UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

AMENDMENT NO. 1 TO FORM 10

GENERAL FORM FOR REGISTRATION OF SECURITIES

Pursuant to Section 12(b) or (g) of The Securities Exchange Act of 1934

 

OneMeta Inc.

 

(Exact name of registrant as specified in its charter)

 

Nevada   20-5150818

(State or other jurisdiction

of incorporation or organization)

  

(I.R.S. Employer

Identification No.)

 

450 South 400 East, Suite 200, Bountiful, UT 84010
(Address of principal executive offices) (Zip Code)

 

Registrant’s telephone number, including area code 775-464-1980

 

Securities to be registered pursuant to Section 12(b) of the Act:

 

Title of each class   Name of each exchange on which
to be so registered   each class is to be registered
None   None
     

 

Securities to be registered pursuant to Section 12(g) of the Act:

 

Common Stock, par value $0.001 per share

 

(Title of class)

 

 

(Title of class)

 

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

 

  Large accelerated filer ☐ Accelerated filer ☐
  Non-accelerated filer ☐ Smaller reporting company ☒
    Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Persons who respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.

 

 

 

 
 

 

EXPLANATORY NOTE

 

OneMeta Inc., a Nevada corporation, is filing this registration statement on Form 10 (the “Registration Statement”) with the Securities and Exchange Commission (the “SEC”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), to provide current public information to the investment community in anticipation of being required to register under Section 12(g) of the Exchange Act in the future, to comply with applicable requirements thereunder.

 

In this Registration Statement, except where the context suggests otherwise:

 

●the terms “we,” “us,” “our,” “OneMeta” and the “Company,” refer to OneMeta Inc.;
●the term “Board” refers to the OneMeta Inc. Board of Directors;
●the term “Shareholders” refers to holders of our Shares (as defined herein). The Company has two classes of Shares: Common Stock (the “Shares’) and Series B-1 Convertible Stock; and
●the term “Bylaws” refers to the Amended and Restated Bylaws of the Company dated as of July 31, 2015.

 

This Registration Statement does not constitute an offer of securities of OneMeta Inc. or any other entity. Once this Registration Statement has been deemed effective, we will be subject to the requirements of Section 13(a) of the Exchange Act, including the rules and regulations promulgated thereunder, which will require us, among other things, to file annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, and we will be required to comply with all other obligations of the Exchange Act applicable to issuers filing registration statements pursuant to Section 12(g) of the Exchange Act.

 

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

Some of the statements in this Registration Statement constitute forward-looking statements because they relate to future events or our future performance or financial condition. The forward-looking statements contained in this Registration Statement may include statements as to:

 

●our future operating results;
●our future financial performance, including our revenue, costs of revenue, operating expenses and profitability;
●our predictions about the development of language translation technology and the related market trends;
●our ability to raise sufficient capital to execute our product development strategies;
●our ability to attract and retain customers in all our business segments to purchase our products and services;
●our current and expected financing arrangements;
●changes in the general interest rate environment;
●the adequacy of our cash resources, financing sources and working capital;
●our contractual arrangements and relationships with third parties;
●actual and potential conflicts of interest with the Board;
●the dependence of our future success on the general economy and its effect on the industries in which we develop products;
●our use of financial leverage; and
●the ability of the Board to attract and retain highly talented professionals.

 

We caution you that the foregoing list may not contain all of the forward-looking statements made in this Registration Statement. In addition, words such as “anticipate,” “believe,” “expect” and “intend” indicate a forward-looking statement, although not all forward-looking statements include these words. The forward-looking statements contained in this Registration Statement involve risks and uncertainties. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth in “Item 1A. Risk Factors” and elsewhere in this Registration Statement. Other factors that could cause actual results to differ materially include:

 

●changes in the economy; and
●risks associated with possible disruption in our operations or the economy generally due to terrorism, natural disasters, epidemics or other events having a broad impact on the economy.

 

Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this Registration Statement should not be regarded as a representation by us that our plans and objectives will be achieved. These forward-looking statements apply only as of the date of this Registration Statement. Moreover, we assume no duty and do not undertake to update the forward-looking statements.

 

 3 

 

 

ITEM 1.BUSINESS

 

General Development of Business

 

OneMeta was originally incorporated as Promotions on Wheels Holdings, Inc., a Nevada corporation, on July 3, 2006. On December 26, 2008, the name of the Company was changed to Blindspot Alert, Inc. On September 11, 2009, the Company’s name was changed to WebSafety, Inc. On March 23, 2021, the Company’s name was changed to VeriDetx Corp. On June 8, 2021, the Company’s name was changed to WebSafety, Inc. On July 10, 2022, the Company’s name was changed to OneMeta AI. On June 20, 2023, the Company’s name was changed to OneMeta Inc.

 

At the time of its initial formation in 2006, the Company was a development stage company that offered live promotions and marketing events using custom-built mobile displays.

 

Today, the Company is developing a stack of cutting-edge artificial intelligence technologies that solve everyday problems with an innovative and pragmatic approach. Using natural language processing sentiment analytics and behavioral prediction to metaverse enhancement, the Company is attempting to solve problems that will elevate our human condition.

 

The Company has recently launched two products: Verbum, which is a platform that enables fluent and effective communication among individuals that do not speak a similar language; and Verbum SDK. Verbum SDK is a software development kit that allows developers to create multi-language translation tools for their own use.

 

There is no guarantee that we will achieve our business objectives. See “Item 1A. Risk Factors” and “Item 7. Certain Relationships and Related Transactions, and Director Independence – Potential Conflicts of Interest” of this Registration Statement for additional details on the risks associated with a purchase of our Shares.

 

The Company

 

We were formed as a Nevada corporation on July 3, 2006, under the name Promotions on Wheels Holdings, Inc. Promotions on Wheels Holdings was a development stage company that offered live promotions and marketing events using custom-built mobile displays. This business was discontinued and the Company next developed two mobile apps and changed its name to WebSafety, Inc. WebSafety Inc.’s first app allowed parents to monitor questionable and potentially harmful content or a direct predatory exchange on their child’s mobile device. The second app disabled a mobile device from texting and other distracted driving habits while driving. These apps were discontinued in May of 2023 so the Company could focus on its current product development. Our principal office is located at 450 South 400 East, Suite 200, Bountiful, Utah 84010.

 

The Company’s internet address is www.onemeta.ai.

 

On August 1, 2022, the Company acquired Metalanguage Corp. Metalanguage Corp. was solely owned by Saul Leal, who has become the Company’s CEO. Metalanguage Corp. owned certain intellectual property regarding the use of artificial language for the translation and transcription of foreign languages. This intellectual property became the basis of the Company’s Verbum and Verbum SDK products (discussed in detail below). The Company issued shares of Series B-1 Convertible Preferred stock and common stock to Mr. Leal in exchange for all of the stock of Metalanguage Corp (the “Acquisition”). Upon completion of the Acquisition, Mr. Leal became the CEO of the Company and became a direction on the Company’s board of directors. See footnote 4 to the Company’s financial statements.

 

OneMeta’s proprietary artificial intelligence and machine learning architecture allow the spoken and written word to be translated and transcribed in approximately one second across multiple languages. The Company currently has two finished products that are currently marketed: Verbum and Verbum SDK. Verbum is a platform that enables fluent and effective communication among individuals that do not speak a similar language. Verbum SDK is a software development kit that allows developers to create multi-language translation tools for their own use.

 

The Company’s current products described in detail below have proprietary technology and associated patents. The Company is currently working on patents for future product offerings.

 

 4 

 

 

●Verbum. Verbum supports near-real time web-based conversations, discussions, meetings, and online chats in 112 languages and 40 dialects, enabling fluent and effective communication among individuals that do not speak a similar language. This product is distributed through the Company’s online platform, direct sales to businesses and organizations, and the Company is attempting to develop partnerships with existing video conferencing providers. The competitive position is against other video conferencing providers that also offer live interpretation services, such as Microsoft Teams, Zoom and Google Meet. The Company believes its main competitors are organizations that supply human interpreters which can be 10X times more expensive than the Company’s Verbum product. The primary market for the Company’s Verbum product would be any organization or individual that requires real-time interpretation services.

 

●Verbum SDK. Verbum Software Developer Kit allows software programmers, potential channel partners, and corporate development teams to integrate the Company’s powerful multilingual communications platform Verbum™ — into new or existing Software-as-a-Service applications and/or client/server programs, helping them remove communications barriers for multinational organizations and/or those serving customers who speak/read different languages. This product may be distributed through partnerships with software developers or through direct sales to businesses and organizations that require interpretation services for their software. The competitive position would be against other software development kit providers that also offer interpretation services, such as Microsoft Azure or Amazon Translate. The market for this product would be software developers and businesses that require interpretation services for their software applications.

 

The following chart provides information regarding the patents and trademarks of the Company:

 

Patents

 

Case No.   Title of Invention:   Country:   Status:   Application No.   Filing Date:   Patent No:   Date Issued:   Publication Number:   Published Date:
1META.055PR   SYSTEMS AND METHODS FOR RAPID MULTI-USER TEXT, SPEECH, AND TRANSLATION   US   Pending   63/374220   8/31/2022                
1META.055PR2   SYSTEMS AND METHODS FOR RAPID MULTI USER TEXT, SPEECH, AND TRANSLATION   US   Pending   63/429505   12/1/2022                
1META.055PR3   SYSTEMS AND METHODS FOR RAPID MULTI-USER TEXT, SPEECH, AND TRANSLATION   US   Pending   63/498261   4/25/2023                
1META.055PR4   SYSTEMS AND METHODS FOR RAPID MULTI-USER TEXT, SPEECH, AND TRANSLATION   US   Pending   63/499696   5/2/2023                
WEBS.001A   METHOD OF INHIBITING FUNCTIONS OF A MOBILE COMMUNICATIONS DEVICE   US   Issued   12/506045   7/20/2009   8380176   2/19/2013   2010/0035588 A1   2/11/2010
WEBS.001C1   METHOD OF INHIBITING FUNCTIONS OF A MOBILE COMMUNICATIONS DEVICE   US   Issued   13/757141   2/1/2013   8744417   6/3/2014   2013/0210413 A1   8/15/2013
WEBS.001C2   SAFETY OF A MOBILE COMMUNICATIONS DEVICE   US   Issued   14/291407   5/30/2014   9661469   5/23/2017   2015/0111555 A1   4/23/2015
WEBS.001C3   SAFETY OF A MOBILE COMMUNICATIONS DEVICE   US   Issued   15/601592   5/22/2017   9986385   5/29/2018   2018/0077531 A1   3/15/2018
WEBS.004A   DEVICES AND METHODS FOR IMPROVING WEB SAFETY AND DETERRENCE OF CYBERBULLYING   US   Issued   14/576065   12/18/2014   9485206   11/1/2016   2015/0180746 A1   6/25/2015
WEBS.004DA   DISPLAY SCREEN OR PORTION THEREOF WITH GRAPHICAL USER INTERFACE   US   Issued   29/504071   10/1/2014   D792421   7/18/2017        
WEBS.004MX   DEVICES AND METHODS FOR IMPROVING WEB SAFETY AND DETERRENCE OF CYBERBULLYING   MX   Issued   MX/a/2016/008094   6/17/2016   362735   2/6/2019        
                                     
WEBS.004PH   DEVICES AND METHODS FOR IMPROVING WEB SAFETY AND DETERRENCE OF CYBERBULLYING   PH   Issued   1-2016-501195   6/17/2016   1-2016-501195   5/30/2018       6/25/2015

 

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Trademarks

 

Case No.   Trademark Name:   Country:   Status:   Application No.   Filing Date:   Reg No:   Reg Date:   Class:   Published On:
1META.002T   ONEMETA   US   Pending   97/732496   12/27/2022           38 Int., 41 Int., 42 Int.    
1META.003T   VERBUM   US   Pending   97/732499   12/27/2022           38 Int., 41 Int., 42 Int.    
WEBS.023T   WEBSAFETY ! (Stylized and/or with Design)   US   Registered   86/315697   6/20/2014   10/27/2015   4842244   09 Int.   6/23/2015
WEBS.022T   ! (Stylized and/or Design)   US   Registered   86/315659   6/20/2014   5/5/2015   4733214   09 Int.   11/11/2014
WEBS.049T   DRIVESAFETY! (stylized and/or design)   US   Registered   88/639949   10/2/2019   4/20/2021   6329740   09 Int.   8/18/2020

 

Our business objective is to help organizations throughout the world to achieve their full potential via artificial intelligence by eliminating language barriers in daily communications by providing high-quality, accurate, and efficient translation and transcription services using natural language processing (NLP) technology. The Company’s focus is on developing a proprietary architecture that is faster and more accurate than any other technology with a commitment to providing superior quality services to their customers.

 

Currently, the Company has six (6) full-time employees and one (1) party-time employee. The Company currently has twenty-one independent contractors. The number of employees will increase through time and natural sales growth.

 

We intend to operate our business in a manner permitting us to maintain an exclusion from registration under the Investment Company Act of 1940, as amended (the “Investment Company Act”). See “Item 1A. Risk Factors—Risks Related to Our Structure.” We would not be able to operate our business according to our business plans if we are required to register as an investment company under the Investment Company Act.

 

We intend to operate our business in a manner permitting us to maintain an exclusion from registration under the Investment Company Act of 1940, as amended (the “Investment Company Act”). See “Item 1A. Risk Factors—Risks Related to Our Structure.” We would not be able to operate our business according to our business plans if we are required to register as an investment company under the Investment Company Act.

 

Our Board of Directors

 

Rowland W. Day II is a corporate securities lawyer and has practiced law since 1983. Mr. Day has been a director of TechTeam Global, Inc, (NASDAQ symbol: TEAM), RE3W WorldWide, Inc., Restaurants on the Run, HDL Communications, and Bikers Dream. Mr. Day was a General Partner of FarWest Ventures, a venture capital firm from 1990-1994.

 

Saul I. Leal joined the Company in August 2022. He has 22 years of relevant experience. Mr. Leal holds a degree in Systems Engineering from Military University UNEFA in Venezuela, a Master’s degree in Business from The Marriott School of Business, cum laude, Executive Education in Marketing from the Kellogg School of Management, and Advance Statistics Executive Education from Stanford University.

 

Reporting Obligations

 

We will file our annual reports containing audited financial statements, quarterly reports, and such other periodic reports as we determine to be appropriate or as may be required by law. We are filing this Registration Statement with the SEC under the Exchange Act to provide current public information to the investment community in anticipation of being required to register under Section 12(g) of the Exchange Act in the future, to comply with applicable requirements thereunder.

 

 6 

 

 

ITEM 1A.RISK FACTORS

 

A purchase of the Company’s Shares involves a high degree of risk and is suitable only for sophisticated individuals and institutions for whom a purchase of the Company’s Shares does not represent a complete investment program and who fully understands and are capable of bearing the risks associated with a purchase of the Company’s Shares. There can be no assurance that the business objectives of the Company will be achieved or that a Shareholder will receive a return of its capital. In addition, there will be occasions when the Board will encounter potential conflicts of interest in connection with the Company, as described below under “Item 7. Certain Relationships and Related Transactions, and Director Independence – Potential Conflicts of Interest.” The following discussion enumerates certain risk factors and should be carefully evaluated before making a purchase of the Company’s Shares. This summary does not purport to be a complete discussion of all of the risks and other factors and considerations which relate to or might arise from investing in the Company and/or a purchase of the Company’s Shares.

 

Risks Related to Liquidity, the Company’s Business and Industry

 

If we are unable to attract and retain key management, specific personnel and advisors, we may not achieve our business objectives.

 

Our success depends on the availability and contribution of members of our senior management team. The loss of services of any of these individuals could delay, reduce or prevent our language translation software development and other business objectives. Furthermore, recruiting and retaining qualified personnel to perform language translation software development work will be critical to our success. We may be unable to attract and retain these individuals, and our failure to do so could materially adversely affect our business and financial condition.

 

The development of our technology, products, and services are highly competitive.

 

We face competition with respect to any products we may seek to develop or commercialize in the future. Our competitors include major companies worldwide. Many of our competitors have significantly greater financial, technical and human resources than we have and may be more capable and better equipped than us to develop and commercialize products/services. These competitors also compete with us in recruiting and retaining qualified personnel and acquiring technologies. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. Accordingly, our competitors may commercialize products more rapidly or effectively than we are able to do so, which would adversely affect our competitive position and the likelihood that our products/services will achieve initial market acceptance and our ability to generate meaningful additional revenues from our products.

 

From time to time, third parties may claim that one or more of our products or services infringe their intellectual property rights.

 

Any dispute or litigation regarding patents or other intellectual property could be costly and time consuming due to the uncertainty of intellectual property litigation and could divert our management and key personnel from our business operations. A claim of intellectual property infringement could force us to enter into a costly or restrictive license agreement, which might not be available under acceptable terms or could require us to redesign our products, which would be costly and time-consuming, and/or could subject us to an injunction against development and sale of our products or services. We may have to pay substantial damages, including damages for past infringement if it is ultimately determined that our products infringe on a third party’s proprietary rights. Even if these claims are without merit, defending a lawsuit takes significant time, may be expensive and may divert management’s attention from other business concerns. Any public announcements related to litigation or interference proceedings initiated or threatened against us could cause our business to be harmed. Our intellectual property portfolio may not be useful in asserting a counterclaim, or negotiating a license, in response to a claim of intellectual property infringement.

 

 7 

 

 

The Company’s business operations may be materially adversely affected by a pandemic such as the Coronavirus (COVID-19) outbreak.

 

In December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China, which spread throughout other parts of the world, including the United States. On January 30, 2020, the World Health Organization declared the outbreak of the coronavirus disease (COVID-19) a “Public Health Emergency of International Concern.” On January 31, 2020, U.S. Health and Human Services Secretary Alex M. Azar II declared a public health emergency for the United States to aid the U.S. healthcare community in responding to COVID-19, and on March 11, 2020 the World Health Organization characterized the outbreak as a “pandemic.” COVID-19 resulted in a widespread health crisis that adversely affected the economies and financial markets worldwide. The Company’s business could be materially and adversely affected. The extent to which COVID-19 impacts the Company’s business will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact. If the disruptions posed by COVID-19 or other matters of global concern continue for an extended amount of time, the Company’s operations may be materially adversely affected.

 

New product development involves a lengthy, expensive and complex process.

 

We may be unable to develop or commercialize any new products. There can be no assurance that our technologies will be capable of developing and commercializing products at all. New product development involves a lengthy, expensive, and complex process.

 

We will continue to require additional capital for the foreseeable future. If we are unable to raise additional capital when needed, we may be forced to delay, reduce, or eliminate our product development efforts.

 

We expect to continue to incur significant operating expenses in connection with our ongoing activities, including conducting product development. Our ongoing future capital requirements will depend on numerous factors, including:

 

●the scope, prioritization and number of product development projects we pursue;
●the costs for preparing, filing, prosecuting, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims;
●the extent to which we acquire or in-license other products and technologies;
●our ability to establish strategic collaborations and licensing or other arrangements on terms favorable to us; and
●competing technological and market developments.

 

We are increasingly dependent on information technology systems to operate our business and a cyber-attack or other breach of our systems, or those of third parties on whom we may rely, could subject us to liability or interrupt the operating of our business.

 

We are increasingly dependent on information technology systems to operate our business. A breakdown, invasion, corruption, destruction, or interruption of critical information technology systems by employees, or others with authorized access to our systems or unauthorized persons could negatively impact operations. In the ordinary course of business, we collect, store and transmit confidential information and it is critical that we do so in a secure manner to maintain the confidentiality and integrity of such information. Additionally, we outsource certain elements of our information technology systems to third parties. As a result of this outsourcing, our third-party vendors may or could have access to our confidential information making such systems vulnerable. Data breaches of our information technology systems, or those of our third-party vendors, may pose a risk that sensitive data may be exposed to unauthorized persons or to the public. While we believe that we have taken appropriate security measures to protect our data and information technology systems and have been informed by our third-party vendors that they have as well, there can be no assurance that our efforts will prevent breakdowns or breaches in our systems, or those of our third-party vendors. Any breakdown or breach will materially adversely affect our business and financial condition.

 

We may rely on technology solution partners for the development and deployment of our artificial intelligence technology.

 

Our partners may experience technical, financial, operational, or security issues that reduce or eliminate their ability to support the Company. This could prevent the Company from generating revenue and eliminate our ability to operate.

 

 8 

 

 

In addition to the risks listed above, businesses are often subject to risks not foreseen or fully appreciated by management. It is not possible to foresee all risks that may affect us. Moreover, the Company cannot predict whether the Company will successfully effectuate and implement the Company’s current business plan.

 

Risks Related to Intellectual Property Rights

 

We rely on various intellectual property rights, including trademarks, copyrights, patents and licenses in order to operate our business.

