per Security Price”), upon the terms and conditions set forth herein. The minimum subscription is $500. The rights of the Securities are as set forth in certificate of incorporation, filed as Exhibit 2.1 to the Offering Statement of the Company filed with the SEC (the “Offering Statement”).
(b) Subscriber understands that the Securities are being offered pursuant to an offering circular dated [_______________] (the “Offering Circular”) filed with the SEC as part of the Offering Statement. By subscribing to the offering, Subscriber acknowledges that Subscriber has received this Subscription Agreement, copies of the Offering Circular and Offering Statement including exhibits thereto and any other information required by the Subscriber to make an investment decision
(c) The Subscriber’s subscription may be accepted or rejected in whole or in part, at any time prior to a Closing Date (as hereinafter defined), by the Company at its sole discretion. Upon the expiration of the period specified in Subscriber’s state for notice filings before sales may be made in such state, if any, the subscription may no longer be revoked at the option of the Subscriber. In addition, the Company, at its sole discretion, may allocate to Subscriber only a portion of the number of Securities Subscriber has subscribed for. The Company will notify Subscriber whether this subscription is accepted (whether in whole or in part) or rejected. If Subscriber’s subscription is rejected, Subscriber’s payment (or portion thereof if partially rejected) will be returned to Subscriber without interest and all of Subscriber’s obligations hereunder shall terminate.
(d) The aggregate number of Securities sold shall not exceed 15,000,000 (the “Maximum Offering”). The Company may accept subscriptions until the termination of the Offering in accordance with its terms (the “Termination Date”). The Company may elect at any time to close all or any portion of this offering, on various dates at or prior to the Termination Date (each a “Closing Date”).
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(e) In the event of rejection of this subscription in its entirety, or in the event the sale of the Securities (or any portion thereof) is not consummated for any reason, this Subscription Agreement shall have no force or effect, except for Section 5 hereof, which shall remain in force and effect.
2. Purchase Procedure.
(a) Payment. The purchase price for the Securities shall be paid simultaneously with the completion of this Subscription Agreement. Subscriber shall deliver a signed copy of this Subscription Agreement, along with payment for the aggregate purchase price of the Securities by check, wire, credit or debit card, or electronic funds transfer via ACH to the specified account or deliver evidence of cancellation of debt.
(b) Escrow arrangements. Payment for the Securities shall be received by Wilmington Trust, National Association (the “Escrow Agent”) from the undersigned by transfer of immediately available funds, check or other means approved by the Company at least two days prior to the applicable Closing Date, in the amount as set forth in Appendix A on the signature page hereto. Upon such Closing Date, the Escrow Agent shall release such funds to the Company. The undersigned shall receive notice and evidence of the digital entry of the number of the Securities owned by undersigned reflected on the books and records of the Company and verified by [STOCK TRANSFER AGENT], (the “Transfer Agent”), which books and records shall bear a notation that the Securities were sold in reliance upon Regulation A.
3. Representations and Warranties of the Company.
The Company represents and warrants to Subscriber that the following representations and warranties are true and complete in all material respects as of the date of each Closing Date, except as otherwise indicated. For purposes of this Agreement, an individual shall be deemed to have “knowledge” of a particular fact or other matter if such individual is actually aware of such fact. The Company will be deemed to have “knowledge” of a particular fact or other matter if one of the Company’s current officers has, or at any time had, actual knowledge of such fact or other matter.
(a) Organization and Standing. The Company is a corporation duly formed, validly existing and in good standing under the laws of the State of Delaware. The Company has all requisite power and authority to own and operate its properties and assets, to complete and deliver this Subscription Agreement, [the Operating Agreement] and any other agreements or instruments required hereunder. The Company is duly qualified and is authorized to do business and is in good standing as a foreign corporation in all jurisdictions in which the nature of its activities and of its properties (both owned and leased) makes such qualification necessary, except for those jurisdictions in which failure to do so would not have a material adverse effect on the Company or its business.
(b) Issuance of the Securities. The issuance, sale and delivery of the Securities in accordance with this Subscription Agreement has been duly authorized by all necessary corporate action on the part of the Company. The Securities, when so issued, sold and delivered against payment therefor in accordance with the provisions of this Subscription Agreement, will be duly and validly issued, fully paid and non-assessable.