 

Our intellectual property rights may not be sufficiently broad or otherwise may not provide us a significant competitive advantage. In addition, the steps that we have taken to maintain and protect our intellectual property may not prevent it from being challenged, invalidated, circumvented or designed-around, particularly in countries where intellectual property rights are not highly developed or protected. In some circumstances, enforcement may not be available to us because an infringer has a dominant intellectual property position or for other business reasons, or countries may require compulsory licensing of our intellectual property. Our failure to obtain or maintain intellectual property rights that convey competitive advantage, adequately protect our intellectual property or detect or prevent circumvention or unauthorized use of such property, could adversely impact our competitive position and results of operations. We also rely on nondisclosure and noncompetition agreements with employees, consultants, and other parties to protect, trade secrets and other proprietary rights. There can be no assurance that these agreements will adequately protect our trade secrets and other proprietary rights and will not be breached. There can be no assurance that we will have adequate remedies for any breach or that others will not independently develop substantially equivalent or better proprietary information or that third parties will not gain access to our trade secrets or other proprietary rights.

 

As we expand our business, protecting our intellectual property will become increasingly important. The protective steps we have taken may be inadequate to deter our competitors from using our proprietary information. In order to protect or enforce our patent rights, we may be required to initiate litigation against third parties, such as infringement lawsuits. Also, these third parties may assert claims against us with or without provocation. These lawsuits could be expensive, take significant time and could divert management’s attention from other business concerns. The law relating to the scope and validity of claims in the technology field in which we operate is still evolving and, consequently, intellectual property positions in our industry are generally uncertain. We cannot assure you that we will prevail in any of these potential suits or that the damages or other remedies awarded, if any, would be commercially valuable.

 

The Company could be negatively impacted if found to have infringed on intellectual property rights.

 

Technology companies, including many of the Company’s competitors, frequently being litigation based on allegations of patent infringement or other violations of intellectual property rights. In addition, patent holding companies seek to monetize patents they have purchased or otherwise obtained. As the Company grows, the intellectual property rights claims against it will likely increase. The Company intends to vigorously defend infringement actions in court and before the U.S. International Trade Commission. The plaintiffs in these actions frequently seek injunctions and substantial damages. Regardless of the scope or validity of such patents or other intellectual property rights, or the merits of any claims by potential or actual litigants, which may cause the Company to engage in protracted litigation. If the Company is found to infringe one or more patents or other intellectual property rights, regardless of whether it can develop non-infringing technology, it may be required to pay substantial damages or royalties to a third-party, or it may be subject to a temporary or permanent injunction prohibiting the Company from marketing or selling certain products. In certain cases, the Company may consider the desirability of entering into licensing agreements, although no assurance can be given that such licenses can be obtained on acceptable terms or that litigation will not occur. These licenses may also significantly increase the Company’s operating expenses. Regardless of the merit of any claims, litigation may be expensive, time-consuming, disruptive to the Company’s operations and distracting to management. In recognition of these considerations, the Company may enter into arrangements to settle litigation. If one or more legal matters were resolved against the Company’s consolidated financial statements, the financial reporting period could be materially adversely affected. Further, such an outcome could result in significant compensatory, punitive, or trebled monetary damages, disgorgement of revenue or profits, remedial corporate measures or injunctive relief against the Company that could adversely affect its financial condition and results of operations.

 

 9 

 

 

We rely heavily on our technology and intellectual property, but we may be unable to adequately or cost-effectively protect or enforce our intellectual property rights, thereby weakening our competitive position and increasing operating costs.

 

To protect our rights in our services and technology, we rely on a combination of copyright and trademark laws, patents, trade secrets, confidentiality agreements and protective contractual provisions. We also rely on laws pertaining to trademarks and domain names to protect the value of our corporate brands and reputation. Despite our efforts to protect our proprietary rights, unauthorized parties may copy aspects of our services or technology, obtain and use information, marks, or technology that we regard as proprietary, or otherwise violate or infringe our intellectual property rights. In addition, it is possible that others could independently develop substantially equivalent intellectual property. If we do not effectively protect our intellectual property, or if others independently develop substantially equivalent intellectual property, our competitive position could be weakened.

 

Effectively policing the unauthorized use of our services and technology is time-consuming and costly, and the steps taken by us may not prevent misappropriation of our technology or other proprietary assets. The efforts we have taken to protect our proprietary rights may not be sufficient or effective, and unauthorized parties may copy aspects of our services, use similar marks or domain names, or obtain and use information, marks, or technology that we regard as proprietary. We may have to litigate to enforce our intellectual property rights, to protect our trade secrets, or to determine the validity and scope of others’ proprietary rights, which are sometimes not clear or may change. Litigation can be time consuming and expensive, and the outcome can be difficult to predict.

 

We rely on agreements with third parties to provide certain services, goods, technology, and intellectual property rights necessary to enable us to implement some of our applications.

 

Our ability to implement and provide our applications and services to our clients depends, in part, on services, goods, technology, and intellectual property rights owned or controlled by third parties. These third parties may become unable to or refuse to continue to provide these services, goods, technology, or intellectual property rights on commercially reasonable terms consistent with our business practices, or otherwise discontinue a service important for us to continue to operate our applications. If we fail to replace these services, goods, technologies, or intellectual property rights in a timely manner or on commercially reasonable terms, our operating results and financial condition could be harmed. In addition, we exercise limited control over our third-party vendors, which increases our vulnerability to problems with technology and services those vendors provide. If the services, technology, or intellectual property of third parties were to fail to perform as expected, it could subject us to potential liability, adversely affect our renewal rates, and have an adverse effect on our financial condition and results of operations.

 

If any third-party owners of intellectual property that we may license in the future do not properly maintain or enforce the patents underlying such licenses, our competitive position and business prospects will be harmed.

 

We may enter into licenses for third-party intellectual property in the future. Our success will depend in part on the ability of our licensors to obtain, maintain and enforce patent protection for their intellectual property to which we have secured exclusive rights.

 

If applicable, our licensors may not successfully prosecute the patent applications to which we are licensed. Even if patents issue in respect of any such patent applications, our licensors may fail to maintain the patents, may determine not to pursue litigation against other companies that are infringing the patents, or may pursue such litigation less aggressively than we would. In addition, our licensors may terminate their agreements with us in the event we breach the applicable license agreement and fail to cure the breach within a specified period of time. Without protection for the intellectual property we license, other companies might be able to offer substantially identical products for sale, which could materially adversely affect our competitive business position, business prospects and financial condition.

 

Because development of our products may incorporate intellectual property of third parties, we may depend on continued access to such intellectual property to conduct and complete our product development. We expect that future licenses would impose, numerous obligations on us. We may be required to reimburse patent costs incurred by the licensor, or we may be obligated to pay additional royalties, at specified rates, based on net sales of programs that incorporate the licensed intellectual property rights. We may also be obligated under some of these agreements to pay a percentage of any future sublicensing revenues that we may receive. Future license agreements may also include payment obligations such as milestone payments or minimum expenditures for research and development. We expect that any future licenses would contain reporting, insurance and indemnification requirements. We are actively reviewing and preparing additional patent applications to expand our patent portfolio, but there can be no assurances that patents related to our existing patent applications or any applications we may file in the future will be issued or that any issued patents will provide meaningful protection for our products, which could materially adversely affect our competitive business position, business prospects and financial condition.

 

 10 

 

 

Confidentiality agreements with employees and others may not adequately prevent disclosure of trade secrets and other proprietary information and may not adequately protect our intellectual property.

 

We rely on trade secrets to protect our technology, especially where we do not believe patent protection is appropriate or obtainable. However, trade secrets are difficult to protect. To protect our proprietary technology and processes, we also rely in part on confidentiality and intellectual property assignment agreements with our employees, consultants, and other advisors. These agreements may not effectively prevent disclosure of confidential information nor result in the effective assignment to us of intellectual property and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information or other breaches of the agreements. In addition, others may independently discover our trade secrets and proprietary information, and in such case, we could not assert any trade secret rights against such party. Enforcing a claim that a party illegally obtained and is using our trade secrets is difficult, expensive, and time-consuming, and the outcome is unpredictable. In addition, courts outside the U.S. may be less willing to protect trade secrets. Costly and time-consuming litigation could be necessary to seek to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain trade secret protection could materially adversely affect our business and financial condition.

 

The OTC Markets Group, Inc. has discontinued the display of the Company’s quotes and has labeled the Company’s common stock “Caveat Emptor (Buyer Beware).”

 

On November 2, 2023, the OTC Markets Group placed the Caveat Emptor designation next to the Company’s stock symbol, which advises investors to exercise additional care and perform thorough due diligence before making an investment decision with respect to the Company’s common stock. Due to this Caveat Emptor designation, bid and ask quotations are not displayed on the OTC. Until such time as the Caveat Emptor designation is removed, the Company’s common stock will not be quoted on any listed exchange and our shareholders have no method to buy or sell our common stock on a listed exchange. The Company’s common stock shares are currently unable to be traded and are therefore illiquid. There can be no assurance that we will successfully have the Caveat Emptor designation removed in the near future or at all. Failure to remove the designation will continue to limit the liquidity of our capital stock.

 

 11 

 

 

ITEM 2.FINANCIAL INFORMATION

 

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

 

Overview

 

The Company develops and markets artificial intelligence products that eliminate language barriers in daily communications by providing high-quality, accurate, and efficient interpretation and translation services using natural language processing (NLP) technology. The Company’s focus is on developing a proprietary architecture that is faster and more accurate than any other company, with a commitment to providing superior quality services to its customers. The Company intends to serve a wide variety of markets and customers and is focused on becoming a leader in the creation of products for the interpretation and translation industry.

 

Basis of Presentation

 

Our financial statements have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates, assumptions, and to exercise subjective judgment as to future uncertainties. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Our financial statements have been prepared using the accounting and reporting guidance in Accounting Standards Codification Topic 946, Financial Services—Investment Companies, or ASC Topic 946.

 

Revenue Recognition

 

The Company recognizes revenue in accordance with ASC Topic 606, Revenue From Contracts With Customers, which was adopted on January 1, 2018 using the modified retrospective method, with no impact to the Company’s comparative financial statements. Revenues are recognized when control of the promised goods or services is transferred to the customer in an amount that reflects the consideration the Company expects to be entitled to in exchange for transferring those goods or services. Revenue is recognized based on the following five step model:

 

● Identification of the contract with a customer
● Identification of the performance obligations in the contract
● Determination of the transaction price
● Allocation of the transaction price to the performance obligations in the contract
● Recognition of revenue when, or as, the Company satisfies a performance obligation

 

We enter into revenue arrangements in which a customer may purchase a combination of subscriptions, consulting services, training and education. Fully hosted subscription services (“SaaS”) allow customers to access hosted software during the contractual term without taking possession of the software.

 

We recognize revenue ratably over the contractual service term for hosted services that are priced based on a committed number of transactions where the delivery and consumption of the benefit of the services occur evenly over time, beginning on the date the services associated with the committed transactions are first made available to the customer and continuing through the end of the contractual service term. Over-usage fees and fees based on the actual number of transactions are billed in accordance with contract terms as these fees are incurred and are included in the transaction price of an arrangement as variable consideration. Revenue based on per-minute or per-word basis, where invoicing is aligned to the pattern of performance, customer benefit and consumption, are typically accounted for utilizing the “as-invoiced” practical expedient. Revenue for subscriptions sold as a fee per period is recognized ratably over the contractual term as the customer simultaneously receives and consumes the benefit of the underlying service.

 

Licenses for software may be purchased as a subscription for a fixed period of time or based on usage. Revenue from licenses is recognized at the point in time the software is available to the customer, provided all other revenue recognition criteria are met, and classified as revenue on our Statements of Operations. Our interpretation or translation services fees are based on a per-minute or per-word basis, are typically accounted for utilizing the “as-invoiced” practical expedient.

 

 12 

 

 

Our services are comprised primarily of fees related to training, and education for certain licenses that are recognized at a point in time. Training and education revenues are recognized as the services are performed.

 

Disaggregation of Revenues

 

The Company disaggregates revenue between subscription and license revenue and training and education revenue.

 

    Six Months Ended June 30, 2023     December 31, 2022     December 31, 2021  
Subscription and license revenue   $ 41,287     $ 1,295     $ 4,265  
Training and education    

6,675

     

-

     

-

 
Total revenue   $ 47,962     $ 1,295     $ 4,265  

 

Deferred Revenue

 

Deferred revenue includes service and support contracts and represents the undelivered performance obligation of agreements that are typically for one year or less. As of December 31, 2022 and 2021, deferred revenue was $0. As of June 30, 2023, deferred revenue was $0.

 

Expenses

 

●Research and Development: Developing and maintaining the proprietary NLP technology and architecture will be a significant future expense for the Company. This will include expenses related to hiring and retaining top talent, conducting research and development, and investing in technology infrastructure and equipment.

 

●Salaries and Benefits: The Company will invest in hiring and retaining additional employees to perform various functions, such as software development, customer support, sales, and administration. This will include salaries, benefits, and other employee-related expenses.

 

●Infrastructure and Equipment: The Company will invest in technology infrastructure and equipment to support its software development and distribution operations. This will include expenses related to servers, software licenses, hardware, and office equipment.

 

●Professional Services: Depending on the Company’s needs, it may need to engage professional services such as legal, accounting, or consulting services, which would be an expense for the Company.

 

●Distribution and Delivery: The Company will need to invest in distribution and delivery methods for its products, such as software updates, shipping, or online delivery. This will include expenses related to logistics, software licensing, or server maintenance.

 

The Company will bear all expenses of its operations, including, without limitation, expenses incurred by the Company, as well as all fees, costs and expenses fairly allocable to the Company, including: (a) fees, costs and expenses of outside counsel, accountants, auditors, consultants, administrators, depositaries and other similar outside advisors and service providers with respect to the Company and its business or operations; (b) any taxes, fees or other governmental charges levied against the Company or on its income or assets or in connection with its business or operations, and preparation expense in connection with such governmental charges or to otherwise comply with applicable tax reporting obligations or any legal implementation of such regimes, but excluding any amounts to the extent that the Company has been reimbursed therefore; (c) fees, costs and expenses incurred in connection with any audit, examination, investigation or other proceeding by any taxing authority or incurred in connection with any governmental inquiry, investigation or proceeding, in each case, involving or otherwise applicable to the Company, including the amount of any judgments, settlements, remediation or fines paid in connection therewith; (d) the portion fairly allocable to the Company of fees, costs and expenses incurred in connection with legal, regulatory and tax services provided on behalf of the Company and compliance with U.S. federal, state or local law or other non-U.S. law or other law and regulation relating to the Company’s activities, reports, filings, disclosures and notices prepared in connection with the laws and/or regulations of jurisdictions in which the Company engages in activities; (e) fees, costs and expense related to the offing of shares (including expense associated with updating the offering materials, expenses associated with printing such materials, expenses associated with subscriptions and redemptions, and travel expenses relating to the ongoing offing of shares) or a transfer of Shares or repurchase (but only to the extent not paid or otherwise borne by the transferring shareholder and/or assignee of the transferring shareholder, as appliable); (f) fees, costs and expense incurred in connection with any amendments, restatements or other modifications to, and compliance with this Registration Statement, the Bylaws, any other constituent or related documents of the Company, including the solicitation of any consent, waiver or similar acknowledgment from the Shareholders or preparation of other materials in connection with compliance (or monitoring compliance) with such documents; (g) fees, costs and expenses related to procuring, developing, implementing or maintaining information technology, data subscriptions and license-based services, product development materials, equipment and services, computer software or hardware and electronic equipment used in connection with providing services to the Company in connection with obtaining and performing research related to potential or actual product development; (h) fees, costs and expenses incurred in connection with the dissolution and liquidation of the Company; and (i) all other costs and expenses of the Company and its affiliates in connection with the business or operation of the Company.

 

 13 

 

 

The Company will bear any extraordinary expenses it may incur, including any litigation expenses.

 

Results of Operations for Three Months Ended June 30, 2023 and 2022

 

Revenues

 

Our revenue for the three months ended June 30, 2023, was $44,802 compared to $301 for three months ended June 30, 2022, an increase of $44,501. The increase from June 2022 was primarily attributable to us commencing operations of our translation and transcription products in 2023.

 

Operating Expenses

 

Our total operating expenses for the three months ended June 30, 2023, was $3,528,829, compared to $126,974 for three months ended June 30, 2022, an increase of $3,401,855. The increase in our operating expenses was primarily a result of an increase in (i) research and development expenses, from $45,000 for three months ended June 30, 2022 and $191,472 for three months ended June 30, 2023, (ii) general and administrative expenses, from $70,662 for three months ended June 30, 2022 and $3,210,847 for three months ended June 30, 2023, and (iii) advertising and marketing expenses, from nil for three months ended June 30, 2022 and $29,178 for three months ended June 30, 2023, each of which were connected to the Acquisition of Metalanguage Corp. and the development and marketing of translation and transcription products following the Acquisition.

 

Other Expense

 

We had total other expenses of $10,581 for the three months ended June 30, 2023 as compared to $8,026 for the three months ended June 30, 2022. The increase was primarily attributable to increased interest expense in 2023.

 

Net Loss

 

As a result of the foregoing factors, we had a net loss of $3,494,608 for the three months ended June 30, 2023, and a net loss of $134,699 for the three months ended June 30, 2022.

 

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Results of Operations for Six Months Ended June 30, 2023 and 2022

 

Revenues

 

Our revenue for the six months ended June 30, 2023, was $47,962 compared to $1,101 for six months ended June 30, 2022, an increase of $46,861. The increase from June 2022 was primarily attributable to us commencing operations of our translation and transcription products in the first half of 2023.

 

Operating Expenses

 

Our total operating expenses for the six months ended June 30, 2023, was $4,064,511, compared to $516,365 for six months ended June 30, 2022, an increase of $3,458,146. The increase in our operating expenses was primarily a result of an increase in (i) research and development expenses, from $45,000 for six months ended June 30, 2022 and $336,504 for six months ended June 30, 2023, (ii) general and administrative expenses, from $245,862 for six months ended June 30, 2022 and $3,516,306 for six months ended June 30, 2023, and (iii) advertising and marketing expenses, from nil for six months ended June 30, 2022 and $89,785 for six months ended June 30, 2023, each of which were connected to the Acquisition of Metalanguage Corp. and the development and marketing of translation and transcription products following the Acquisition.

 

Other Expense

 

We had total other expenses of $20,472 for the six months ended June 30, 2023 as compared to $15,236 for the six months ended June 30, 2022. The increase was primarily attributable to increased interest expense in 2023.

 

Net Loss

 

As a result of the foregoing factors, we had a net loss of $4,037,021 for the six months ended June 30, 2023, and a net loss of $530,500 for the six months ended June 30, 2022.

 

Results of Operations for the Years Ended December 31, 2022 and 2021

 

Revenue

 

Our revenue for the year ended December 31, 2022 was $1,295, which was relatively stable compared to revenue of $4,265 for the year ended December 31, 2021. We did not generate significant revenue during the periods due to not having a product portfolio prior to the Acquisition (which was completed in August 2022) and our translation and transcription products being in the developmental phase during the second half of 2022.

 

Operating Expenses

 

Our total operating expenses for the year ended December 31, 2022 were $1,311,499, compared to $350,981 for the year ended December 31, 2021, an increase of $960,518. The increase in our operating expenses was primarily a result of an increase in (i) legal and professional expenses, from $135,450 for 2021 to $434,499 for 2022, an increase of $299,049, (ii) general and administrative expenses, from $402,048 for 2021 to $669,550 for 2022, an increase of $267,502, (iii) a gain on settlement of accounts payable from 2021 of $252,886 which was not replicated in 2022, and (iv) an increase in research and development expenses, from nil in 2021 to $157,650 in 2022, each of which were connected to the Acquisition of Metalanguage Corp. and the development and marketing of translation and transcription products following the Acquisition.

 

 

Other Expense

 

We had total other expense of $33,368 in 2022 as compared to $563,916 in 2021. The decrease from 2021 was primarily attributable to loss on conversion of debt of $514,330 in 2021, attributable to debt modifications connected to certain convertible note conversions in 2021.

 

 15 

 

 

Net Loss

 

As a result of the foregoing factors, we had a net loss of $910,632 for the year ended December 31, 2021, and a net loss of $1,343,572 for the year ended December 31, 2022.

 

Liquidity and Capital Resources

 

As of June 30, 2023, we had $623,078 of cash, liabilities of $1,077,681, and an accumulated deficit of $31,798,754.

 

As of December 31, 2022, we had $400,703 of cash, liabilities of $1,042,308, and an accumulated deficit of $27,761,733.

 

As of December 31, 2021, we had $7,347 of cash, liabilities of $739,616, and an accumulated deficit of $26,418,161.

 

Since April of 2021, the Company has primarily relied on the sale of common stock to finance its operations. Prior to April of 2021, Mr. Day was the major source of capital by loaning the capital necessary for the Company’s operations.

 

The primary source of capital since April of 2021 has been from sales of common stock. The uses have been for working capital in order to develop and market the Company’s applications in 2021 until September of 2022. After September of 2022 the primary use has been the development of the Company’s artificial intelligence software.

 

Based on the Company’s current available capital resources, we anticipate that the Company will be able to conduct its planned operations until approximately November 31, 2023.

 

The Company anticipates that it will need approximately $1,500,000 over the next 12 months to continue the development and marketing of its products. The Company will continue to sell its common stock to pay for its products research and development, marketing, operations, and general and administrative expenses. There is no guarantee that the Company will be able to continue to sell its common stock to finance its operations.

 

The Company is not able to ascertain its cash needs for longer than 12 months. If the Company is not able to develop and market its products successfully within the next 12 months, it is highly unlikely that the Company will be able to continue to sell any common stock in order to finance its operations.

 

The Company doesn’t have any plans to repurchase any of its equity or debt.

 

Cash Flow

 

Comparison of the six months ended June 30, 2023 and the six months ended June 30, 2022

 

    Six months ended June 30, 2023     Six months ended June 30, 2022  
Cash flows used in operating activities   $ (960,625 )   $ (168,652 )
                 
Cash flows used in investing activities     -     -
                 
Cash flows provided by financing activities   $ 1,183,000     $ 185,001  
                 
Net change in cash   $ 222,375     $ 16,349  

 

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Cash Flows Used in Operating Activities

 

Cash flows used in operating activities was $960,625 for six months ended June 30, 2023 compared to $168,652 for six months ended June 30, 2022, an increase of $791,973. The increased funds used in operating activities was primarily due to our net loss, as we expanded operations following the Acquisition.

 

Cash Flows From Investing Activities

 

Cash flows used in investing activities was nil for six months ended June 30, 2023 and June 30, 2022.

 

Cash Flows from Financing Activities

 

Cash flows provided by financing activities was $1,183,000 for six months ended June 30, 2023 compared to $185,001 for six months ended June 30, 2022. The change was attributable to our increase in sales of our common stock in between June 2022 and June 2023.

 

Comparison of the Year Ended December 31, 2022 to the Year Ended December 31, 2021

 

The following table sets forth the primary sources and uses of cash for the periods presented below:

 

    Years Ended  
    December 31,     December 31,  
    2022     2021  
Net cash used in operating activities   $ (722,145 )   $ (316,649 )
                 
Net cash used in investing activities     (210,000 )     -
                 
Net cash provided by financing activities   $ 1,325,501     $ 190,003  
                 
Net change in cash   $ 393,356     $ (126,646 )

 

 

Net Cash Used in Operating Activities

 

Net cash used in operating activities was $722,145 for 2022 compared to $316,649 for 2021, an increase of $405,496. The increased funds used in operating activities was primarily due to our net loss, as we increased expanded operations following the Acquisition.

 

Net Cash Used in Investing Activities

 

Net cash used in investing activities was $210,000 for 2022 as compared to nil for 2021. This was primarily attributable to our purchase of software in the Acquisition in 2022.

 

Net Cash Provided by Financing Activities

 

Net cash provided by financing activities was $1,324,501 in 2022 compared to $190,003 in 2021. The change was attributable to our increase in sales of our common stock in 2022.

 

Off-Balance Sheet Arrangements

 

We did not have any off-balance sheet arrangements, such as structured finance, special purpose entities, or variable interest entities during the years ended December 31, 2022 and 2021.

 

Related Parties

 

See “Item 7. Certain Relationships and Related Transactions, and Director Independence” for a description of certain transactions and relationships with related parties.

 

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ITEM 3.PROPERTIES

 

The Company leases office space in a shared environment in Bountiful, Utah. The lease amount is approximately $1,000 per month.

 

ITEM 4.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

The following table sets forth, as of June 30, 2023, the number of shares of common stock and preferred stock owned of record and beneficially by our executive officers, directors, and persons who beneficially own more than 5% of the outstanding shares of our common stock.

 

Names of All Officers, Directors, and Control Persons   Affiliation with Company (e.g. Officer Title/Director/Owner of More than 5%)   Residential Address   Number of Shares Owned   Share Type/Class   Ownership Percentage of Class Outstanding
Rowland W. Day, II   President, CFO, and Director   420 South 400 East, Suite 200, Bountiful, UT 84010  

2,142,800 Common

 

and

 

4,309,710 Series B-1 Preferred*

   Common and Series B-1 Preferred  

7.5% Common

 

and

 

50% Series B-1 Preferred

 

Saul Leal   Chief Executive Officer and Director   420 South 400 East, Suite 200, Bountiful, UT 84010  

2,142,800 Common

 

And

 

4,309,710 Series B-1 Preferred of which 1,363,638 Series B-1 Preferred are held in escrow*

 

   Common and Series B-1 Preferred  

7.5% Common

 

and

 

50% Series B-1 Preferred

Nicholson Family Trust***   Owner of More than 5%  

36 Palazzo, Newport Beach, CA 92660

 

   167   Series A Preferred**   8.075%
Melinda Owen Bass   Owner of More than 5%   4403 Homewood   667  

Series A Preferred**

 

   32.253%
Clayton Walls   Owner of More than 5%  

5055 Addison Cir., PH 711, Addison, TX 75001

 

   668  

Series A Preferred**

 

   32.302%
Donald Bailey Holmes   Owner of More than 5%  

111 Dahlia Pass, Spring Branch, TX 78070

 

   167  

Series A Preferred**

 

   8.075%

Gregory K. Bell & Annette Bell JTWROS

 

   Owner of More than 5%   P.O. Box 1886, Forney, TX 75126   134  

Series A Preferred**

 

   6.480%
Collective Management Ownership   Officers and Directors  

2510 East Sunset Road, Suite 5-837, Las Vegas, NV 89120

 

  

4,285,600 Common

 

and

 

8,619,420 Series B-1 Preferred

   Common and Series B-1 Preferred  

15.2% Common

 

and

 

100% Series B-1 Preferred

 

*Each share of Series B-1 Preferred Stock shall be convertible, at the option of the holder, at a rate of eleven (11) shares of Common Stock for each share of Series B-1 Preferred Stock, and holders of the Series B-1 Preferred Stock shall be entitled to 3.2 times the number of votes on all matters submitted to the shareholders, that is equal to the number of shares of Common Stock into which such holder’s shares of Series B-1 Preferred Stock are convertible.

 

**Each share of Series A Preferred Stock shall be convertible, at the option of the holder, at a rate of one and one quarter (1 ¼) share of Common Stock for each share of Series A Preferred Stock, and holders of Series A Preferred Stock shall be entitled to votes equal to the number of whole shares of Common Stock into which each share of Series A Preferred Stock could be converted.

 

***The Nicholson Family Trust was created by Richard and Kim Nicholson. Mr. and Mrs. Nicholson were the victims of a homicide in 2019. Since the date of their deaths, we have been unable to obtain information regarding the identity of the natural person or persons who have voting and dispositive control over the shares held by the Nicholson Family Trust.

 

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ITEM 5.DIRECTORS AND EXECUTIVE OFFICERS

 

The Company’s Board has overall responsibility for the management and supervision of the business operations of the Company. To the extent permitted by applicable law, the Board may delegate any of its rights, power and authority to, among others, the officers of the Company and any committee of the Board. Our Board consists of two members, neither of whom are independent directors, as such term is defined in Section 303A.02 of the New York Stock Exchange Listed Company Manual.

 

There are no familial relationships among any of our officers or directors. Except as indicated below, neither of our directors is a director in any other reporting companies. None of our officers or directors has been affiliated with any company that has filed for bankruptcy within the last ten years. We are not aware of any proceedings to which any of our officers or directors, or any associate of any such officer or director is a party adverse to us or has a material interest adverse to us. Unless otherwise indicated, there are no arrangements or understandings between any officer and any other person pursuant to which such person was selected as an officer.

 

Board of Directors and Executive Officers

 

Information regarding the Board and executive officers are set for the below. Each director will hold office until his or her death, resignation, removal or disqualification. The address for each of our directors is 3401 Hwy 89, Bountiful, Utah 84010. Each officer holds office at the pleasure of the Board until his or her successor is duly appointed and qualified. The Company has not entered into any employment agreement with any executive officer.

 

Name   Year of Birth   Position   Position Held Since
Non-Independent Directors:            
Rowland W. Day II   1955   Director, Chairman of the Board   2013
Saul I. Leal   1980   Director   August 2022
             
Executive Officers:            
Saul I. Leal   1980   Chief Executive Officer   August 2022
Rowland W. Day, II   1955   President, CFO, and Secretary   2013

 

Biographical Information

 

Rowland W. Day, II is our President, CFO, Secretary, and our Chairman of the Board. For the prior five (5) years, Mr. Day served as President and CEO of the Company. Mr. Day is a corporate securities lawyer and has practiced law since 1983. Mr. Day has been a director of TechTeam Global, Inc, (NASDAQ symbol: TEAM), RE3W WorldWide, Inc., Restaurants on the Run, HDL Communications, and Bikers Dream. Mr. Day was a General Partner of FarWest Ventures, a venture capital firm from 1990-1994.

 

Saul I. Leal joined the Company in August 2022. Mr. Leal holds a degree in Systems Engineering from Military University UNEFA in Venezuela, a master’s degree in business from The Marriott School of Business, cum laude, Executive Education in Marketing from the Kellogg School of Management, and Advance Statistics Executive Education from Stanford University. Mr. Leal’s experience includes the following:

 

●From 2006 to 2007, Mr. Leal worked at Deloitte & Touche.

 

●From 2007 to 2014, Mr. Leal worked as Station Manager at BYU Broadcasting, where he developed viable businesses in more that 20 countries, built products that have been distributed to over 55 million cell phones and approximately 39 million pay TV viewers, and translated over 15,000 hours of content into multiple languages.

 

●From 2014 to 2021, Mr. Leal served as General Manager and Director of Global Initiatives at Deseret Management Corporation. Mr. Leal led the development of one of the largest digital publishers achieving more than 256 million social media follows and over 4 billion monthly impressions.

 

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●In 2021, Mr. Leal founded Metalanguage, an artificial intelligence architecture using the latest NLP and LLM technology to provide pragmatic, user-centric solutions to the interpretation and behavioral industry.

 

●Mr. Leal has served on multiple advisory boards, including Oracle Cloud USA CAB, Ad Council, Leadership Council, and The Leonardo, Museum of Creativity & Innovation.

 

●During his career, Mr. Leal earned 27 nominations and 9 regional Emmys.

 

Leadership Structure and Oversight Responsibilities

 

The Board has overall responsibility for the management and supervision of the business operations of the Company. To the extent permitted by applicable law, the Board may delegate any of its rights, powers, and authority to, among others, the officers of the Company and any committee of the Board. Our Board consists of two members, neither of whom are Independent Directors.

 

ITEM 6.EXECUTIVE COMPENSATION

 

(a)Compensation of Executive Officers

 

The Company previously accrued $15,000 of salary per month for Rowland Day, Chief Executive Officer (“CEO”), with interest at 5% per annum on the CEO’s accrued salary. On March 25, 2021, Mr. Day agreed to forego and cancel the Corporation’s obligation to pay his accrued salary of $1,553,000 and accrued interest of $301,053 which was recorded to additional paid in capital. Mr. Day resigned as CEO effective August 1, 2022, and remained as the Chairman of the Board, President, Chief Financial Officer, and Secretary of the Company. On August 1, 2022, Saul Leal as appointed as CEO and as a director. On September 1, 2022, the Company agreed to compensate Mr. Leal and Mr. Day each $15,000 per month for their services.

 

During the years ended December 31, 2022, and 2021, the Company recognized $260,000 and $180,000 of salary expense. As of December 31, 2022, and 2021, the Company accrued $387,000 and $180,000 of salary expense, with accrued interest of $19,426 and $3,818, respectively.

 

The Company does not compensate directors through bonuses, stock awards, option awards, nonequity incentive plans, nonqualified deferred compensation earnings, or other compensation.

 

Compensation Table

 

The following table sets forth in summary form the compensation received by our Chief Executive Officer and Chief Financial Officer for the years ended December 31, 2022 and 2021:

 

Name and
Principal Position 		  Fiscal
Year 		    Salary
($) (3) 		    Bonus
($) 		    Stock
Awards
($) 		    Option
Awards
($) 		    Non-Equity
Incentive Plan
Compensation
($) 		    All Other
Compensation
($) 		    Total
($) 		 
                                                 
Saul Leal (1)     2022       60,000       –       –       –       –       –       60,000  
      2021       –       –       –       –       –       –       –  
                                                                 
Rowland W. Day II (2)     2022       200,000       –       –       –       –       –       200,000  
      2021       180,000       –       –       –       –       –       180,000  

 

(1) Mr. Leal was appointed as Chief Executive Officer on August 1, 2022.
(2) Mr. Day resigned as Chief Executive Officer effective August 1, 2022, and remained the Chief Financial Officer of the Company.
(3) The dollar value of base salary (cash and non-cash) earned.

 

(b)Compensation of Directors

 

No compensation is paid to our directors, who are not Independent Directors.

 

 20 

 

 

ITEM 7.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

 

Accrued Salary and Interest

 

The Company previously accrued $20,000 per month for Rowland Day’s salary which accrued interest at 5% per annum on the accrued salary. On March 25, 2021, Mr. Day agreed to forego and cancel the Company’s obligation to pay his accrued salary of $1,553,000 and accrued interest of $301,053, which was recorded to additional paid in capital. Mr. Day resigned as Chief Executive Officer of the Company effective August 1, 2022, and remains as the Chairman of the Board, President, Chief Financial Officer, and Secretary of the Company.

 

On August 1, 2022, the Company appointed Saul Leal as the new CEO. On September 1, 2022, the Company agreed to compensate Mr. Leal and Mr. Day at a rate of $15,000 per month for their services.

 

Expenses Paid on the Company’s Behalf

 

During the year ended December 31, 2022, Mr. Day paid $113,439 of expenses on the Company’s behalf and was repaid $103,030. During the year ended December 31, 2021, Mr. Day paid $53,816 of expenses on the Company’s behalf and was repaid $50,415. As of December 31, 2022, and 2021, the Company owed Mr. Day $13,809 and $3,401 for expenses paid on the Company’s behalf, respectively.

 

Convertible Note – Founder Note

 

On January 1, 2021, the Company entered into a convertible promissory note (the “Note”) with Rowland Day for $221,990. The Note accrues interest at a rate of 5% per annum and matures on demand by the holder of the Note. The Note provides for a $0.04 per share conversion rate. At the end of each calendar quarter the convertible promissory note is adjusted based upon any additional funds provided by Mr. Day.

 

From the period of approximately January 1, 2014, through December 31, 2020, Mr. Day had loaned the Company $1,299,030. Interest on this loan was approximately $245,398. On March 25, 2021, Mr. Day agreed to convert $1,077,040 of principal and $245,398 of accrued interest due under the Note into 1,475,000 shares of the Company’s Series B-1 convertible preferred stock. The Series B-1 convertible preferred stock was valued at the redemption value of $0.70798 per share with a fair market value of $1,044,271. The remaining unpaid principal balance and accrued interest totaling $221,990 that was owed to Mr. Day became a new demand promissory note with a 5% annual interest rate that began to accrue interest on January 1, 2021. As a result of the above transaction, the Company recorded a gain of $130,412 to additional paid in capital due to the related party nature of the transaction. The new demand promissory note is convertible into common stock at the rate of $0.04 per share. During the years ended December 31, 2022, and 2021, this Company recorded imputed interest expense of $6,660. As of December 31, 2022, and 2021, the convertible note payable, related party principal balance was $221,990, with accrued interest of $22,198 and $11,099, respectively.

 

Convertible Note Sold to Related Party

 

On February 23, 2021, a convertible noteholder sold a $100,000 promissory note to various buyers which are family members of Rowland Day. On the same day, the convertible noteholders agreed to convert the convertible note at a conversion price of $0.20 per share, which represents a debt modification due to the change in conversion feature from an exercise price $0.50 to $0.20. The Company evaluated the conversion option and concluded a beneficial conversion feature and embedded derivative were not present at issuance since the fair value of stock at the time of issuance matched the exercise price of $0.20. On March 15, 2021, the Company issued 500,000 shares of common stock with a fair value of $375,000 to convert $100,000 of principal. The Company recognized a loss on conversion of debt of $275,000 related to this transaction. As of December 31, 2022, and 2021, the convertible notes, related parties balance was $0.

 

Except as disclosed herein, No director, executive officer, shareholder holding at least 5% of shares of our common stock, or any family member thereof, had any material interest, direct or indirect, in any transaction, or proposed transaction since March 1, 2023, in which the amount involved in the transaction exceeds the lesser of $120,000 or one percent of the average of our total assets at the year-end for the last two completed fiscal years.

 

Review, Approval or Ratification of Transactions with Related Persons

 

The Board conducts an appropriate review of and oversees all related party transactions on a continuing basis and reviews potential conflicts of interest situations where appropriate. The Board has adopted formal standards to apply when it reviews, approves or ratifies any related party transaction. In addition, the Board applies the following standards to such reviews: (i) all related party transactions must be fair and reasonable and on terms comparable to those reasonably expected to be agreed to with independent third parties for the same goods and/or services at the time they are authorized by the Board and (ii) all related party transactions should be authorized, approved or ratified by the affirmative vote of a majority of the directors who have no interest, either directly or indirectly, in any such related party transaction.

 

Director Independence

 

We have determined that neither of our directors is independent.

 

 21 

 

 


ITEM 8.LEGAL PROCEEDINGS

 

There are not any material pending legal proceedings to which the Registrant is a party or as to which any of its property is subject, and no such proceedings are known to the Registrant to be threatened or contemplated against it.

 

ITEM 9.MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

 

Market Information

 

There is no established public trading market in our common stock, and a regular trading market may not develop, or if developed, may not be sustained. On November 2, 2022, the OTC Markets, Inc. discontinued the display of our quotes and labeled our stock “Caveat Emptor (Buyer Beware).” The following reflects inter-dealer prices, without mark-up, mark-down or commission and may not necessarily represent actual transactions as published by OTC Markets Pink.

 

   High ($)   Low ($) 
Fiscal Year 2021          
Quarter ended 12/31/2021   0.975    .0719 
Quarter ended 9/30/2021   1.00    0.88 
Quarter ended 6/30/2021   2.75    1.6101 
Quarter ended 3/31/2021   2.00    1.99 
           
Fiscal Year 2022          
Quarter ended 12/31/2022   1.66    0.115 
Quarter ended 9/30/2022   0.75    0.65 
Quarter ended 6/30/2022   1.05    1.01 
Quarter ended 3/31/2022   0.6    0.43 
           
Fiscal Year 2023          
Quarter ended 3/31/2023   0.0808    0.0808 
Quarter ended 6/30/2023     0.39       0.0575  

 

Securities authorized for sale under Rule 144 of the Securities Act or that the Company has agreed to register under the Securities Act in the future; or Securities that are being, or is proposed to be, publicly offered by the company, the offering of which could have a material effect on the market price of its common equity.

 

None.

 

Holders

 

As of June 30, 2023, there were 30,160,560 shares of Common Stock outstanding held by 261 record holders.

 

As of June 30, 2023, there were 2,068 shares of Series A Preferred Stock outstanding held by 9 record holders.

 

As of June 30, 2023, there were 8,619,420 shares of Series B-1 Preferred Stock outstanding held by 2 record holders.

 

Dividends

 

We have never paid cash dividends of any of our capital stock and currently intend to retain our future earnings, if any, to fund the development and growth of our business. We do not expect to pay any dividends on any of our capital stock in the foreseeable future.

 

Securities Authorized for Issuance under Equity Compensation Plans

 

None.