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(c) Authority for Agreement. The execution and delivery by the Company of this Subscription Agreement and the consummation of the transactions contemplated hereby (including the issuance, sale and delivery of the Securities) are within the Company’s powers and have been duly authorized by all necessary corporate action on the part of the Company. Upon full execution hereof as provided herein, this Subscription Agreement shall constitute a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies and (iii) with respect to provisions relating to indemnification and contribution, as limited by considerations of public policy and by federal or state securities laws.
(d) No filings. Assuming the accuracy of the Subscriber’s representations and warranties set forth in Section 4 hereof, no order, license, consent, authorization or approval of, or exemption by, or action by or in respect of, or notice to, or filing or registration with, any governmental body, agency or official is required by or with respect to the Company in connection with the execution, delivery and performance by the Company of this Subscription Agreement except (i) for such filings as may be required under Regulation A or under any applicable state securities laws, (ii) for such other filings and approvals as have been made or obtained, or (iii) where the failure to obtain any such order, license, consent, authorization, approval or exemption or give any such notice or make any filing or registration would not have a material adverse effect on the ability of the Company to perform its obligations hereunder.
(e) Capitalization. The authorized and outstanding securities of the Company immediately prior to the initial investment in the Securities is as set forth “Securities Being Offered” in the Offering Circular. Except as set forth in the Offering Circular, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), or agreements of any kind (oral or written) for the purchase or acquisition from the Company of any of its securities.
(f) Financial statements. Complete copies of the Company’s financial statements consisting of the balance sheets of the Company as at June 30, 2022 and the related statements of operations, stockholders’ equity and cash flows for the period from inception (the “Financial Statements”) have been made available to the Subscriber and appear in the Offering Circular. The Financial Statements are based on the books and records of the Company and fairly present in all material respects the financial condition of the Company as of the respective dates they were prepared and the results of the operations and cash flows of the Company for the periods indicated. R&L Schuck CPAs LLC, which has audited the Financial Statements, is an independent accounting firm within the rules and regulations adopted by the SEC.
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(g) Proceeds. The Company shall use the proceeds from the issuance and sale of the Securities as set forth in “Use of Proceeds to Issuer” in the Offering Circular.
(h) Litigation. Except as set forth in the Offering Circular, there is no pending action, suit, proceeding, arbitration, mediation, complaint, claim, charge or investigation before any court, arbitrator, mediator or governmental body, or to the Company’s knowledge, currently threatened in writing (a) against the Company or (b) against any consultant, officer, manager, director or key employee of the Company arising out of his or her consulting, employment or board relationship with the Company or that could otherwise materially impact the Company.
4. Representations and Warranties of Subscriber. By executing this Subscription Agreement, Subscriber (and, if Subscriber is purchasing the Securities subscribed for hereby in a fiduciary capacity, the person or persons for whom Subscriber is so purchasing) represents and warrants, which representations and warranties are true and complete in all material respects as of such Subscriber’s respective Closing Date(s):
(a) Requisite Power and Authority. Such Subscriber has all necessary power and authority under all applicable provisions of law to execute and deliver this Subscription Agreement and other agreements required hereunder and to carry out their provisions. All action on Subscriber’s part required for the lawful execution and delivery of this Subscription Agreement and other agreements required hereunder have been or will be effectively taken prior to the Closing Date. Upon their execution and delivery, this Subscription Agreement and other agreements required hereunder will be valid and binding obligations of Subscriber, enforceable in accordance with their terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors’ rights and (b) as limited by general principles of equity that restrict the availability of equitable remedies.
(b) Investment Representations. Subscriber understands that the Securities have not been registered under the Securities Act of 1933, as amended (the “Securities Act”). Subscriber also understands that the Securities are being offered and sold pursuant to an exemption from registration contained in the Securities Act based in part upon Subscriber’s representations contained in this Subscription Agreement.
(c) Illiquidity and Continued Economic Risk. Subscriber acknowledges and agrees that there is no ready public market for the Securities and that there is no guarantee that a market for their resale will ever exist. Subscriber must bear the economic risk of this investment indefinitely and the Company has no obligation to list the Securities on any market or take any steps (including registration under the Securities Act or the Securities Exchange Act of 1934, as amended) with respect to facilitating trading or resale of the Securities. Subscriber acknowledges that Subscriber is able to bear the economic risk of losing Subscriber’s entire investment in the Securities. Subscriber also understands that an investment in the Company involves significant risks and has taken full cognizance of and understands all of the risk factors relating to the purchase of Securities.
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(d) Accredited Investor Status or Investment Limits. Subscriber represents that either:
(i) Subscriber is an “accredited investor” within the meaning of Rule 501 of Regulation D under the Securities Act. Subscriber represents and warrants that it meets one or more of the criteria set forth in Appendix A attached hereto; or
(ii) The purchase price of the Securities (including any fee to be paid by the Subscriber), together with any other amounts previously used to purchase Securities in this offering, does not exceed 10% of the greater of the Subscriber’s annual income or net worth.
Subscriber represents that to the extent it has any questions with respect to its status as an accredited investor, or the application of the investment limits, it has sought professional advice.
(e) Shareholder information. Within five days after receipt of a request from the Company, the Subscriber hereby agrees to provide such information with respect to its status as a shareholder (or potential shareholder) and to execute and deliver such documents as may reasonably be necessary to comply with any and all laws and regulations to which the Company is or may become subject. Subscriber further agrees that in the event it transfers any Securities, it will require the transferee of such Securities to agree to provide such information to the Company as a condition of such transfer.
(f) Valuation. The Subscriber acknowledges that the price of the Securities was set by the Company on the basis of the Company’s internal valuation and no warranties are made as to value. The Subscriber further acknowledges that future offerings of Securities may be made at lower valuations, with the result that the Subscriber’s investment will bear a lower valuation.
(g) Domicile. Subscriber maintains Subscriber’s domicile (and is not a transient or temporary resident) at the address shown on the signature page.
(h) No Brokerage Fees. There are no claims for brokerage commission, finders’ fees or similar compensation in connection with the transactions contemplated by this Subscription Agreement or related documents based on any arrangement or agreement binding upon Subscriber.
(i) Foreign Investors. If Subscriber is not a United States person (as defined by Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended), Subscriber hereby represents that it has satisfied itself as to the full observance of the laws of its jurisdiction in connection with any invitation to subscribe for the Securities or any use of this Subscription Agreement, including (i) the legal requirements within its jurisdiction for the purchase of the Securities, (ii) any foreign exchange restrictions applicable to such purchase, (iii) any governmental or other consents that may need to be obtained, and (iv) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale, or transfer of the Securities. Subscriber’s subscription and payment for and continued beneficial ownership of the Securities will not violate any applicable securities or other laws of the Subscriber’s jurisdiction.
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5. Survival of Representations and Indemnity. The representations, warranties and covenants made by the Subscriber herein shall survive the Termination Date of this Agreement. The Subscriber agrees to indemnify and hold harmless the Company and its respective officers, directors and affiliates, and each other person, if any, who controls the Company within the meaning of Section 15 of the Securities Act against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all reasonable attorneys’ fees, including attorneys’ fees on appeal) and expenses reasonably incurred in investigating, preparing or defending against any false representation or warranty or breach of failure by the Subscriber to comply with any covenant or agreement made by the Subscriber herein or in any other document furnished by the Subscriber to any of the foregoing in connection with this transaction.
6. Governing Law; Jurisdiction. This Subscription Agreement shall be governed and construed in accordance with the laws of the State of Delaware, without regard to conflict of law principles.
EACH OF THE SUBSCRIBER AND THE COMPANY CONSENTS TO THE EXCLUSIVE JURISDICTION OF COURT OF CHANCERY OF THE STATE OF DELAWARE AND NO OTHER PLACE AND IRREVOCABLY AGREES THAT ALL ACTIONS OR PROCEEDINGS RELATING TO THIS SUBSCRIPTION AGREEMENT NOT ARISING UNDER THE FEDERAL SECURITIES LAWS MAY BE LITIGATED IN SUCH COURTS .
EACH OF SUBSCRIBER AND THE COMPANY ACCEPTS FOR ITSELF AND HIMSELF AND IN CONNECTION WITH ITS AND HIS RESPECTIVE PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURT AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS SUBSCRIPTION AGREEMENT NOT ARISING UNDER THE FEDERAL SECURITIES LAWS. EACH OF SUBSCRIBER AND THE COMPANY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN THE MANNER AND IN THE ADDRESS SPECIFIED IN SECTION 7 AND THE SIGNATURE PAGE OF THIS SUBSCRIPTION AGREEMENT.
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED IN CONTRACT, TORT BUT NOT INCLUDING CLAIMS UNDER THE FEDERAL SECURITIES LAWS) ARISING OUT OF OR RELATING TO THIS SUBSCRIPTION AGREEMENT OR THE ACTIONS OF EITHER PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF. EACH OF THE PARTIES HERETO ALSO WAIVES ANY BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF SUCH PARTY. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS SUBSCRIPTION AGREEMENT. IN THE EVENT OF LITIGATION, THIS SUBSCRIPTION AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. BY AGREEING TO THIS WAIVER, THE SUBSCRIBER IS NOT DEEMED TO WAIVE THE COMPANY’S COMPLIANCE WITH THE FEDERAL SECURITIES LAWS AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER.