 

 22 

 

 

ITEM 10.RECENT SALES OF UNREGISTERED SECURITIES

 

Date of Sale   Number of Shares Issued   Class of Securities   Individual/Entity to Whom Securities were Sold   Consideration Paid   Exemption from Registration   Terms of Conversion   Use of Proceeds
5/13/2020   15000   Common   Istvan Elek   Cash   Exempt   NA   Development of Company’s business
1/15/2021   250,000   Common   Jodi Bardash   Cash   Exempt   NA   Development of Company’s business
1/25/2021   250,000   Common   Andrew Hansen   Cash   Exempt   NA   Development of Company’s business
1/26/2021   100,000   Common   Georgette Wansor   Services   Exempt   NA   Development of Company’s business
1/27/2021   50,000   Common   Moises Eskenazi   Cash   Exempt   NA   Development of Company’s business
2/1/2021   89,140   Common   Daniel Feeney   Cash   Exempt   NA   Development of Company’s business
2/1/2021   149,740   Common   Conrad F. Hohener III   Cash   Exempt   NA   Development of Company’s business
2/1/2021   149,360   Common   Keith Stribling Separate Property Trust   Cash   Exempt   NA   Development of Company’s business
2/1/2021   149,360   Common   Newton Family Trust/David Newton   Cash   Exempt   NA   Development of Company’s business
2/1/2021   148,865   Common   Philip and Allison Nelson Family Trust   Cash   Exempt   NA   Development of Company’s business
2/1/2021   149,660   Common   Edward A Gage, Jr. Revocable Trust   Cash   Exempt   NA   Development of Company’s business
2/1/2021   149,495   Common   Meyer Living Trust/Todd Meyer   Cash   Exempt   NA   Development of Company’s business
2/23/2021   66,667   Common   Robert Hartman   Cash   Exempt   NA   Development of Company’s business
2/23/2021   40,000   Common   Anthony Campisi   Cash   Exempt   NA   Development of Company’s business
2/24/2021   80,000   Common   Valerie Vichikov   Cash   Exempt   NA   Development of Company’s business
2/24/2021   50,000   Common   Melinda L. Day   Cash   Exempt   NA   Development of Company’s business
2/24/2021   250,000   Common   Hamilton F. Day   Cash   Exempt   NA   Development of Company’s business
2/24/2021   250,000   Common   Rowland W. Day and Milly Day   Cash   Exempt   NA   Development of Company’s business
2/24/2021   50,000   Common   David and Susanne Wigginton   Cash   Exempt   NA   Development of Company’s business
2/24/2021   50,000   Common   Rowland W. Day   Cash   Exempt   NA   Development of Company’s business
2/24/2021   50,000   Common   Diana Zivich   Cash   Exempt   NA   Development of Company’s business

 

 23 

 

 

2/24/2021   50,000   Common   Ann M. Day   Cash   Exempt   NA   Development of Company’s business
2/28/2021   66,670   Common   David Hartman   Cash   Exempt   NA   Development of Company’s business
3/1/2021   305,145   Common   JHK Holdings LLC/Kirk Harns   Cash   Exempt   NA   Development of Company’s business
3/15/2021   370,000   Common   Saul Leal   Services   Exempt   NA   Development of Company’s business
3/23/2021   500,000   Common   Istvan Elek   Cash   Exempt   NA   Development of Company’s business
3/29/2021   50,000   Common   Charles McMurray   Cash   Exempt   NA   Development of Company’s business
4/2/2021   1,475,000   Series B-1 Preferred   Rowland W. Day, II   Debt Conversion   Exempt   Convertible, at the option of the holder, at a rate of eleven (11) shares of Common Stock for each share of Series B-1 Preferred Stock   Development of Company’s business
4/2/2021   4,309,710   Series B-1 Preferred   Gerald Astor   Acquisition   Exempt   Convertible, at the option of the holder, at a rate of eleven (11) shares of Common Stock for each share of Series B-1 Preferred Stock   Development of Company’s business
4/2/2021   3,092,800   Common   Gerald Astor   Acquisition   Exempt   NA   Development of Company’s business
4/6/2021   3,049,392   Common   Istvan Elek   Cash   Exempt   NA   Development of Company’s business
7/6/2021   1,566   Common   Francis X. Pisano   Shares issued to settle payment for services   Exempt   NA   Development of Company’s business
7/6/2021   1,567   Common   Ingrid Carrillo   Shares issued to settle payment for services   Exempt   NA   Development of Company’s business
7/6/2021   1,567   Common   Kevin Hennings   Shares issued to settle payment for services   Exempt   NA   Development of Company’s business
7/6/2021   4,340   Common   Corey Henke   Shares issued to settle payment for services   Exempt   NA   Development of Company’s business
7/6/2021   133,000   Common   Bonneville Communications/Jeff Barton   Shares issued to settle payment for services   Exempt   NA   Development of Company’s business

 

 24 

 

 

7/8/2021   2,000   Common   Jeffrey Pizzino   Shares issued to settle payment for services   Exempt   NA   Development of Company’s business
7/13/2021   3,000   Common   Sprout Marketing/Bruce Law   Shares issued to settle payment for services   Exempt   NA   Development of Company’s business
8/5/2021   16,367   Common   Gregory Howison   Shares issued to settle payment for services   Exempt   NA   Development of Company’s business
9/21/2021   152,627   Common   Knobbe, Martens, Olson & Bear LLP/Philip Nelson   Shares issued to settle payment for services   Exempt   NA   Development of Company’s business
1/22/2022   250,000   Common   Kristy Rus   Cash   Exempt   NA   Development of Company’s business
4/1/2022   1,347,431   Common   Bob Carroll   Consulting Agreement   Exempt   NA   Development of Company’s business
4/19/2022   62,500   Common   Gary Mauro   Cash   Exempt   NA   Development of Company’s business
4/22/2022   25,000   Common   Daniel Wisian   Cash   Exempt   NA   Development of Company’s business
5/18/2022   37,500   Common   Sarah and Clinton Walker   Cash   Exempt   NA   Development of Company’s business
6/15/2022   50,000   Common   Robert Dean Schalow   Cash   Exempt   NA   Development of Company’s business
6/20/2022   37,500   Common   Daniel Wisian   Cash   Exempt   NA   Development of Company’s business
7/19/2022   50,000   Common   Brian J. Finley   Cash   Exempt   NA   Development of Company’s business
7/19/2022   58,750   Common   Roy E. Mullin   Cash   Exempt   NA   Development of Company’s business
7/19/2022   66,250   Common   Roy E. Mullin Roth IRA   Cash   Exempt   NA   Development of Company’s business
7/20/2022   100.000   Common   Richard Allen Sanders   Cash   Exempt   NA   Development of Company’s business
8/15/2022   250,000   Common   Istvan Elek   Cash   Exempt   NA   Development of Company’s business
8/19/2022   15,385   Common   Maria Julia Rojas   Cash   Exempt   NA   Development of Company’s business
8/25/2022   15,385   Common   Munsee Co LLC/Nick Munsee   Cash   Exempt   NA   Development of Company’s business
9/9/2022   15,385   Common   Dominic Pace   Cash   Exempt   NA   Development of Company’s business
9/19/2022   15,395   Common   Sean Blair   Cash   Exempt   NA   Development of Company’s business
10/11/2022   20,000   Common   Nicholas V. Lampson   Cash   Exempt   NA   Development of Company’s business

 

 25 

 

 

10/11/2022   10,000   Common   Lindsey Warren Davis   Cash   Exempt   NA   Development of Company’s business
10/11/2022   10,000   Common   Elisha Gardener Honeycutt   Cash   Exempt   NA   Development of Company’s business
10/11/2022   30,000   Common   Gary Mauro   Cash   Exempt   NA   Development of Company’s business
10/11/2022   90,000   Common   Bryan Finley   Cash   Exempt   NA   Development of Company’s business
10/11/2022   10,000   Common   Leroy Saleme   Cash   Exempt   NA   Development of Company’s business
10/11/2022   40,000   Common   Daniel Wisian   Cash   Exempt   NA   Development of Company’s business
10/11/2022   10,000   Common   George Henry Summerville   Cash   Exempt   NA   Development of Company’s business
10/11/2022   10,000   Common   Bradley L. Morrison   Cash   Exempt   NA   Development of Company’s business
10/11/2022   30,003   Common   Shilpa P. Bakre   Cash   Exempt   NA   Development of Company’s business
10/11/2022   125,000   Common   Dean V. Wiberg   Cash   Exempt   NA   Development of Company’s business
10/11/2022   10,000   Common   Sonia Van Meter   Cash   Exempt   NA   Development of Company’s business
10/11/2022   20,000   Common   William O. Mara   Cash   Exempt   NA   Development of Company’s business
10/11/2022   20,000   Common   Warren Alverson   Cash   Exempt   NA   Development of Company’s business
10/11/2022   10,000   Common   Ryan S. Sanders   Cash   Exempt   NA   Development of Company’s business
10/19/2022   1,363,637   Series B-1 Preferred   Saul Leal   Services   Exempt   Convertible, at the option of the holder, at a rate of eleven (11) shares of Common Stock for each share of Series B-1 Preferred Stock   Development of Company’s business
10/20/2022   9,615   Common   Sean Blair   Cash   Exempt   NA   Development of Company’s business
10/20/2022   9,615   Common   Munsee Co LLC/Nick Munsee   Cash   Exempt   NA   Development of Company’s business
10/20/2022   9,615   Common   Maria Julia Rojas   Cash   Exempt   NA   Development of Company’s business
10/20/2022   9,615   Common   Dominic Pace   Cash   Exempt   NA   Development of Company’s business
10/24/2022   10,000   Common   Thomas Charles Gent   Cash   Exempt   NA   Development of Company’s business

 

 26 

 

 

10/25/2022   10,000   Common   Arlo Pignotti   Cash   Exempt   NA   Development of Company’s business
10/27/2022   45,000   Common   Evan Spaulding   Cash   Exempt   NA   Development of Company’s business
10/29/2022   62,500   Common   Plan R Enterprises Inc./Jeffrey C. Moffat   Cash   Exempt   NA   Development of Company’s business
10/31/2022   40,000   Common   Thomas C. Clemons   Cash   Exempt   NA   Development of Company’s business
10/31/2022   700,000   Common   Gonzalo Carballo   Cash   Exempt   NA   Development of Company’s business
11/01/2022   31,250   Common   Don L. Enlow   Cash   Exempt   NA   Development of Company’s business
11/28/2022   1,000,000   Common   AOS Holdings LL/Denis Suggs   Cash   Exempt   NA   Development of Company’s business
11/29/2022   10,000   Common   Bear McCreadie   Cash   Exempt   NA   Development of Company’s business
11/29/2022   100,000   Common   Daniel Wisian   Cash   Exempt   NA   Development of Company’s business
11/29/2022   12,500   Common   Earls Heritage Trust/Earl Foote   Cash   Exempt   NA   Development of Company’s business
11/29/2022   10,000   Common   Lindsey Warren Davis   Cash   Exempt   NA   Development of Company’s business
4/12/2023   125,000   Common   Larry Oliver and Bobbie Oliver JTWROS   Cash   Exempt   NA   Development of Company’s business
4/12/2023   100,000   Common   Michael L. Soileau and Rhonda Soileau JTWROS   Cash   Exempt   NA   Development of Company’s business
4/12/2023   250,000   Common   Abraham Family Trust – Michael Abraham   Cash   Exempt   NA   Development of Company’s business
4/26/2023   50,000   Common   Abigail Frank   Cash   Exempt   NA   Development of Company’s business
4/26/2023   250,000   Common   Darren Scharf   Cash   Exempt   NA   Development of Company’s business
5/1/2023   4,309,710   Series B-1 Preferred   Saul Leal   Acquisition Agreement   Exempt   Convertible, at the option of the holder, at a rate of eleven (11) shares of Common Stock for each share of Series B-1 Preferred Stock   Development of Company’s business
5/1/2023   1,772,800   Common   Saul Leal   Acquisition Agreement   Exempt   NA   Development of Company’s business
5/9/2023   30,000   Common   The David Politis Company Inc. – David Politis   Consulting Services   Exempt   NA   Development of Company’s business
5/12/2023   125,000   Common   Damon Garcia   Cash   Exempt   NA   Development of Company’s business
5/23/2023   125,000   Common   Quest Trust Company –Larry Andres IRA   Cash   Exempt   NA   Development of Company’s business
5/23/2023   250,000   Common   Kolleen T. Kennedy   Cash   Exempt   NA   Development of Company’s business
5/31/2023   35,000   Common   The Entrust Group – FBO Nicholas Lampson   Cash   Exempt   NA   Development of Company’s business
5/31/2023   125,000   Common   Quest Trust Company– FBO Ronald L. Reeves   Cash   Exempt   NA   Development of Company’s business
6/14/2023   62,500   Common   Adam Yannotta   Cash   Exempt   NA   Development of Company’s business
6/14/2023   10,000   Common   Lindsey Warren Davis   Cash   Exempt   NA   Development of Company’s business

 27 

 

 

ITEM 11.DESCRIPTION OF REGISTRANT’S SECURITIES TO BE REGISTERED

 

Not applicable.

 

ITEM 12.INDEMNIFICATION OF DIRECTORS AND OFFICERS

 

Under our Bylaws, the Company shall, to the maximum extent and in the manner permitted by law, indemnify each of its directors against expenses, judgments, fines, settlements, and other amounts actually and reasonably incurred in connection with any proceeding, arising by reason of the fact that such person is or was a director of the Company. The Company may, to the extent and in the manner permitted by law, indemnify each of its employees, officers, and agents (other than directors) against expenses, judgments, fines, settlements, and other amounts actually and reasonably incurred in connection with any proceeding, arising by reason of the fact that such person is or was an employee, officer, or agent of the Company. The Company may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Company against any liability asserted against or incurred by such person in such capacity or arising out of that person’s status as such, whether or not the Company would have the power to indemnify that person against liability under the other provisions of the Bylaws.

 

Further pursuant to the Bylaws, the Board may enter into a contract with any director, officer, employee or agent of the Company, or any person who is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including employee benefit plans, or any person who was a director, officer, employee or agent of a corporation which was a predecessor corporation of the Company or of another enterprise at the request of such predecessor corporation, providing for indemnification rights equivalent to or, if the Board so determines and to the extent permitted by applicable law, greater than, those provided for in Article VII of the Bylaws.

 

Without limiting the application of the foregoing, the Board may adopt bylaws from time to time with respect to indemnification, to provide at all times the fullest indemnification permitted by the laws of the State of Nevada, and may cause us to purchase and maintain insurance on behalf of any person who is or was our director or officer, or is or was serving at our request as a director or officer of another corporation, or as its representative in a partnership, joint venture, trust, or other enterprise against any liability asserted against such person and incurred in any such capacity or arising out of such status, whether or not we would have the power to indemnify such person. The indemnification provided shall continue as to a person who has ceased to be a director, officer, employee, or agent, and shall inure to the benefit of the heirs, executors, and administrators of such person.

 

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

 

We have not entered into any agreements with our directors and executive officers that require us to indemnify these persons against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred (including expenses of a derivative action) in connection with any proceeding, whether actual or threatened, to which any such person may be made a party by reason of the fact that the person is or was our director or officer or any of our affiliated enterprises.

 

 28 

 

 

ITEM 13.FINANCIAL STATEMENTS AND EXHIBITS

 

The information required by this item may be found beginning on page F-1 of this Form 10.

 

ITEM 14.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

There are not and have not been disagreements between the Company and its accountant on any matter of accounting principles, practices, audit procedures, the Company’s internal control over financial reporting, the reliability of previously issued audit reports or financial statements, or financial statement disclosure. Neither are there, nor have there been, any changes in the Company’s auditors during the two most recent fiscal years or any subsequent interim period.

 

ITEM 15.FINANCIAL STATEMENTS AND EXHIBITS

 

(a)Financial Statements

 

The following financial statements are filed as part of this Registration Statement:

 

1.Audited financial statements for years ended December 31, 2022 and 2021
2. Unaudited financial statements for six months ended June 30, 2023 and 2022
3.Audit opinion by M&K CPAs, PLLC
4.Audited Statement of Operations for years ended December 31, 2022 and 2021
5.Notes to audited financial statements

 

(b)Exhibits

 

  3.1 Articles of Incorporation
  3.2 Amended and Restated Bylaws
  3.3 Cert of Designation Series A
  3.4 ONEMETA AI – NV – Secretary of State – Amendment Filing
  3.5 Amendment to Certificate of Designation Series B
  3.6 Certificate of Designation Final-Series A - 1
  21.0 Subsidiaries

 

 29 

 

 

SIGNATURES

 

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.

 

    OneMeta Inc.
    (Registrant)
     
Date: August 25, 2023 By: /s/ Rowland Day
  Rowland Day, President
     
    (Signature)*

 

*Print name and title of the signing officer under his signature.

 

 30 

 

 

GENERAL INSTRUCTIONS

 

A. Rule as to Use of Form 10.

 

Form 10 shall be used for registration pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934 of classes of securities of issuers for which no other form is prescribed.

 

B. Application of General Rules and Regulations.

 

(a) The General Rules and Regulations under the Act contain certain general requirements which are applicable to registration on any form. These general requirements should be carefully read and observed in the preparation and filing of registration statements on this form.

 

(b) Particular attention is directed to Regulation 12B [17 CFR 240.12b-1 - 240.12b-36] which contains general requirements regarding matters such as the kind and size of paper to be used, the legibility of the registration statement, the information to be given whenever the title of securities is required to be stated, and the filing of the registration statement. The definitions contained in Rule 12b-2 [17 CFR 240.12b-2] should be especially noted.

 

C. Preparation of Registration Statement.

 

(a) This form is not to be used as a blank form to be filled in, but only as a guide in the preparation of the registration statement on paper meeting the requirements of Rule 12b-12 [17 CFR 240.12b-12]. The registration statement shall contain the item numbers and captions, but the text of the items may be omitted. The answers to the items shall be prepared in the manner specified in Rule 12b-13 [17 CFR 240.12b-13].

 

(b) Unless otherwise stated, the information required shall be given as of a date reasonably close to the date of filing the registration statement.

 

(c) Attention is directed to Rule 12b-20 [17 CFR 240.12b-20] which states: “In addition to the information expressly required to be included in a statement or report, there shall be added such further material information, if any, as may be necessary to make the required statements, in light of the circumstances under which they are made, not misleading.

 

 31 

 

 

D. Signature and Filing of Registration Statement.

 

Three complete copies of the registration statement, including financial statements, exhibits and all other papers and documents filed as a part thereof, and five additional copies which need not include exhibits, shall be filed with the Commission. At least one complete copy of the registration statement, including financial statements, exhibits and all other papers and documents filed as a part thereof, shall be filed with each exchange on which any class of securities is to be registered. At least one complete copy of the registration statement filed with the Commission and one such copy filed with each exchange shall be manually signed. Copies not manually signed shall bear typed or printed signatures.

 

E. Omission of Information Regarding Foreign Subsidiaries.

 

Information required by any item or other requirement of this form with respect to any foreign subsidiary may be omitted to the extent that the required disclosure would be detrimental to the registrant. However, financial statements, otherwise required, shall not be omitted pursuant to this instruction. Where information is omitted pursuant to this instruction, a statement shall be made that such information has been omitted and the names of the subsidiaries involved shall be separately furnished to the Commission. The Commission may, in its discretion, call for justification that the required disclosure would be detrimental.

 

F. Incorporation by Reference.

 

Attention is directed to Rule 12b-23 [17 CFR 240.12b-23] which provides for the incorporation by reference of information contained in certain documents in answer or partial answer to any item of a registration statement.

 

 32 

 

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors and

Shareholders of OneMeta AI

 

Opinion on the Financial Statements

 

We have audited the accompanying balance sheets of OneMeta AI. (the Company) as of December 31, 2022 and 2021, and the related statements of operations, change in stockholders’ equity (deficit), and cash flows for each of the years in the two-year period ended December 31, 2022, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

 

Going Concern

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has negative cash flow from operations and a net loss, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Basis for Opinion

 

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provides a reasonable basis for our opinion.

 

Critical Audit Matters

 

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

 

Series B-1 Preferred Shares Classification

 

As discussed in Note 2 and 7 to the financial statements, the Company issued Series B-1 Preferred Stock as a component of the consideration paid in multiple transactions during the years ended with features requiring significant accounting judgment.

 

Auditing management’s evaluation of these transactions can be complex due to the unusual nature of these transactions

 

To evaluate the appropriateness of the instrument’s classification, we examined and evaluated the agreement along with management’s evaluation of the key terms and management’s disclosure of the transactions.

 

/s/ M&K CPAS, PLLC

We have served as the Company’s auditor since 2022.