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7. Notices. Notice, requests, demands and other communications relating to this Subscription Agreement and the transactions contemplated herein shall be in writing and shall be deemed to have been duly given if and when (a) delivered personally, on the date of such delivery; or (b) mailed by registered or certified mail, postage prepaid, return receipt requested, in the third day after the posting thereof; or (c) emailed, telecopied or cabled, on the date of such delivery to the address of the respective parties as follows:
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If to the Company, to:
Zergratran SA, Inc. 501 East Las Olas Blvd., Suite 207 Fort Lauderdale, Florida 33301 |
with a required copy to:
3rd Gen Law Group LLP Attn: Stephanie Fiesta 1735 Seventeenth Street, N.W. Washington, DC 20009 | |
| If to a Subscriber, to Subscriber’s address as shown on the signature page hereto. | ||
or to such other address as may be specified by written notice from time to time by the party entitled to receive such notice. Any notices, requests, demands or other communications by telecopy or cable shall be confirmed by letter given in accordance with (a) or (b) above.
8. Miscellaneous.
(a) All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural, as the identity of the person or persons or entity or entities may require.
(b) This Subscription Agreement is not transferable or assignable by Subscriber.
(c) The representations, warranties and agreements contained herein shall be deemed to be made by and be binding upon Subscriber and its heirs, executors, administrators and successors and shall inure to the benefit of the Company and its successors and assigns.
(d) None of the provisions of this Subscription Agreement may be waived, changed or terminated orally or otherwise, except as specifically set forth herein or except by a writing signed by the Company and Subscriber.
(e) In the event any part of this Subscription Agreement is found to be void or unenforceable, the remaining provisions are intended to be separable and binding with the same effect as if the void or unenforceable part were never the subject of agreement.
(f) The invalidity, illegality or unenforceability of one or more of the provisions of this Subscription Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Subscription Agreement in such jurisdiction or the validity, legality or enforceability of this Subscription Agreement, including any such provision, in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law.
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(g) This Subscription Agreement supersedes all prior discussions and agreements between the parties with respect to the subject matter hereof and contains the sole and entire agreement between the parties hereto with respect to the subject matter hereof.
(h) The terms and provisions of this Subscription Agreement are intended solely for the benefit of each party hereto and their respective successors and assigns, and it is not the intention of the parties to confer, and no provision hereof shall confer, third-party beneficiary rights upon any other person.
(i) The headings used in this Subscription Agreement have been inserted for convenience of reference only and do not define or limit the provisions hereof.
(j) This Subscription Agreement may be executed in any number of counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.
(k) If any recapitalization or other transaction affecting the stock of the Company is effected, then any new, substituted or additional securities or other property which is distributed with respect to the Securities shall be immediately subject to this Subscription Agreement, to the same extent that the Securities, immediately prior thereto, shall have been covered by this Subscription Agreement.
(l) No failure or delay by any party in exercising any right, power or privilege under this Subscription Agreement shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.
9. Subscription Procedure. Each Subscriber, by providing his or her name and subscription amount and clicking “accept” and/or checking the appropriate box on the Platform (“Online Acceptance”) [is the equivalent of providing such information on a “signature page” and], confirms such Subscriber’s electronic signature to this Subscription Agreement. Each party hereto agrees that (a) Subscriber’s electronic signature as provided through Online Acceptance is the legal equivalent of his or her manual signature on this Subscription Agreement and constitutes execution and delivery of this Subscription Agreement by Subscriber, (b) the Company’s acceptance of Subscriber’s subscription through the Platform and its electronic signature hereto is the legal equivalent of its manual signature on this Subscription Agreement and constitutes execution and delivery of this Subscription Agreement by the Company and (c) each party’s execution and delivery of this Subscription Agreement as provided in this Section 9 establishes such party’s acceptance of the terms and conditions of this Subscription Agreement.