Houston, TX

June 30, 2023

 

F-1

 

 

OneMeta AI

Balance Sheets

 

   December 31,
2022		   December 31,
2021		 
         
ASSETS          
Current assets:          
Cash  $400,703   $7,347 
Total current assets   400,703    7,347 
           
Noncurrent assets:          
Software, net   1,077,475    - 
Total noncurrent assets   1,077,475    - 
           
Total assets  $1,478,178   $7,347 
           
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT          
Current liabilities:          
Accounts payable  $377,883   $319,307 
Accrued expenses, related party   442,435    198,319 
Convertible notes payable, related party   221,990    221,990 
Total current liabilities   1,042,308    739,616 
Total liabilities   1,042,308    739,616 
           
Mezzanine equity:          
Series B-1 convertible preferred stock, $0.70798 redemption value, 8,855,511 shares authorized, 5,673,346 and 4,309,710 shares issued and outstanding, respectively   4,016,616    3,051,189 
           
STOCKHOLDERS’ DEFICIT          
Preferred stock, $0.001 par value, 50,000,000 shares authorized, Series A preferred stock, $0.001 par value, 2,068 shares authorized and outstanding   2    2 
Common stock, $0.001 par value, 500,000,000 shares authorized,
24,983,593 and 20,075,409 shares issued and outstanding, respectively		   24,984    20,073 
Additional paid in capital   24,156,001    22,614,628 
Accumulated deficit   (27,761,733)   (26,418,161)
Total stockholders’ deficit   (3,580,746)   (3,783,458)
Total liabilities, mezzanine equity and stockholders’ deficit  $1,478,178   $7,347 

 

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

 

F-2

 

 

OneMeta AI

Statements of Operations

For the years ended December 31, 2022 and 2021

 

   December 31, 2022   December 31, 2021 
         
Revenue  $1,295   $4,265 
Total revenue   1,295    4,265 
           
Operating expenses:          
General and administrative   669,550    402,048 
Advertising and marketing   49,800    66,369 
Legal and professional   434,499    135,450 
Research and development   157,650    - 
Gain on settlement of accounts payable   -    (252,886)
           
Total operating expenses   1,311,499    350,981 
           
Loss from operations   (1,310,204)   (346,716)
           
Other expense:          
           
Interest expense   (33,368)   (49,586)
Loss on conversion of debt   -    (514,330)
           
Total other expense   (33,368)   (563,916)
           
Net loss  $(1,343,572)  $(910,632)
           
Net loss per common share:          
Basic  $(0.06)  $(0.05)
Diluted  $(0.06)  $(0.05)
           
Weighted average common shares outstanding:          
Basic   22,249,977    18,252,746 
Diluted   22,249,977    18,252,746 

 

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

 

F-3

 

 

OneMeta AI

Statements of Changes in Stockholders’ Deficit

For the years ended December 31, 2022 and 2021

 

   Series B-1 Convertible Preferred Stock   Series A Preferred Stock   Common Stock  

Additional

paid-in

   Common Stock   Accumulated     
   Shares   Amount   Shares   Amount   Shares   Amount   capital   Payable   Deficit   Total 
                                         
Balance, December 31, 2020   2,834,710   $2,006,918    2,068   $2    13,027,881   $13,028   $18,751,471   $548,641   $(25,507,529)  $(6,194,387)
Common shares issued for cash   -    -    -    -    4,337,729    4,338    734,306    (548,641)   -    190,003 
Common shares issued for settlement of accounts payable   -    -    -    -    316,034    316    62,891    -    -    63,207 
Common shares issue for convertible debt and accrued interest   -    -    -    -    1,420,765    1,421    522,062    -    -    523,483 
Common shares issue for convertible debt and accrued interest, related party   -    -    -    -    500,000    500    374,500    -    -    375,000 
Stock based compensation   -    -    -    -    470,000    470    178,273    -    -    178,743 
Imputed interest   -    -    -    -    -    -    6,660    -    -    6,660 
Series B-1 convertible preferred shares issued for the conversion of debt and accrued interest   1,475,000    1,044,271    -    -    -    -    130,412    -    -    130,412 
Settlement of liabilities, related party   -    -    -    -    -    -    1,854,053    -    -    1,854,053 
Net loss   -    -    -    -    -    -    -    -    (910,632)   (910,632)
Balance, December 31, 2021   4,309,710    3,051,189    2,068    2    20,072,409    20,073    22,614,628    -    (26,418,161)   (3,783,458)
Common shares issued for cash   -    -    -    -    3,563,753    3,564    1,321,937    -    -    1,325,501 
Stock based compensation   -    -    -    -    1,347,431    1,347    212,776    -    -    214,123 
Imputed interest   -    -    -    -    -    -    6,660    -    -    6,660 
Series B-1 convertible preferred shares issued for software   1,363,636    965,427    -    -    -    -    -    -    -    - 
Net loss   -    -    -    -    -    -    -    -    (1,343,572)   (1,343,572)
Balance, December 31, 2022   5,673,346   $4,016,616    2,068   $2    24,983,593   $24,984   $24,156,001   $-   $(27,761,733)  $(3,580,746)

 

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

 

F-4

 

 

OneMeta AI

Statements of Cash Flows

For the years ended December 31, 2022 and 2021

 

   December 31, 2022   December 31, 2021 
CASH FLOWS FROM OPERATING ACTIVITIES          
Net loss  $(1,343,572)  $(910,632)
Adjustment to reconcile net loss to cash used in operating activities:          
Imputed interest   6,660    6,660 
Stock based compensation   214,123    178,743 
Amortization   97,952    - 
Loss on conversion of debt   -    514,330 
Gain on settlement of accounts payable   -    (252,886)
Net change in:          
Prepaid expenses   -    2,770 
Accounts payable   (54,863)   (23,261)
Accrued expenses   -    (84,508)
Accrued expenses, related party   357,555    252,135 
           
CASH FLOWS USED IN OPERATING ACTIVITIES   (722,145)   (316,649)
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Purchase of software   (210,000)   - 
           
CASH FLOWS USED IN INVESTING ACTIVITIES   (210,000)   - 
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Proceeds from issuance of common shares   1,325,501    190,003 
           
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES   1,325,501    190,003 
           
NET CHANGE IN CASH   393,356    (126,646)
Cash, beginning of period   7,347    133,993 
Cash, end of period  $400,703   $7,347 
           
SUPPLEMENTAL CASH FLOW INFORMATION          
           
Cash paid on interest expense  $-   $1,903 
Cash paid for income taxes  $-   $- 
           
NON-CASH TRANSACTIONS          
Expenses paid on the Company’s behalf  $113,439   $53,816 
Series B-1 convertible preferred shares issued for software  $965,427   $- 
Common shares issued for settlement of accounts payable  $-   $63,207 
Common shares issue for convertible debt and accrued interest  $-   $384,153 
Series B-1 convertible preferred shares issued for the conversion of debt and accrued interest  $-   $1,174,683 
Settlement of liabilities, related party  $-   $1,854,053 

 

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

 

F-5

 

 

OneMeta AI

Notes to the Financial Statements

 

Note 1. Basis of Presentation

 

The accompanying audited financial statements of OneMeta AI (“we”, “our”, “OneMeta” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”).

 

OneMeta AI was originally incorporated as Promotions on Wheels Holdings, Inc.in July 2006 and was a development stage company that offered live promotions and marketing events using custom-built mobile displays. Presently we are focused on primarily marketing our cutting-edge artificial intelligence technologies that solve everyday problems.

 

Note 2. Summary of Significant Accounting Policies

 

The financial statements have, in management’s opinion, been properly prepared within the framework of the significant accounting policies summarized below:

 

Basis of Presentation

 

The basis of accounting applied is United States generally accepted accounting principles (“US GAAP”).

 

Cash and Cash Equivalents

 

The Company considers all highly liquid investments with an original purchase maturity of three months or less to be cash equivalents. As of December 31, 2022 and 2021, there were no cash equivalents.

 

Use of Estimates

 

In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates in the accompanying financial statements involving the valuation of common stock and stock based compensation.

 

Related Parties

 

The Company follows ASC 850, “Related Party Disclosures,” for the identification of related parties and disclosure of related party transactions.

 

Fair Value of Financial Instruments

 

The Company’s financial instruments consist primarily of cash and accounts payable. The carrying values of these financial instruments approximate their respective fair values as they are short-term in nature or carry interest rates that approximate market rates.

 

Mezzanine equity

 

Where ordinary or preferred shares are determined to be conditionally redeemable upon the occurrence of certain events that are not solely within the control of the issuer, and upon such event, the shares would become redeemable at the option of the holders, they are classified as ‘mezzanine equity’ (temporary equity). The purpose of this classification is to convey that such a security may not be permanently part of equity and could result in a demand for cash, securities or other assets of the entity in the future.

 

F-6

 

 

Revenue Recognition

 

The Company recognizes revenue in accordance with ASC Topic 606, Revenue From Contracts With Customers, which was adopted on January 1, 2018 using the modified retrospective method, with no impact to the Company’s comparative financial statements. Revenues are recognized when control of the promised goods or services is transferred to the customer in an amount that reflects the consideration the Company expects to be entitled to in exchange for transferring those goods or services. Revenue is recognized based on the following five step model:

 

● Identification of the contract with a customer
● Identification of the performance obligations in the contract
● Determination of the transaction price
● Allocation of the transaction price to the performance obligations in the contract
● Recognition of revenue when, or as, the Company satisfies a performance obligation

 

We enter into revenue arrangements in which a customer may purchase a combination of subscriptions, consulting services, training and education. Fully hosted subscription services (“SaaS”) allow customers to access hosted software during the contractual term without taking possession of the software.

 

We recognize revenue ratably over the contractual service term for hosted services that are priced based on a committed number of transactions where the delivery and consumption of the benefit of the services occur evenly over time, beginning on the date the services associated with the committed transactions are first made available to the customer and continuing through the end of the contractual service term. Over-usage fees and fees based on the actual number of transactions are billed in accordance with contract terms as these fees are incurred and are included in the transaction price of an arrangement as variable consideration. Revenue based on per-minute or per-word basis, where invoicing is aligned to the pattern of performance, customer benefit and consumption, are typically accounted for utilizing the “as-invoiced” practical expedient. Revenue for subscriptions sold as a fee per period is recognized ratably over the contractual term as the customer simultaneously receives and consumes the benefit of the underlying service.

 

Licenses for software may be purchased as a subscription for a fixed period of time or based on usage. Revenue from licenses is recognized at the point in time the software is available to the customer, provided all other revenue recognition criteria are met, and classified as revenue on our Statements of Operations. Our interpretation or translation services fees are based on a per-minute or per-word basis, are typically accounted for utilizing the “as-invoiced” practical expedient.

 

Our services are comprised primarily of fees related to training, and education for certain licenses that are recognized at a point in time. Training and education revenues are recognized as the services are performed.

 

Disaggregation of Revenues

 

The Company disaggregates revenue between subscription and license revenue and training and education revenue.

 

   

December 31,

2022

   

December 31,

2021

 
Subscription and license revenue   $ 1,295     $ 4,265  
Total revenue   $ 1,295     $ 4,265  

 

Deferred Revenue

 

Deferred revenue includes service and support contracts and represents the undelivered performance obligation of agreements that are typically for one year or less. As of December 31, 2022 and 2021, deferred revenue was $0.

 

Basic and Diluted Loss Per Share

 

Basic loss per common share is computed by dividing net loss available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted loss per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents. In periods when losses are reported, the weighted-average number of common shares outstanding excludes common stock equivalents, because their inclusion would be anti-dilutive. Accordingly, the number of weighted average shares outstanding, as well as the amount of net loss per share are presented for basic and diluted per share calculations for the year ended December 31, 2022 and 2021, reflected in the accompanying statement of operations.

 

Stock-based Compensation

 

The Company determines the fair value of stock option awards granted to employees and nonemployees in accordance with FASB ASC Topic 718 – 10. Compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period.

 

Recent Accounting Pronouncements

 

In August 2020, the FASB issued ASU 2020-06—Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and edging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”) to simplify the accounting for convertible instruments by removing certain separation models in Subtopic 470- 20, Debt with Conversion and Other Options, for convertible instruments. Under the amendments in ASU 2020-06, the embedded conversion features no longer are separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital. Consequently, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost and a convertible preferred stock will be accounted for as a single equity instrument measured at its historical cost, as long as no other features require bifurcation and recognition as derivatives. By removing those separation models, the interest rate of convertible debt instruments typically will be closer to the coupon interest rate when applying the guidance in Topic 835, Interest. The amendments in ASU 2020-06 provide financial statement users with a simpler and more consistent starting point to perform analyses across entities. The amendments also improve the operability of the guidance and reduce, to a large extent, the complexities in the accounting for convertible instruments and the difficulties with the interpretation and application of the relevant guidance. Additionally, for convertible debt instruments with substantial premiums accounted for as paid-in capital, amendments in ASU 2020-06 added disclosures about (1) the fair value amount and the level of fair value hierarchy of the entire instrument for public business entities and (2) the premium amount recorded as paid-in capital. The amendments in ASU 2020-06 are effective for public business entities, excluding entities eligible to be smaller reporting companies, as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. Entities should adopt the guidance as of the beginning of its annual fiscal year and are allowed to adopt the guidance through either a modified retrospective method of transition or a fully retrospective method of transition. In applying the modified retrospective method, entities should apply the guidance to transactions outstanding as of the beginning of the fiscal year in which the amendments are adopted. Transactions that were settled (or expired) during prior reporting periods are unaffected. The cumulative effect of the change should be recognized as an adjustment to the opening balance of retained earnings at the date of adoption. If an entity elects the fully retrospective method of transition, the cumulative effect of the change should be recognized as an adjustment to the opening balance of retained earnings in the first comparative period presented. The Company early adopted ASU 2020-06 on January 1, 2022. The adoption of ASU 2020-06 did not have an impact on the Company’s financial statements.

 

F-7

 

 

The Company does not believe that any recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have a material effect on the accompanying financial statements.

 

Note 3. Going Concern

 

These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next fiscal year. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. At December 31, 2022, the Company had not yet achieved profitable operations and expects to incur further losses in the development of its business, all of which raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has no formal plan in place to address this concern but considers that the Company will be able to obtain additional funds by equity financing and/or related party advances, however, there is no assurance of additional funding being available.

 

Note 4. Asset Acquisition

 

On June 30, 2022, the Company entered into an acquisition agreement with Metalanguage Corp. Per the acquisition agreement, the Company acquired all the shares of Metalanguage Corp.  Per the acquisition agreement, the purchase price is comprised of $210,000 cash, 1,363,636 shares of Series B-1 convertible preferred shares and the right to receive contingent consideration in the form of equity. The contingent consideration for the acquisition is comprised of 1,363,637 shares of Series B-1 convertible preferred stock, which shall be held in escrow and will be issued upon the Company achieving sales of $5 million within 12 consecutive months prior to December 31, 2027. The day one contingent liability is $0 since the probability of achieving $5 million in sales within twelve consecutive months is low but will be re-evaluated in future periods.

 

The total purchase price for the acquisition was determined to be $1,175,427 which consisted of $210,000 cash paid and 1,363,636 shares of Series B-1 convertible preferred stock valued at the redemption value of $0.70798 per share with a fair value of $965,427. The Company concluded the purchase of a single set of assets qualified as an asset acquisition and all such acquisition costs have been capitalized as software on the balance sheet. The Company estimated the useful life of the software acquired and purchased to be 3 years. During the year ended December 31, 2022, the Company recorded $97,952 of amortization expense related to the software. As of December 31, 2022, the software, net balance was $1,077,475.

 

F-8

 

 

Note 5. Related Party Transactions

 

Accrued salary and interest

 

The Company accrues $20,000 per month for Rowland Day, Chief Executive Officer (“CEO”), salary and accrues interest at 5% per annum on the CEO’s accrued salary. On March 25, 2021, Mr. Day agreed to forego and cancel the Corporation’s obligation to pay the accrued salary of $1,553,000 and accrued interest of $301,053 of accrued interest due, which was recorded to additional paid in capital. Mr. Day resigned as CEO effective August 1, 2022, and shall remain as the Chairman of the Board, President, and Chief Financial Officer of the Company. On August 1, 2022, the Company appointed Saul Leal as their new CEO. On September 1, 2022 the Company agreed to compensate Mr. Leal and Mr. Day $15,000 per month for their services.

 

During the year ended December 31, 2022 and 2021, the Company recognized $260,000 and $180,000 of salary expense. As of December 31, 2022 and 2021, the Company accrued $387,000 and $180,000 of compensation, with accrued interest of $19,426 and $3,818, respectively.

 

Expense paid on the Company’s behalf

 

During the year ended December 31, 2022, Mr. Day paid $113,439 of expenses on the Company’s behalf and was repaid $103,030. During the year ended December 31, 2021, Mr. Day paid $53,816 of expenses on the Company’s behalf and was repaid $50,415. As of December 31, 2022 and 2021, the Company owed the CEO $13,809 and $3,401 for expenses paid on the Company’s behalf, respectively.

 

Convertible note – Founder note

 

Rowland Day, the Company’s prior CEO agreed to provide the necessary working capital for the Company’s business. At the end of each calendar quarter the convertible promissory note is adjusted based upon the funds provided. The convertible promissory note bears interest at 5% and is convertible at $0.04 per share. On March 25, 2021, Mr. Day agreed to convert $1,077,040 of convertible note and $245,398 of accrued interest due into 1,475,000 shares of the Corporation’s Series B-1 convertible preferred stock. The Series B-1 convertible preferred stock was valued at the redemption value of $0.70798 per share with a fair value of $1,044,271. The remaining unpaid principal loan balance and accrued interest totaling $221,990 that is owed to Mr. Day became a new demand promissory note with a 5% annual interest rate that begins to accrue interest on January 1, 2021. As a result of the above settlement, the Company recorded a gain of $130,412 to additional paid in capital due to the related party nature of the transaction. The new demand promissory note is convertible into Series B-1 preferred stock at the rate of $0.10 per share. During the years ended December 31, 2022 and 2021, the Company recorded imputed interest expense of $6,660. As of December 31, 2022 and 2021, the convertible note payable, related party principal balance was $221,990, with accrued interest of $22,198 and $11,099, respectively.

 

Convertible note sold to related party

 

On February 23, 2021, a convertible noteholder sold a $100,000 promissory note to various buyers which are family members of Mr. Day. On the same day, the convertible noteholders agreed to convert the convertible note at a conversion price of $0.20 per share, which represents a debt modification due to the change in conversion feature from an exercise price $0.50 to $0.20. The Company evaluated the conversion option and concluded a beneficial conversion feature and embedded derivative were not present at issuance since the fair value of stock at the time of issuance matched the exercise price of $0.20. On March 15, 2021, the Company issued 500,000 shares of common stock with a fair value of $375,000 to convert $100,000 of principal. The Company recognized a loss on conversion of debt of $275,000 related to this transaction. As of December 31, 2022 and 2021, the convertible notes, related parties balance was $0.

 

F-9

 

 

Note 6. Convertible Notes

 

From July through September 2018, the Company issued nine convertible notes in the principal amount of $315,000. The convertible notes are unsecured, bear interest at 5% per year and are due and payable six months from issuance. At the option of the convertible noteholders, the notes can be converted into shares of the Company’s common stock. The number of shares of common stock to be issued upon conversion of the convertible note shall be determined by dividing the amount of the convertible note and accrued interest by either $0.50 per share or the per share price of the stock that was sold in the Capital Raise, whichever price is the lowest. From the date of issuance through conversion a “Capital Raise” was never completed as that term was defined in the agreements, so the conversion price remained at $0.50. The Company evaluated the conversion option and concluded a beneficial conversion feature and embedded derivative were not present at issuance since the fair value of stock at the time of issuance matched the exercise price of $0.50. On February 23, 2021, a convertible noteholder sold $26,000 of accrued interest due on their convertible note to two new convertible noteholders. During February 2021, the convertible noteholders agreed to convert $215,000 of convertible note principal and $69,153 of accrued interest at a conversion price of $0.20 per share, which represents a debt modification due to the change in conversion feature from an exercise price $0.50 to $0.20. On March 15, 2021, the Company issued 1,420,765 shares of common stock with a fair value of $523,483 to convert $215,000 of principal and $69,153 of accrued interest. The Company recognized a loss on conversion of debt of $239,330 related to this transaction. As of December 31, 2022 and 2021, the convertible notes balance was $0.

 

Note 7. Equity

 

The Company is currently authorized to issue up to 500,000,000 shares of common stock with a par value of $0.001. In addition, The Company is authorized to issue 50,000,000 shares of preferred stock with a par value of $0.001. The specific rights of the preferred stock, when so designated, shall be determined by the board of directors.

 

Common Stock

 

2022

 

On March 1, 2017, the Company entered into a consulting agreement. As consideration for its services under the Agreement, the Company agreed to pay to the consultant 847,431 restricted shares of the Company’s common stock and vest over five years. The shares were valued at $0.50 per share based on estimated fair value using the cash selling price at the time of issuance and will be recognized over the service period. During the year ended December 31, 2021, the Company recorded expense of $84,743 related to this agreement. During the year ended December 31, 2022, the Company issued 847,431 shares related to this agreement and recognized $14,124 of expense for services provided during the year ended December 31, 2022. Additionally, and unrelated to the terms of the consulting agreement, the Company issued the consultant 500,000 bonus shares in 2022. The shares were valued at $0.40 per share based on estimated fair value using the cash selling price at the time of issuance and vested at issuance.

 

During the year ended December 31, 2022, the Company issued 3,563,753 shares of common for cash and collected $1,325,501.

 

2021

 

During the year ended December 31, 2021, the Company sold 4,337,729 shares of common stock and collected $190,003. Of the 4,337,729 shares issued, 3,864,392 shares were related to common stock payable for cash received in 2020. As of December 31, 2021, the common stock payable balance was $0.

 

During the year ended December 31, 2021, the Company issued 316,034 shares of common stock with a fair value of $63,207 to settle accounts payable of $316,093, which result in a gain on settlement of accounts payable of $252,886.

 

F-10

 

 

During the year ended December 31, 2021, the Company issued 470,000 shares related to services provided in 2020 and settled the prior year accrual of $94,000 for 2020 services.

 

Preferred Stock

 

Series A Convertible Preferred Stock

 

In April 2008, our board of directors designated 5,000,000 shares of our preferred stock as Series A Convertible Preferred Stock (“Series A”) with a par value of $0.001. Series A has liquidation and dividend preferences. Each share of Series A has voting rights equal to the amount of shares of common stock the Series A is convertible to and is convertible on a 1 to 1.25 common share basis. As of December 31, 2022 and 2021, there are 2,068 shares of Series A-1 issued and outstanding.

 

Series B-1 Convertible Preferred Stock

 

In October 2015, our board of directors designated 3,107,438 shares of our preferred stock as Series B-1 Convertible Preferred Stock (“Series B-1”) with the redemption value of $0.70798 per share. Series B -1 has liquidation and dividend preferences. Each share of Series B-1 has voting rights 3.2x (times) that of the number of votes that is equal to the number of common stock the series of preferred shares are convertible into. Each share is convertible on a 1 to 11 common share basis. Series B-1 preferred shares also include covenants requiring 51% of the outstanding votes of the series of stock to amend or repeal any incorporation documents that would alter the rights or preferences of Series B-1, alter the authorized number of shares of the series, create or issue any classes of preferred stock senior to the Series B-1, amend the company’s bylaws, or enter into a transaction that would result in a change in control. Series B-1 is included in mezzanine equity on the balance sheet, because it is convertible at the redemption value into a variable number of shares. As of December 31, 2022 and 2021, there are 5,673,346 and 4,309,710 shares of Series B-1 issued and outstanding, respectively.

 

Series B-2 Convertible Preferred Stock

 

In October 2015, our board of directors designated 3,107,438 shares of our preferred stock as Series B-2 Convertible Preferred Stock (“Series B-2”) with a par value of $0.001. Series B -2 have no liquidation or dividend preferences. Each share of Series B-2 has voting rights equal to the amount of shares of common stock the Series A is convertible to and is convertible on a 1 to 1 common share basis and shall automatically be converted into common shares up the Public Offering Closing. As of December 31, 2022 and 2021, there are no shares of Series B-2 issued and outstanding.

 

Stock Warrants

 

The following table summarizes the stock warrant activity for the years ended December 31, 2022 and 2021:

 

      

Weighted

Average

 
       Exercise Price 
   Warrants   Per Share 
Outstanding, December 31, 2020   78,750   $0.50 
Granted   –    – 
Exercised   –    – 
Forfeited   –    – 
Outstanding, December 31, 2021   78,750    0.50 
Granted   –    – 
Exercised   –    – 
Forfeited   –    – 
Outstanding, December 31, 2022   78,750   $0.50 

 

F-11

 

 

As of December 31, 2022 and 2021 the outstanding and exercisable warrants have a weighted average remaining term of 0.63 and 1.63 years with no intrinsic value, respectively.

 

Note 8. Income Tax

 

The Company is subject to United States federal income taxes at an approximate rate of 21%. The reconciliation of the provision for income taxes at the United States federal statutory rate compared to the Company’s income tax expense as reported is as follows:

 

   Year Ended   Year Ended 
   December 31,   December 31, 
   2022   2021 
Income tax benefit computed at the statutory rate  $282,000   $191,000 
Tax effect of:          
Non-deductible expenses   (45,000)   (146,000)
Change in valuation allowance   (237,000)   (45,000)
Provision for income taxes  $–   $– 

 

Significant components of the Company’s deferred tax assets and liabilities after applying enacted corporate income tax rates are as follows:

 

   As of   As of 
   December 31,   December 31, 
   2022   2021 
Deferred income tax assets          
Net operating losses  $282,000   $45,000 
Valuation allowance   (282,000)   (45,000)
Net deferred income tax assets  $–   $– 

 

The Company has an operating loss carry forward of approximately $1,347,000.

 

Note 9. Subsequent Events

 

On February 24, 2023, the Board approved the issuance of 30,000 shares of the Company common stock to consultants for services.

 

Subsequent to December 31, 2022, the Company issued 1,600,000 shares of common stock at $0.40 per share and collected $640,000.

 

On May 1, 2023, the Company amended their articles of incorporation to increase the authorized B-1 preferred shares to 8,619,420 shares.

 

On May 2, 2023, the Board approved  an addendum to the Share Exchange Agreement previously entered into on August 1, 2022, between the Company, Metalanguage, and Saul Leal. The Addendum provided for the additional issuance of 1, 772,800 shares of common stock and issuance of 2,946,074 shares of Series B-1 Convertible preferred stock to the sole shareholder of Metalanguage who is also the CEO of the Company, Saul Leal.

 

F-12

 

 

OneMeta Inc.

(Formerly OneMeta AI)

Balance Sheets

(Unaudited)

 

    June 30, 2023     December 31, 2022  
             
ASSETS                
Current assets:                
Cash   $ 623,078     $ 400,703  
Accounts receivable     44,760       -  
Total current assets     667,838       400,703  
                 
Noncurrent assets:                
Software, net     881,570       1,077,475  
Total noncurrent assets     881,570       1,077,475  
                 
Total assets   $ 1,549,408     $ 1,478,178  
                 
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT                
Current liabilities:                
Accounts payable   $ 320,312     $ 377,883  
Accrued expenses, related party     535,379       442,435  
Convertible notes payable, related party     221,990       221,990  
Total current liabilities     1,077,681       1,042,308  
Total liabilities     1,077,681       1,042,308  
                 
Commitments and contingencies                
                 
Mezzanine equity:                
Series B-1 convertible preferred stock, $0.70798 redemption value, 8,855,511 shares authorized, 8,619,420 and 5,673,346 shares issued and outstanding, respectively     6,102,378       4,016,616  
                 
STOCKHOLDERS’ DEFICIT                
Preferred stock, $0.001 par value, 50,000,000 shares authorized,                
Series A preferred stock, $0.001 par value, 5,000,000 shares authorized, 2,068 issued and outstanding     2       2  
Common stock, $0.001 par value, 500,000,000 shares authorized, 30,160,560 and 24,983,593 shares issued and outstanding, respectively     30,161       24,984  
Additional paid in capital     26,137,940       24,156,001  
Accumulated deficit     (31,798,754 )     (27,761,733 )
Total stockholders’ deficit     (5,630,651 )     (3,580,746 )
Total liabilities, mezzanine equity and stockholders’ deficit   $ 1,549,408     $ 1,478,178  

 

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

 

F-13

 

 

OneMeta Inc.

(Formerly OneMeta AI)

Statements of Operations

For the three and six months ended June 30, 2023 and 2022

(Unaudited)

 

    Three months ended     Three months ended     Six months ended     Six months ended  
    June 30, 2023     June 30, 2022     June 30, 2023     June 30, 2022  
                         
Revenue   $ 44,802     $ 301     $ 47,962     $ 1,101  
Total revenue     44,802       301       47,962       1,101  
                                 
Operating expenses:                                
Research and development     191,472       45,000       336,504       45,000  
General and administrative     3,210,847       70,662       3,516,306       245,862  
Advertising and marketing     29,178       -       89,785       -  
Legal and professional     97,332       11,312       121,916       225,503  
                                 
Total operating expenses     3,528,829       126,974       4,064,511       516,365  
                                 
Loss from operations     (3,484,027 )     (126,673 )     (4,016,549 )     (515,264 )
                                 
Other expense:                                
                                 
Interest expense     (10,581 )     (8,026 )     (20,472 )     (15,236 )
                                 
Total other expense     (10,581 )     (8,026 )     (20,472 )     (15,236 )
                                 
Net loss   $ (3,494,608 )   $ (134,699 )   $ (4,037,021 )   $ (530,500 )
                                 
Net loss per common share:                                
Basic   $ (0.12 )   $ (0.01 )   $ (0.15 )   $ (0.03 )
Diluted   $ (0.12 )   $ (0.01 )   $ (0.15 )   $ (0.03 )
                                 
Weighted average common shares outstanding:                                
Basic     28,196,484       21,772,757       26,592,636       21,020,346  
Diluted     28,196,484       21,772,757       26,592,636       21,020,346  

 

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

 

F-14

 

 

OneMeta Inc.

(Formerly OneMeta AI)

Statements of Changes in Stockholders’ Deficit

For the six months ended June 30, 2023 and 2022

(Unaudited)

 

    Series B-1 Convertible Preferred Stock     Series A Preferred Stock     Common Stock     Additional     Accumulated        
    Shares     Amount     Shares     Amount     Shares     Amount     paid-in capital     Deficit     Total  
                                                       
Balance, December 31, 2022     5,673,346     $ 4,016,616       2,068     $ 2       24,983,593     $ 24,984     $          24,156,001     $ (27,761,733 )   $ (3,580,746 )
Common shares issued for cash     -       -       -       -       437,500       437       174,563       -       175,000  
Stock based compensation     -       -       -       -       30,000       30       11,970       -       12,000  
Imputed interest     -       -       -       -       -       -       1,665       -       1,665  
Net loss     -       -       -       -       -       -       -       (542,413 )     (542,413 )
Balance, March 31, 2023     5,673,346       4,016,616       2,068       2       25,451,093       25,451       24,344,199       (28,304,146 )     (3,934,494 )
Common shares issued for cash     -       -       -       -       2,936,667       2,937       1,005,063       -       1,008,000  
Additional shares issued for prior year software acquisition     2,946,074       2,085,762       -       -       1,772,800       1,773       707,347       -       709,120  
Stock based compensation     -       -       -       -       -       -       79,666       -       79,666  
Imputed interest     -       -       -       -       -       -       1,665       -       1,665  
Net loss     -       -       -       -       -       -       -       (3,494,608 )     (3,494,608 )
Balance, June 30, 2023     8,619,420     $ 6,102,378       2,068     $ 2       30,160,560     $ 30,161     $ 26,137,940     $ (31,798,754 )   $ (5,630,651 )
                                                                         
Balance, December 31, 2021     4,309,710     $ 3,051,189       2,068     $ 2       20,072,409     $ 20,073     $ 22,614,628     $ (26,418,161 )   $ (3,783,458 )
Common shares issued for cash     -       -       -       -       250,000       250       99,750       -       100,000  
Stock based compensation     -       -       -       -       1,347,431       1,347       212,776       -       214,123  
Imputed interest     -       -       -       -       -       -       1,665       -       1,665  
Net loss     -       -       -       -       -       -       -       (395,801 )     (395,801 )
Balance, March 31, 2022     4,309,710       3,051,189       2,068       2       21,669,840       21,670       22,928,819       (26,813,962 )     (3,863,471 )
Common shares issued for cash     -       -       -       -       212,500       213       84,788       -       85,001  
Imputed interest     -       -       -       -       -       -       1,665       -       1,665  
Net loss     -       -       -       -       -       -       -       (134,699 )     (134,699 )
Balance, June 30, 2022     4,309,710     $ 3,051,189       2,068     $ 2       21,882,340     $ 21,883     $ 23,015,272     $ (26,948,661 )   $ (3,911,504 )

 

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

 

F-15

 

 

OneMeta Inc.

(Formerly OneMeta AI)

Statements of Cash Flows

For the six months ended June 30, 2023 and 2022

(Unaudited)

 

    June 30, 2023     June 30, 2022  
CASH FLOWS FROM OPERATING ACTIVITIES                
Net loss   $ (4,037,021 )   $ (530,500 )
Adjustment to reconcile net loss to cash used in operating activities:                
Imputed interest     3,330       3,330  
Additional shares issued for prior year software acquisition     2,794,882       -  
Stock based compensation     91,666       214,123  
Amortization     195,905       -  
Net change in:                
Accounts receivable     (44,760 )     -  
Accounts payable     124,425       (50,573 )
Accrued expenses, related party     (89,052 )     194,968  
                 
CASH FLOWS USED IN OPERATING ACTIVITIES     (960,625 )     (168,652 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES:                
Proceeds from issuance of common shares     1,183,000       185,001  
                 
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES     1,183,000       185,001  
                 
NET CHANGE IN CASH     222,375       16,349  
Cash, beginning of period     400,703       7,347  
Cash, end of period   $ 623,078     $ 23,696  
                 
SUPPLEMENTAL CASH FLOW INFORMATION                
                 
Cash paid on interest expense   $ -     $ -  
Cash paid for income taxes   $ -     $ -  
                 
NON-CASH TRANSACTIONS                
Expenses paid on the Company’s behalf   $ 181,996     $ 49,729  

 

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

 

F-16

 

 

OneMeta Inc.

(Formerly OneMeta AI)

Notes to the Financial Statements

(Unaudited)

 

Note 1. Basis of Presentation

 

The accompanying unaudited interim financial statements of OneMeta Inc. (“we”, “our”, “OneMeta” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the financial statements and notes thereto contained in the Company’s fiscal 2022 financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for our interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements that would substantially duplicate the disclosure contained in the financial statements for fiscal 2022, have been omitted.

 

OneMeta was originally incorporated as Promotions on Wheels Holdings, Inc., a Nevada corporation, on July 3, 2006. On December 26, 2008, the name of the Company was changed to Blindspot Alert, Inc. On September 11, 2009, the Company’s name was changed to WebSafety, Inc. On March 23, 2021, the Company’s name was changed to VeriDetx Corp. On June 8, 2021, the Company’s name was changed to WebSafety, Inc. On July 10, 2022, the Company’s name was changed to OneMeta AI. On June 20, 2023, the Company’s name was changed to OneMeta Inc.

 

Note 2. Summary of Significant Accounting Policies

 

Use of Estimates

 

In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates in the accompanying financial statements involving the valuation of common stock and stock based compensation.

 

Related Parties

 

The Company follows ASC 850, “Related Party Disclosures,” for the identification of related parties and disclosure of related party transactions.

 

Fair Value of Financial Instruments

 

The Company’s financial instruments consist primarily of cash and accounts payable. The carrying values of these financial instruments approximate their respective fair values as they are short-term in nature or carry interest rates that approximate market rates.

 

Mezzanine equity

 

Where ordinary or preferred shares are determined to be conditionally redeemable upon the occurrence of certain events that are not solely within the control of the issuer, and upon such event, the shares would become redeemable at the option of the holders, they are classified as ‘mezzanine equity’ (temporary equity). The purpose of this classification is to convey that such a security may not be permanently part of equity and could result in a demand for cash, securities or other assets of the entity in the future.

 

F-17

 

 

Revenue Recognition

 

The Company recognizes revenue in accordance with ASC Topic 606, Revenue From Contracts With Customers, which was adopted on January 1, 2018 using the modified retrospective method, with no impact to the Company’s comparative financial statements. Revenues are recognized when control of the promised goods or services is transferred to the customer in an amount that reflects the consideration the Company expects to be entitled to in exchange for transferring those goods or services. Revenue is recognized based on the following five step model:

 

● Identification of the contract with a customer
● Identification of the performance obligations in the contract
● Determination of the transaction price
● Allocation of the transaction price to the performance obligations in the contract
● Recognition of revenue when, or as, the Company satisfies a performance obligation

 

We enter into revenue arrangements in which a customer may purchase a combination of subscriptions, consulting services, training and education. Fully hosted subscription services (“SaaS”) allow customers to access hosted software during the contractual term without taking possession of the software.

 

We recognize revenue ratably over the contractual service term for hosted services that are priced based on a committed number of transactions where the delivery and consumption of the benefit of the services occur evenly over time, beginning on the date the services associated with the committed transactions are first made available to the customer and continuing through the end of the contractual service term. Over-usage fees and fees based on the actual number of transactions are billed in accordance with contract terms as these fees are incurred and are included in the transaction price of an arrangement as variable consideration. Revenue based on per-minute or per-word basis, where invoicing is aligned to the pattern of performance, customer benefit and consumption, are typically accounted for utilizing the “as-invoiced” practical expedient. Revenue for subscriptions sold as a fee per period is recognized ratably over the contractual term as the customer simultaneously receives and consumes the benefit of the underlying service.

 

Licenses for software may be purchased as a subscription for a fixed period of time or based on usage. Revenue from licenses is recognized at the point in time the software is available to the customer, provided all other revenue recognition criteria are met, and classified as revenue on our Statements of Operations. Our interpretation or translation services fees are based on a per-minute or per-word basis, are typically accounted for utilizing the “as-invoiced” practical expedient.

 

Our services are comprised primarily of fees related to training, and education for certain licenses that are recognized at a point in time. Training and education revenues are recognized as the services are performed.

 

Disaggregation of revenues

 

The Company disaggregates revenue between subscription and license revenue and training and education revenue.

 

    Three Months Ended June 30, 2023     Three Months Ended June 30, 2022     Six Months Ended June 30, 2023     Six Months Ended June 30, 2022  
Subscription and license revenue   $ 41,202     $ 301     $ 41,287     $ 1,101  
Training and education     3,600       -       6,675       -  
Total revenue   $ 44,802     $ 301     $ 47,962     $ 1,101  

 

Deferred Revenue

 

Deferred revenue includes service and support contracts and represents the undelivered performance obligation of agreements that are typically for one year or less. As of June 30, 2023 and 2022, deferred revenue was $0. 

 

F-18

 

 

Basic and Diluted Loss Per Share

 

Basic loss per common share is computed by dividing the net loss available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted loss per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents. In periods when losses are reported, the weighted-average number of common shares outstanding excludes common stock equivalents, because their inclusion would be anti-dilutive. Accordingly, the number of weighted average shares outstanding, as well as the amount of net loss per share are presented for basic and diluted per share calculations for the six months ended June 30, 2023 and 2022, reflected in the accompanying statement of operations.

 

Recent Accounting Pronouncements

 

In June 2016, the FASB issued Accounting Standards Update No. 2016-13, Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires measurement and recognition of expected credit losses for financial assets. In April 2019, the FASB issued clarification to ASU 2016-13 within ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, or ASU 2016-13. The guidance is effective for fiscal years beginning after December 15, 2022. The Company adopted this standard on January 1, 2023, which had no material impact on the Company’s financial statements.

 

Note 3. Going Concern

 

These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next fiscal year. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. As of June 30, 2023, the Company had not yet achieved profitable operations and expects to incur further losses in the development of its business, all of which raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has no formal plan in place to address this concern but considers that the Company will be able to obtain additional funds by equity financing and/or related party advances, however, there is no assurance of additional funding being available.

 

Note 4. Software

 

On June 30, 2022, the Company entered into an acquisition agreement with Metalanguage Corp. Per the acquisition agreement, the Company acquired all the shares of Metalanguage Corp. Per the acquisition agreement, the purchase price is comprised of $210,000 cash, 1,363,636 shares of Series B-1 convertible preferred shares and the right to receive contingent consideration in the form of equity. The contingent consideration for the acquisition is comprised of 1,363,637 shares of Series B-1 convertible preferred stock, which shall be held in escrow and will be issued upon the Company achieving sales of $5 million within 12 consecutive months prior to December 31, 2027. The day one contingent liability is $0 since the probability of achieving $5 million in sales within twelve consecutive months is low but will be re-evaluated in future periods.

 

The total purchase price for the acquisition was determined to be $1,175,427 which consisted of $210,000 cash paid and 1,363,636 shares of Series B-1 convertible preferred stock valued at the redemption value of $0.70798 per share with a fair value of $965,427. The Company concluded the purchase of a single set of assets qualified as an asset acquisition and all such acquisition costs have been capitalized as software on the balance sheet. The Company estimated the useful life of the software acquired and purchased to be 3 years. During the six months ended June 30, 2023, the Company recorded $195,905 of amortization expense related to the software. As of June 30, 2023 and December 31, 2022, the software balance, net of amortization was $881,570 and $1,077,475, respectively.

 

F-19

 

 

Note 5. Related Party Transactions

 

Accrued salary and interest

 

On August 1, 2022, the Company appointed Saul Leal as their new CEO. On September 1, 2022, the Company agreed to compensate Mr. Leal and Mr. Day $15,000 per month for their services.

 

During the six months ended June 30, 2023 and 2022, the Company recognized $180,000 and $120,000 of salary expense. As of June 30, 2023 and December 31, 2022, the Company accrued $470,000 and $387,000 of compensation, with accrued interest of $31,019 and $19,426, respectively.

 

Expense paid on the Company’s behalf

 

During the six months ended June 30, 2023 and 2022, Mr. Day paid $181,996 and $49,729 of expenses on the Company’s behalf and was repaid $189,139 and $39,396, respectively. As of June 30, 2023, the balance owed to Mr. Day was $6,611.

 

Convertible note – Founder note

 

Rowland Day, the Company’s prior CEO agreed to provide the necessary working capital for the Company’s business. At the end of each calendar quarter the convertible promissory note is adjusted based upon the funds provided. The convertible promissory note bears interest at 5% and is convertible into Series B-1 preferred stock at the rate of $0.10 per share. During the six months ended June 30, 2023 and 2022, this Company recorded imputed interest expense of $3,330. As of June 30, 2023 and December 31, 2022, the convertible note payable, related party principal balance was $221,990, with accrued interest of $27,749 and $22,198, respectively.