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APPENDIX A
An accredited investor, as defined in Rule 501(a) of the Securities Act of 1933, as amended, includes the following categories of investor:
(1) Any bank as defined in section 3(a)(2) of the Act, or any savings and loan association or other institution as defined in section 3(a)(5)(A) of the Act whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to section 15 of the Securities Exchange Act of 1934; any investment adviser registered pursuant to section 203 of the Investment Advisers Act of 1940 or registered pursuant to the laws of a state; any investment adviser relying on the exemption from registering with the Commission under section 203(l) or (m) of the Investment Advisers Act of 1940; any insurance company as defined in section 2(a)(13) of the Act; any investment company registered under the Investment Company Act of 1940 or a business development company as defined in section 2(a)(48) of that Act; any Small Business Investment Company licensed by the U.S. Small Business Administration under section 301(c) or (d) of the Small Business Investment Act of 1958; any Rural Business Investment Company as defined in section 384A of the Consolidated Farm and Rural Development Act; any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; any employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 if the investment decision is made by a plan fiduciary, as defined in section 3(21) of such act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors;
(2) Any private business development company as defined in section 202(a)(22) of the Investment Advisers Act of 1940;
(3) Any organization described in section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, or limited liability company, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000;
(4) Any director, executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer, or general partner of a general partner of that issuer;
(5) Any natural person whose individual net worth, or joint net worth with that person’s spouse or spousal equivalent, exceeds $1,000,000.
(i) Except as provided in paragraph (5)(ii) of this section, for purposes of calculating net worth under this paragraph (5):
(A) The person’s primary residence shall not be included as an asset;
(B) Indebtedness that is secured by the person’s primary residence, up to the estimated fair market value of the primary residence at the time of the sale of securities, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of sale of securities exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability); and
(C) Indebtedness that is secured by the person’s primary residence in excess of the estimated fair market value of the primary residence at the time of the sale of securities shall be included as a liability;
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(ii) Paragraph (5)(i) of this section will not apply to any calculation of a person’s net worth made in connection with a purchase of securities in accordance with a right to purchase such securities, provided that:
(A) Such right was held by the person on July 20, 2010;
(B) The person qualified as an accredited investor on the basis of net worth at the time the person acquired such right; and
(C) The person held securities of the same issuer, other than such right, on July 20, 2010.
(6) Any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse or spousal equivalent in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year;
(7) Any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in §230.506(b)(2)(ii);
(8) Any entity in which all of the equity owners are accredited investors;
(9) Any entity, of a type of not listed in paragraphs (1), (2), (3), (7), or (8), not formed for the specific purpose of acquiring the securities offered, owning investments in excess of $5,000,000;
(10) Any natural person holding in good standing one or more professional certifications or designations or credentials from an accredited educational institution that the Commission has designated as qualifying an individual for accredited investor status;
(11) Any natural person who is a “knowledgeable employee,” as defined in rule 3c-5(a)(4) under the Investment Company Act of 1940 (17 CFR 270.3c-5(a)(4)), of the issuer of the securities being offered or sold where the issuer would be an investment company, as defined in section 3 of such act, but for the exclusion provided by either section 3(c)(1) or section 3(c)(7) of such act;
(12) Any “family office,” as defined in rule 202(a)(11)(G)-1 under the Investment Advisers Act of 1940 (17 CFR 275.202(a)(11)(G)-1):
(i) With assets under management in excess of $5,000,000,
(ii) That is not formed for the specific purpose of acquiring the securities offered, and
(iii) Whose prospective investment is directed by a person who has such knowledge and experience in financial and business matters that such family office is capable of evaluating the merits and risks of the prospective investment; and
(13) Any “family client,” as defined in rule 202(a)(11)(G)-1 under the Investment Advisers Act of 1940 (17 CFR 275.202(a)(11)(G)-1)), of a family office meeting the requirements in paragraph (12) of this section and whose prospective investment in the issuer is directed by such family office pursuant to paragraph (12)(iii).
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Exhibit 11.1
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R&L SCHUCK – CPAs, LLC Accountants and Finance Consultants
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6710 Main Street, Suite 233 Miami Lakes, Florida 33014 Phone: (305) 362-1040 Fax: (305) 362-3344
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CONSENT OF INDEPENDENT AUDITORS
We consent to the inclusion in the Offering Statement on Form 1-A dated October 28,2022 of our audit report dated August 24, 2022, relating to the financial statements of Zergratan, SA, Inc., as of June 30, 2022 and for the period from inception (May 16, 2022) through June 30, 2022. Our report with respect to those financial statements includes an emphasis of matter paragraph relating to the uncertainty of Zergratran, SA, Inc. ability to continue as a going concern.
R&L Schuck – CPAs, LLC
Miami Lakes, FL
October 26, 2022