 

Note 6. Equity

 

The Company is currently authorized to issue up to 500,000,000 shares of common stock with a par value of $0.001. In addition, The Company is authorized to issue 50,000,000 shares of preferred stock with a par value of $0.001. The specific rights of the preferred stock, when so designated, shall be determined by the board of directors.

 

On May 1, 2023, the Company amended their articles of incorporation to increase the authorized B-1 preferred shares to 8,619,420 shares.

 

Common Stock

 

During the six months ended June 30, 2023, the Company issued 3,374,167 shares of common stock for cash and collected $1,183,000.

 

On March 31, 2023, the Company issuance of 30,000 shares of common stock to consultants for services provided that were valued at $12,000.

 

On May 2, 2023, the Board approved an addendum to the Share Exchange Agreement previously entered into on August 1, 2022, between the Company, Metalanguage, and Saul Leal. The Addendum provided for the additional issuance of 1,772,800 shares of common stock to the sole shareholder of Metalanguage who is also the CEO of the Company, Saul Leal.

 

Preferred Stock

 

Series A Convertible Preferred Stock

 

In April 2008, our board of directors designated 5,000,000 shares of our preferred stock as Series A Convertible Preferred Stock (“Series A”) with a par value of $0.001. Series A has liquidation and dividend preferences. Each share of Series A has voting rights equal to the amount of shares of common stock the Series A is convertible to and is convertible on a 1 to 1.25 common share basis. As of June 30, 2023 and December 31, 2022, there are 2,068 shares of Series A-1 issued and outstanding.

 

F-20

 

 

Series B-1 Convertible Preferred Stock

 

In October 2015, our board of directors designated 3,107,438 shares of our preferred stock as Series B-1 Convertible Preferred Stock (“Series B-1”) with the redemption value of $0.70798 per share. Series B -1 has liquidation and dividend preferences. Each share of Series B-1 has voting rights 3.2x (times) that of the number of votes that is equal to the number of common stock the series of preferred shares are convertible into. Each share is convertible on a 1 to 11 common share basis. Series B-1 preferred shares also include covenants requiring 51% of the outstanding votes of the series of stock to amend or repeal any incorporation documents that would alter the rights or preferences of Series B-1, alter the authorized number of shares of the series, create or issue any classes of preferred stock senior to the Series B-1, amend the company’s bylaws, or enter into a transaction that would result in a change in control. Series B-1 is included in mezzanine equity on the balance sheet, because it is convertible at the redemption value into a variable number of shares. On May 2, 2023, the Board approved an addendum to the Share Exchange Agreement previously entered into on August 1, 2022, between the Company, Metalanguage, and Saul Leal. The Addendum provided for the additional issuance of 2,946,074 shares of Series B-1 Convertible preferred stock to the sole shareholder of Metalanguage who is also the CEO of the Company, Saul Leal. As of June 30, 2023 and December 31, 2022, there are 8,619,420 and 5,673,346 shares of Series B-1 issued and outstanding, respectively.

 

Series B-2 Convertible Preferred Stock

 

In October 2015, our board of directors designated 3,107,438 shares of our preferred stock as Series B-2 Convertible Preferred Stock (“Series B-2”) with a par value of $0.001. Series B -2 have no liquidation or dividend preferences. Each share of Series B-2 has voting rights equal to the amount of shares of common stock the Series A is convertible to and is convertible on a 1 to 1 common share basis and shall automatically be converted into common shares up the Public Offering Closing. As of June 30, 2023 and December 31, 2022, there are no shares of Series B-2 issued and outstanding.

 

Stock Warrants

 

On June 15, 2023, the Company issued 250,000 common stock warrants in conjunction with a stock purchase agreement. The warrants have a 5-year term and an exercise price of $1.00. The common stock warrants were value at $79,666.The Company valued the warrants using the Black-Scholes model with the following key assumptions: fair value stock price, $0.40, Exercise price, $1.00, Term 5 years, Volatility 130.51%, and Discount rate 3.91% and a dividend yield of 0%.

 

The following table summarizes the stock warrant activity for the six months ended June 30, 2023:

 

         

Weighted

Average

 
          Exercise Price  
    Warrants     Per Share  
Outstanding, December 31, 2022     78,750     $ 0.50  
Granted     250,000       1.00  
Exercised     –       –  
Forfeited     –       –  
Outstanding, June 30, 2023     328,750     $ 0.88  

 

As of June 30, 2023 the outstanding and exercisable warrants have a weighted average remaining term of 3.84 with no intrinsic value, respectively.

 

Note 7. Subsequent Events

 

Subsequent to June 30, 2023, the Company issued 25,000 shares of common stock at $0.40 per share and collected $10,000.

 

F-21

 

Exhibit 3.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 3.2

 

AMENDED AND RESTATED BYLAWS

 

OF

 

WebSafety, Inc.,

 

a Nevada corporation

 

  

 

 

AMENDED AND RESTATED BYLAWS

 

OF

 

WEBSAFETY, INC.,

a Nevada corporation

 

Article I.

 

OFFICES

 

Section 1. Registered Office. The Board of Directors of the Corporation shall be entitled to designate from time-to-time the registered agent of the Corporation in the State of Nevada. Unless otherwise determined by the Board of Directors, the office address for the operation of the business of the Corporation in Nevada shall be the office of the registered agent of the Corporation in the State of Nevada.

 

Section 2. Other Offices. The Corporation may also have offices at such other places both within and without the State of Nevada as the Board of Directors may from time to time determine or the business of the Corporation may require.

 

Section 3. Books. The books of the Corporation may be kept within or without the State of Nevada as the Board of Directors may from time to time determine or the business of the Corporation may require.

 

Article II.

 

MEETINGS OF STOCKHOLDER

 

Section 1. Place of Meetings. All meetings of the stockholders shall be held at such place either within or without the State of Nevada and on such date and at such time as may be designated from time to time by the Board of Directors.

 

Section 2. Annual Meetings. Annual meetings of stockholders shall be held at a time and date designated by the Board of Directors for the purpose of electing directors and transacting such other business as may properly be brought before the meeting.

 

Section 3. Special Meetings. Special meetings of stockholders, for any purpose or purposes, may be called by the President or the Board of Directors, and the President shall call a special meeting of the stockholders upon the written request of one or more stockholders holding shares in the aggregate entitled to cast not less than fifty percent (50%) of the votes at the meeting.

 

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Section 4. Notification of Business to be Transacted at Meeting. To be properly brought before a meeting, business must be (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (b) otherwise properly brought before the meeting by or at the direction of the Board of Directors, or (c) otherwise properly brought before the meeting by a stockholder entitled to vote at the meeting.

 

Section 5. Notice; Waiver of Notice. Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given which shall state the place, date and hour of the meeting, and the purpose or purposes for which the meeting is called. Unless otherwise required by law, such notice shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder of record entitled to vote at such meeting. Such notice shall be deemed to be given when deposited in the mail, postage prepaid, directed to the stockholder at his address as it appears on the records of the Corporation if mailed, and on the date the same is personally delivered, faxed or emailed for those means of delivery. A written waiver of any such notice signed by the person entitled thereto, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.

 

Section 6. Quorum; Adjournment. Except as otherwise required by law, or provided by the Articles of Incorporation or these Bylaws, the holders of a majority of the capital stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum for the transaction of business at all meetings of the stockholders. A meeting at which a quorum is initially present may continue to transact business, notwithstanding the withdrawal of enough votes to leave less than a quorum, if any action taken is approved by at least a majority of the required quorum to conduct that meeting. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting of the time and place of the adjourned meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally noticed. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder entitled to vote at the meeting.

 

Section 7. Voting. Except as otherwise required by law, or provided by the Articles of Incorporation or these Bylaws, any question brought before any meeting of stockholders at which a quorum is present shall be decided by the vote of the holders of a majority of the stock represented and entitled to vote thereat. Unless otherwise provided in the Articles of Incorporation, each stockholder represented at a meeting of stockholders shall be entitled to cast one vote for each share of the capital stock entitled to vote thereat held by such stockholder. Such votes may be cast in person or by proxy, but no proxy shall be voted on or after three (3) years from its date, unless such proxy provides for a longer period. Elections of directors need not be by ballot unless the Chairman of the meeting so directs.

 

 3 

 

 

Section 8. Stockholder Action by Written Consent Without a Meeting. Except as otherwise provided in the Articles of Incorporation or determined by the Board of Directors, any action which may be taken at any annual or special meeting of stockholders may be taken without a meeting and without prior notice, if a consent in writing, setting forth the action so taken, is signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. All such consents shall be filed with the Secretary of the Corporation and shall be maintained in the corporate records. Any stockholder giving a written consent, or the stockholder’s proxy holders, or a transferee of the shares or a personal representative of the stockholder or their respective proxy holders, may revoke the consent by a writing received by the Secretary of the Corporation before written consents of the number of shares required to authorize the proposed action have been filed with the Secretary. Whenever action is taken by written consent, a meeting of stockholders need not be called or noticed and, unless otherwise provided by law, no notice need be given to any non-consenting shareholders of the action so taken.

 

Section 9. Stockholders of Record; List of Stockholders Entitled to Vote. The Board of Directors may at any time fix a future date as a record date for the determination of the stockholders entitled to notice of any meeting or to vote or be entitled to receive payment of any dividend or other distribution or allotment of any rights or entitled to exercise any rights in respect of any other lawful action. The record date so fixed shall not be more than sixty (60) days nor less than ten (10) days prior to the date of such meeting nor more than sixty (60) days nor less than ten (10) days prior to any other action. If no record date is fixed by the Board of Directors, then (a) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the next day preceding the day on which the meeting is held; (b) the record date for action in writing without a meeting, when no prior action by the Board of Directors is necessary, shall be the day on which the written consent is given; and (c) the record date for determining stockholders for any other purpose shall be at the close of business on the day in which the Board of Directors adopts the resolution relating thereto, or the any other day up the to the sixtieth (60th) day prior to the date of such action, whichever is later. The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder of the Corporation who is present.

 

Section 10. Stock Ledger. The stock ledger of the Corporation shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by Section 9 of this Article II or the books of the Corporation, or to vote in person or by proxy at any meeting of stockholders.

 

 4 

 

 

Section 11. Inspectors of Election. In advance of any meeting of stockholders, the Board of Directors may (but shall not be required to) appoint one or more persons (who shall not be candidates for office) as inspectors of election to act at the meeting or any adjournment thereof. If inspectors are not so appointed, or if an appointed inspector fails to appear or fails or refuses to act at a meeting, the Chairman of any meeting of stockholders may, and on the request of any stockholder or his proxy shall, appoint inspectors of election at the meeting. The duties of such inspectors shall include: determining the number of shares outstanding and the voting power of each; the shares represented at the meeting; the existence of a quorum; the authenticity, validity and effect of proxies; receiving votes, ballots or consents; hearing and determining all challenges and questions in any way arising in connection with the right to vote; counting and tabulating all votes or consents; determining the result; and such acts as may be proper to conduct the election or vote with fairness to all stockholders. In the event of any dispute between or among the inspectors, the determination of the majority of the inspectors shall be binding.

 

Section 12. Organization. At each meeting of stockholders the Chairman of the Board of Directors, if one shall have been elected, (or in his absence or if one shall not have been elected, the President) shall act as Chairman of the meeting. The Secretary (or in his absence or inability to act, the person whom the Chairman of the meeting shall appoint secretary of the meeting) shall act as secretary of the meeting and keep the minutes thereof.

 

Section 13. Order of Business. The order and manner of transacting business at all meetings of stockholders shall be determined by the Chairman of the meeting.

 

Article III.

 

DIRECTORS

 

Section 1. Powers. Except as otherwise required by law or provided by the Articles of Incorporation, the business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors.

 

Section 2. Number and Election of Directors. The authorized number of directors of the Corporation shall be one (1) until this Section 2 is amended by a resolution duly adopted by the Board of Directors or the stockholders of the Corporation. Directors shall be elected at each annual meeting of stockholders, and each director so elected shall hold office until his successor is duly elected and qualified, or until his earlier death, resignation or removal. Any director may resign at any time effective upon giving written notice to the Board of Directors, unless the notice specifies a later time for such resignation to become effective. Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. If the resignation of a director is effective at a future time, the Board of Directors may elect a successor prior to such effective time to take office when such resignation becomes effective. Directors need not be stockholders.

 

 5 

 

 

Section 3. Vacancies. Vacancies in the Board of Directors resulting from death, resignation, removal or otherwise and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director. Each director so selected shall hold office for the remainder of the full term of office of the former director which such director replaces and until his successor is duly elected and qualified, or until his earlier death, resignation or removal. No decrease in the authorized number of directors constituting the Board of Directors shall shorten the term of any incumbent directors.

 

Section 4. Time and Place of Meetings. The Board of Director shall hold its meetings at such place, either within or without the State of Nevada, and at such time as may be determined from time to time by the Board of Directors.

 

Section 5. Annual Meeting. The Board of Directors shall meet for the purpose of organization, the election of officers and the transaction of other business, as soon as practicable after each annual meeting of stockholders, on the same day and at the same place where such annual meeting shall be held. Notice of such meeting need not be given. In the event such annual meeting is not so held, the annual meeting of the Board of Directors may be held at such place, either within or without the State of Nevada, on such date and at such time as shall be specified in a notice thereof given as hereinafter provided in Section 7 of this Article III or in a waiver of notice thereof.

 

Section 6. Regular Meetings. Regular meetings of the Board of Directors may be held at such places, within or without the State of Nevada, at such date and time as the Board of Directors may from time to time determine and, if so determined by the Board of Directors, notices thereof need not be given.

 

Section 7. Special Meetings. Special meetings of the Board of Directors may be called by the Chairman of the Board, the President, the Secretary or by any two directors. Notice of the date, time and place of special meetings shall be delivered personally, by mail, by telephone, including a voice messaging system or other system or technology designed to record and communicate messages, telegraph, facsimile, electronic mail or other electronic means, to each director, addressed to each director at the director’s address as it is shown on the records of the Corporation. In case the notice is mailed, it shall be deposited in the United States mail at least four (4) days before the time of the holding of the meeting. In case the notice is delivered personally, by telephone, telegram, facsimile, electronic mail or other electronic means, it shall be delivered at least forty-eight (48) hours before the time of the holding of the meeting. The notice need not specify the purpose of the meeting. A written waiver of any such notice signed by the person entitled thereto, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.

 

Section 8. Quorum; Vote Required for Action; Adjournment. Except as otherwise required by law, or provided in the Articles of Incorporation or these Bylaws, a majority of the directors shall constitute a quorum for the transaction of business at all meetings of the Board of Directors and the affirmative vote of not less than a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting, from time to time, without notice other than announcement at the meeting, until a quorum shall be present. A meeting at which a quorum is initially present may continue to transact business, notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum to conduct that meeting. When a meeting is adjourned to another time or place (whether or not a quorum is present), notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the Board of Directors may transact any business that might have been transacted at the original meeting.

 

Section 9. Action by Written Consent. Unless otherwise restricted by the Articles of Incorporation, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all the members of the Board of Directors or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board of Directors or committee.

 

Section 10. Telephone Meetings. Unless otherwise restricted by the Articles of Incorporation, members of the Board of Directors of the Corporation, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors or such committee, as the case may be, by conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. Participation in a meeting pursuant to this Section 10 shall constitute presence in person at such meeting.

 

Section 11. Committees. The Board of Directors may, by resolution passed by a majority of the entire Board, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board of Directors may designate one or more directors as alternate members of any such committee, who may replace any absent or disqualified member at any meeting of the committee. In the event of absence or disqualification of a member of a committee, and in the absence of a designation by the Board of Directors of an alternate member to replace the absent or disqualified member, the committee member or members present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of the absent or disqualified member. Any committee, to the extent allowed by law and as provided in the resolution establishing such committee, shall have and may exercise all the power and authority of the Board of Directors in the management of the business and affairs of the Corporation, but no such committee shall have the power or authority in reference to amending the Articles of Incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the Corporation’s property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of a dissolution, or amending the Bylaws of the Corporation; and, unless the Articles of Incorporation expressly so provides, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. Each committee shall keep regular minutes of its meetings and report to the Board of Directors when required.

 

 6 

 

 

Section 12. Compensation. The directors may be paid such compensation for their services as the Board of Directors shall from time to time determine.

 

Section 13. Interested Directors. No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other corporation, partnership, association, or other organization in which one or more of its directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or the committee thereof which authorizes the contract or transaction, or solely because his of their votes are counted for such purpose if: (i) the material facts as to his or their relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board of Directors or committee in good faith authorizes the contract or transaction by the affirmative vote of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (ii) the material facts as to his or their relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (iii) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified, by the Board of Directors, a committee thereof, or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee that authorizes the contract or transaction.

 

Article IV.

 

OFFICERS

 

Section 1. Officers. The officers of the Corporation shall be a President, a Secretary and a Treasurer. The Corporation may also have, at the discretion of the Board of Directors, a Chairman of the Board, a Vice Chairman of the Board, a Chief Executive Officer, one or more Vice Presidents, one or more Assistant Financial Officers and Treasurers, one or more Assistant Secretaries and such other officers as may be appointed in accordance with the provisions of Section 3 of this Article IV.

 

Section 2. Appointment of Officers. The officers of the Corporation, except such officers as may be appointed in accordance with the provisions of Section 3 or Section 5 of this Article IV, shall be appointed by the Board of Directors, and each shall serve at the pleasure of the Board, subject to the rights, if any, of an officer under any contract of employment.

 

Section 3. Subordinate Officers. The Board of Directors may appoint, and may empower the Chief Executive Officer or President to appoint, such other officers as the business of the Corporation may require, each of whom shall hold office for such period, have such authority and perform such duties as are provided in the Bylaws or as the Board of Directors may from time to time determine.

 

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Section 4. Removal and Resignation of Officers. Subject to the rights of an officer under any contract, any officer may be removed at any time, with or without cause, by the Board of Directors or, except in case of an officer chosen by the Board of Directors, by any officer upon whom such power of removal may be conferred by the Board of Directors.

 

Any officer may resign at any time by giving written notice to the Corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice; and, unless otherwise specified in that notice, the acceptance of the resignation shall not be necessary to make it effective. Any resignation shall be without prejudice to the rights of the Corporation under any contract to which the officer is a party.

 

Section 5. Vacancies in Offices. A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filled in the manner prescribed in these Bylaws for regular appointments to that office.

 

Section 6. Chairman of the Board. The Chairman of the Board, if such an officer is elected, shall, if present, preside at meetings of the stockholders and of the Board of Directors. He shall, in addition, perform such other functions (if any) as may be prescribed by the Bylaws or Board of Directors.

 

Section 7. Vice Chairman of the Board. The Vice Chairman of the Board, if such an officer is elected, shall, in the absence or disability of the Chairman of the Board, perform all duties of the Chairman of the Board and when so acting shall have all the powers of and be subject to all of the restrictions upon the Chairman of the Board. The Vice Chairman of the Board shall have such other powers and duties as may be prescribed by the Board of Directors or the Bylaws.

 

Section 8. Chief Executive Officer. The Chief Executive Officer of the Corporation, if such an officer is elected, shall, subject to the control of the Board of Directors, have general supervision, direction and control of the business and the officers of the Corporation. He shall exercise the duties usually vested in the chief executive officer of a corporation and perform such other powers and duties as may be assigned to him from time to time by the Board of Directors or prescribed by the Bylaws. In the absence of the Chairman of the Board and any Vice Chairman of the Board, the Chief Executive Officer shall preside at all meetings of the stockholders and of the Board of Directors.

 

Section 9. President. The President of the Corporation shall, subject to the control of the Board of Directors and the Chief Executive Officer of the Corporation, if there be such an officer, have general powers and duties of management usually vested in the office of president of a corporation and shall have such other powers and duties as may be prescribed by the Board of Directors or the Bylaws or the Chief Executive Officer of the Corporation. In the absence of the Chairman of the Board, Vice Chairman of the Board and Chief Executive Officer, the President shall preside at all meetings of the Board of Directors and stockholders.

 

Section 10. Vice President. In the absence or disability of the President, the Vice Presidents, if any, in order of their rank as fixed by the Board of Directors or, if not ranked, a Vice President designated by the Board of Directors, shall perform all the duties of the President, and when so acting shall have all the powers of, and subject to all the restrictions upon, the President. The Vice Presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the Board of Directors or the Bylaws, and the President, or the Chairman of the Board.

 

 8 

 

 

Section 11. Secretary. The Secretary shall keep or cause to be kept, at the principal executive office or such other place as the Board of Directors may direct, a book of minutes of all meetings and actions of Directors, committees of Directors, and stockholders, with the time and place of holding, whether regular or special, and, if special, how authorized, the notice given, the names of those present at Directors’ meetings or committee meetings, the number of shares present or represented at stockholders’ meetings, and a summary of the proceedings.

 

The Secretary shall keep, or cause to be kept, at the principal executive office or at the office of the Corporation’s transfer agent or registrar, as determined by resolution of the Board of Directors, a share register, or a duplicate share register, showing the names of all stockholders and their addresses, the number and classes of shares held by each, the number and date of certificates issued for the same, and the number and date of cancellation of every certificate surrendered for cancellation.

 

The Secretary shall give, or cause to be given, notice of all meetings of the stockholders and of the Board of Directors required by the Bylaws or by law to be given, and he shall keep or cause to be kept the seal of the Corporation if one be adopted, in safe custody, and shall have such powers and perform such other duties as may be prescribed by the Board of Directors or by the Bylaws.

 

Section 12. Treasurer. The Treasurer shall keep and maintain, or cause to be kept and maintained, adequate and correct books and records of accounts of the properties and business transactions of the Corporation. The Treasurer shall deposit all moneys and other valuables in the name and to the credit of the Corporation with such depositories as may be designated by the Board of Directors. He shall make such disbursements of the funds of the Corporation as are authorized and shall render from time to time an account of all of his transactions as Treasurer and of the financial condition of the Corporation. The Treasurer shall also have such other powers and perform such other duties as may be prescribed by the Board of Directors or the Bylaws.

 

Article V.

 

STOCK

 

Section 1. Form of Certificates. Every holder of stock in the Corporation shall be entitled to have a certificate signed by, or in the name of the Corporation (i) by the Chairman or Vice Chairman of the Board of Directors, or the President or a Vice President and (ii) by the Treasurer or the Secretary or an Assistant Secretary of the Corporation, certifying the number of shares owned by such stockholder in the Corporation.

 

Section 2. Signatures. Any or all of the signatures on the certificate may be a facsimile or other electronic means. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue.

 

 9 

 

 

Section 3. Lost Certificates. The Corporation may issue a new certificate to be issued in place of any certificate theretofore issued by the Corporation, alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate to be lost, stolen or destroyed. The Corporation may, in the discretion of the Board of Directors and as a condition precedent to the issuance of such new certificate, require the owner of such lost, stolen, or destroyed certificate, or his legal representative, to give the Corporation a bond (or other security) sufficient to indemnify it against any claim that may be made against the Corporation (including any expense or liability) on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate.

 

Section 4. Transfers. Stock of the Corporation shall be restricted or transferable in the manner prescribed by law and in these Bylaws or in any agreement with the stockholder making the transfer. Transfers of stock shall be made on the books of the Corporation only by the person named in the certificate or by his attorney lawfully constituted in writing and upon the surrender of the certificate therefor, which shall be canceled before a new certificate shall be issued.

 

Section 5. Registered Owners. The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise required by law.

 

Article VI.

 

GENERAL PROVISIONS

 

Section 1. Dividends. Subject to limitations contained in the Nevada General Corporation Law and the Articles of Incorporation, the Board of Directors may declare and pay dividends upon the shares of capital stock of the Corporation, which dividends may be paid either in cash, securities of the Corporation or other property.

 

Section 2. Disbursements. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate.

 

Section 3. Fiscal Year. The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors.

 

Section 4. Corporate Seal. The Corporation shall have a corporate seal in such form as shall be prescribed by the Board of Directors.

 

 10 

 

 

Section 5. Record Date. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty (60) days nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. Stockholders on the record date are entitled to notice and to vote or to receive the dividend, distribution or allotment of rights or to exercise the rights, as the case may be, notwithstanding any transfer of any shares on the books of the Corporation after the record date, except as otherwise provided by agreement or by applicable law.

 

Section 6. Voting of Stock Owned by the Corporation. The Chairman of the Board, the Chief Executive Officer, the President and any other officer of the Corporation authorized by the Board of Directors shall have power, on behalf of the Corporation, to attend, vote and grant proxies to be used at any meeting of stockholders of any corporation (except this Corporation) in which the Corporation may hold stock.

 

Section 7. Construction and Definitions. Unless the context requires otherwise, the general provisions, rules of construction and definitions in the General Corporation Law of the State of Nevada shall govern the construction of these Bylaws.

 

Section 8. Amendments. Subject to the General Corporation Law of the State of Nevada, the Articles of Incorporation and these Bylaws, the Board of Directors may amend or repeal these Bylaws, or adopt other Bylaws as in its judgment may be advisable for the regulation of the conduct of the affairs of the Corporation. Unless otherwise restricted by the Articles of Incorporation, these Bylaws may be altered, amended or repealed, and new Bylaws may be adopted, at any meeting of the stockholders by a majority of the combined voting power of the then outstanding shares of capital stock of all classes and series of the Corporation entitled to vote generally in the election of directors, voting as a single class, provided that, in the notice of any such meeting, notice of such purpose shall be given.

 

Article VII.

 

INDEMNIFICATION

 

Section 1. General. The Corporation shall, to the maximum extent and in the manner permitted by law, indemnify each of its directors against expenses, judgments, fines, settlements, and other amounts actually and reasonably incurred in connection with any proceeding, arising by reason of the fact that such person is or was a director of the Corporation. For purposes of this Article VII, a “director” of the Corporation includes any person (i) who is or was a director of the Corporation, (ii) who is or was serving at the request of the Corporation as a director of another foreign or domestic corporation, partnership, joint venture, trust or other enterprise, or (iii) who was a director of a corporation which was a predecessor corporation of the Corporation or of another enterprise at the request of such predecessor corporation.

 

 11 

 

 

Section 2. Indemnification of Others. The Corporation shall have the power, to the extent and in the manner permitted by law, to indemnify each of its employees, officers, and agents (other than directors) against expenses, judgments, fines, settlements, and other amounts actually and reasonably incurred in connection with any proceeding, arising by reason of the fact that such person is or was an employee, officer, or agent of the Corporation. For purposes of this Article VII, an “employee” or “officer” or “agent” of the Corporation (other than a director) includes any person (i) who is or was an employee, officer, or agent of the Corporation, (ii) who is or was serving at the request of the Corporation as an employee, officer, or agent of another foreign or domestic corporation, partnership, joint venture, trust or other enterprise, or (iii) who was an employee, officer, or agent of a corporation which was a predecessor corporation of the Corporation or of another enterprise at the request of such predecessor corporation.

 

Section 3. Payment of Expenses in Advance. Expenses and attorneys’ fees incurred in defending any civil or criminal action or proceeding for which indemnification is required pursuant to this Article VII, Section 1, or if otherwise authorized by the Board of Directors, shall be paid by the Corporation in advance of the final disposition of such action or proceeding upon receipt of an undertaking by or on behalf of the indemnified party to repay such amount if it shall ultimately be determined that the indemnified party is not entitled to be indemnified as authorized in this Article VII.

 

Section 4. Indemnity Not Exclusive. The indemnification provided by this Article VII shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any Bylaw, agreement, vote of shareholders or directors or otherwise, both as to action in an official capacity and as to action in another capacity while holding such office. The rights to indemnity hereunder shall continue as to a person who has ceased to be a director, officer, employee, or agent and shall inure to the benefit of the heirs, executors, and administrators of the person.

 

Section 5. Insurance Indemnification. The Corporation shall have the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation against any liability asserted against or incurred by such person in such capacity or arising out of that person’s status as such, whether or not the Corporation would have the power to indemnify that person against such liability under the provisions of this Article VII.

 

Section 6. Conflicts. No indemnification or advance shall be made under this Article VII, except where such indemnification or advance is mandated by law or the order, judgment or decree of any court of competent jurisdiction, in any circumstance where it appears:

 

(1) That it would be inconsistent with a provision of the Articles of Incorporation, these Bylaws, a resolution of the shareholders or an agreement in effect at the time of the accrual of the alleged cause of the action asserted in the proceeding in which the expenses were incurred or other amounts were paid, which prohibits or otherwise limits indemnification; or

 

(2) That it would be inconsistent with any condition expressly imposed by a court in approving a settlement.

 

 12 

 

 

Section 7. Right to Bring Suit. If a claim under this Article VII is not paid in full by the Corporation within 90 days after a written claim has been received by the Corporation (either because the claim is denied or because no determination is made), the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall also be entitled to be paid the expenses of prosecuting such claim. The Corporation shall be entitled to raise as a defense to any such action that the claimant has not met the standards of conduct that make it permissible under the law for the Corporation to indemnify the claimant for the claim. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel, or its shareholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is permissible in the circumstances because he or she has met the applicable standard of conduct, if any, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel, or its shareholders) that the claimant has not met the applicable standard of conduct, shall be a defense to such action or create a presumption for the purposes of such action that the claimant has not met the applicable standard of conduct.

 

Section 8. Indemnity Agreements. The Board of Directors is authorized to enter into a contract with any director, officer, employee or agent of the Corporation, or any person who is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including employee benefit plans, or any person who was a director, officer, employee or agent of a corporation which was a predecessor corporation of the Corporation or of another enterprise at the request of such predecessor corporation, providing for indemnification rights equivalent to or, if the Board of Directors so determines and to the extent permitted by applicable law, greater than, those provided for in this Article VII.

 

Section 9. Amendment, Repeal or Modification. Any amendment, repeal or modification of any provision of this Article VII shall not adversely affect any right or protection of a director or agent of the Corporation existing at the time of such amendment, repeal or modification.

 

END OF BYLAWS

 

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CERTIFICATE OF SECRETARY

 

The undersigned hereby certifies that he is, and at all times relevant hereto has been, the duly elected and acting Secretary of WebSafety, Inc., a Nevada corporation (the “Corporation”), and that the foregoing Amended and Restated Bylaws are the Bylaws of the Corporation, the same having been duly adopted by Unanimous Written Consent of the Corporation’s Board of Directors dated as of July 31, 2015.

 

Dated: July 31, 2015 /s/ Rowland W. Day II
  Rowland W. Day II, Secretary

 

 14 

 

Exhibit 3.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 3.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 3.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 3.6

 

CERTIFICATE OF DESIGNATION

OF

SERIES A CONVERTIBLE PREFERRED STOCK

OF

PROMOTIONS ON WHEELS HOLDINGS, INC.

 

(Under the General Corporation Law of the State of Nevada)

 

The undersigned, being all of the Directors of Promotions on Wheels Holdings, Inc., a Nevada corporation (the “Corporation”) do hereby certify that the following resolutions were adopted by the Board of Directors of the Corporation by unanimous written consent as of April 30, 2008.

 

RESOLVED, that pursuant to authority expressly granted to and vested in the Board of Directors by the Company’s Articles of Incorporation and Section 78.195 of the Nevada General Corporation Law, the Board of Directors hereby creates a series of 5,000,000 shares of the Series A Convertible Preferred Stock, $.001 par value per share, of the Company (such series being hereinafter called the “Series A Preferred Stock”), and hereby fixes the designation, preferences, qualifications, privileges, limitations, options, conversion rights and other special rights of the Series A Preferred Stock (to the extent set forth in the Articles of Incorporation) as follows:

 

1.1 Definitions. For purposes of this resolution, the following definitions shall apply:

 

(a) “Board” shall mean the Board of Directors of the Company.

 

(b) “Common Stock” shall mean the Company’s Common Stock, $.001 par value per share.

 

(c) “Original Issue Date” shall mean the date on which the first share of Series A Preferred Stock is issued by the Company.

 

(d) “Original Issue Price” shall mean $0.50 per share for the Series A Preferred Stock.

 

(e) “Series A Preferred Stock” shall mean the Company’s Series A Convertible Preferred Stock, $.001 par value per share.

 

1.2 Liquidation Rights. In the event of any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, the funds and assets of the Company that may be legally distributed to the Company’s shareholders (the “Available Funds and Assets”) shall be distributed to shareholders in the following manner:

 

(a) Liquidation Preferences. The holders of each share of Series A Preferred Stock then issued and outstanding shall be entitled to be paid, out of the Available Funds and Assets, prior and in preference to any payment or distribution (or any setting apart of any payment or distribution) of any Available Funds and Assets on any shares of Common Stock, an amount per share equal to the Original Issue Price of the Series A Preferred Stock. If upon any liquidation, dissolution or winding up of the Company, the Available Funds and Assets shall be insufficient to permit the payment to holders of the Series A Preferred Stock of their full preferential amounts described in this Section 1.2(a), then the Available Funds and Assets shall be distributed ratably among the holders of Series A Preferred Stock in proportion to the amount of such stock owned by each such holder.

 

  

 

 

(b) Participation Rights. If there are any Available Funds and Assets remaining after the payment or distribution (or the setting aside for payment or distribution) to the holders of the Series A Preferred Stock of their full preferential amounts described above in this Section 1.2, then all such remaining Available Funds and Assets shall be distributed among the holders of the then outstanding Common Stock and Series A Preferred Stock pro rata according to the number of shares of Common Stock held by such holders, where, for this purpose, each holder of shares of Series A Preferred Stock is deemed to hold the greatest whole number of shares of Common Stock then issuable upon conversion of all shares of Series A Preferred Stock held by such holder pursuant to Section 1.5.

 

(c) Merger or Sale of Assets. A (i) consolidation or merger of the Company with or into any other corporation or corporations in which the holders of record of the Company’s outstanding shares immediately before such consolidation or merger do not, immediately after such consolidation or merger, hold (by virtue of securities issued as consideration in such transaction or otherwise) a majority of the voting power of the surviving Corporation of such consolidation or merger; or (ii) sale of all or substantially all of the assets of the Company, shall each be deemed to be a liquidation, dissolution or winding up of the Company as those terms are used in this Section 1.2.

 

(d) Non-Cash Consideration. If any assets of the Company distributed to shareholders in connection with any liquidation, dissolution, or winding up of the Company are other than cash, then the value of such assets shall be their fair market value as determined by the Board, except that any securities to be distributed to shareholders in a liquidation, dissolution, or winding up of the Company shall be valued as follows:

 

(i) The method of valuation of securities not subject to investment letter or other similar restrictions on free marketability shall be as follows:

 

(A) if the securities are then traded on a national securities exchange or the NASDAQ Capital Market (or a similar national quotation system), then the value shall be deemed to be the average of the closing prices of the securities on such exchange or system over the 30-day period ending three (3) days prior to the distribution;

 

(B) if actively traded over-the-counter, then the value shall be deemed to be the average of the closing bid prices over the 30-day period ending three (3) days prior to the closing of such merger, consolidation or sale;

 

 2 

 

 

(C) if there is no active public market, then the value shall be the fair market value thereof, as determined in good faith by the Board; and

 

(ii) The method of valuation of securities subject to investment letter or other restrictions on free marketability shall be to make an appropriate discount from the market value determined as above in subparagraphs (d)(A),(B) or (C) of this Section to reflect the approximate fair market value thereof, as determined in good faith by the Board.

 

1.3 Dividend Rights.

 

(a) Dividend Preference. The holders of the then issued and outstanding Series A Preferred Stock shall receive out of any funds and assets of the Company legally available and approved by the Board, cumulative dividends equal to their original investment for such Series A Preferred Stock, prior and in preference to the payment of any dividend or other Distribution on the Common Stock. All dividends may be paid in cash or kind at the election of the Company.

 

(b) Participation Rights. If, after dividends in full preferential amount specified in this Section 1.3 for the Series A Preferred Stock have been paid or declared and set apart in any fiscal year of the Company, the Board shall declare additional dividends out of funds legally available therefor in that fiscal year, then such additional dividends shall be declared ratably among the holders of Common Stock and Series A Preferred Stock in proportion to the amount of such stock owned by each such holder, where, for this purpose, each holder of shares of Series A Preferred Stock is deemed to hold the greatest whole number of shares of Common Stock then issuable upon conversion of all shares of Series A Preferred Stock held by such holder pursuant to Section 1.5.

 

(c) Non-Cash Dividends. Whenever a dividend or Distribution provided for in this Section 1.3 shall be payable in property other than cash (including without limitation Common Stock), the value of such dividend or Distribution shall be deemed to be the fair market value of such property as determined in good faith by the Board.

 

1.4 Voting Rights. Each holder of Series A Preferred Stock shall be entitled to the number of votes equal to the number of whole shares of Common Stock into which such shares of Series A Preferred Stock could be converted pursuant to the provisions of Section 1.5 below at the record date for the determination of the shareholders entitled to vote on such matters or, if no such record date is established, the date such vote is taken or any written consent of shareholders is solicited.

 

1.5 Conversion Rights. The issued and outstanding shares of Series A Preferred Stock shall be convertible into Common Stock as follows:

 

(a) Conversion.

 

(i) At the option of the holder thereof, each share of Series A Preferred Stock shall be convertible, at any time into fully paid and nonassessable shares of Common Stock as provided herein.

 

 3 

 

 

(ii) Each holder of Series A Preferred Stock who elects to convert the same into shares of Common Stock shall surrender the certificate or certificates therefor, duly endorsed, at the office of the Company or any transfer agent for the Series A Preferred Stock or Common Stock, and shall give written notice to the Company at such office that such holder elects to convert the same and shall state therein the number of shares of Series A Preferred Stock being converted. Thereupon the Company shall promptly issue and deliver at such office to such holder a certificate or certificates for the number of shares of Common Stock to which such holder is entitled upon such conversion together with all accrued dividends thereon. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the certificate or certificates representing the shares of Series A Preferred Stock to be converted, and the person entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder of such shares of Common Stock on such date.

 

(b) Conversion Ratio. Subject to the terms and conditions set forth herein, each share of Series A Preferred Stock shall be convertible into one and one quarter share of Common Stock. The initial Conversion Price for the Series A Preferred Stock shall be the Original Issue Price. The Conversion Ratio of the Series A Preferred Stock shall be subject to adjustment from time to time as provided below.

 

(c) Adjustment Upon Common Stock Event. Upon the happening of a Common Stock Event (as hereinafter defined), the Conversion Price of the Series A Preferred Stock shall, simultaneously with the happening of such Common Stock Event, be adjusted so that the number of shares of Common Stock issuable on conversion of any shares of the Series A Preferred Stock shall be increased or decreased, as the case may be, in proportion to the increase or decrease in outstanding shares immediately following the Common Stock Event. The Conversion Price for the Series A Preferred Stock shall be readjusted in the same manner upon the happening of each subsequent Common Stock Event. As used herein, the term “Common Stock Event” shall mean (x) the issue by the Company of additional shares of Common Stock as a dividend or other distribution on outstanding Common Stock, (y) a subdivision of the outstanding shares of Common Stock into a greater number of shares of Common Stock, or (z) a combination of the outstanding shares of Common Stock into a smaller number of shares of Common Stock.

 

(d) Adjustments for Other Dividends and Distributions. If at any time or from time to time after the Original Issue Date the Company pays a dividend or makes another distribution to the holders of the Common Stock payable in securities of the Company other than shares of Common Stock, then in each such event provision shall be made so that the holders of the Series A Preferred Stock shall receive upon conversion thereof, in addition to the number of shares of Common Stock receivable upon conversion thereof, the number of securities of the Company which they would have received had their Series A Preferred Stock been converted into Common Stock on the date of such event (or such record date, as applicable) and had they thereafter, during the period from the date of such event (or such record date, as applicable) to and including the conversion date, retained such securities receivable by them as aforesaid during such period, subject to all other adjustments called for during such period under this Section 1.5 with respect to the rights of the holders of the Series A Preferred Stock or with respect to such other securities by their terms.

 

 4 

 

 

(e) Adjustment for Reclassification, Exchange and Substitution. If at any time or from time to time after the Original Issue Date the Common Stock issuable upon the conversion of the Series A Preferred Stock is changed into the same or a different number of shares of any class or classes of stock, whether by recapitalization, reclassification or otherwise (other than by a Common Stock Event or a stock dividend, reorganization, merger, consolidation or sale of assets provided for elsewhere in this Section 1.5), then in any such event each holder of Series A Preferred Stock shall have the right thereafter to convert such stock into the kind and amount of stock and other securities and property receivable upon such recapitalization, reclassification or other change by holders of the number of shares of Common Stock into which such shares of Series A Preferred Stock could have been converted immediately prior to such recapitalization, reclassification or change, all subject to further adjustment as provided herein or with respect to such other securities or property by the terms thereof.

 

(f) Certificate of Adjustment. In each case of an adjustment or readjustment of the Conversion Price for the Series A Preferred Stock, the Company, at its expense, shall cause its Chief Financial Officer to compute such adjustment or readjustment in accordance with the provisions hereof and prepare a certificate showing such adjustment or readjustment, and shall mail such certificate, by first class mail, postage prepaid, to each record holder of the Series A Preferred Stock at the holder’s address as shown in the Company’s books.

 

(g) Fractional Shares. No fractional shares of Common Stock shall be issued upon any conversion of Series A Preferred Stock. In lieu of any fractional share to which the holder would otherwise be entitled, the Company shall, at the Company’s option: (x) pay the holder cash equal to the product of such fraction multiplied by the Common Stock’s fair market value as determined in good faith by the Board as of the date of conversion, or (y) round up to the nearest whole share of Common Stock to be issued upon any such conversion.

 

(h) Reservation of Stock Issuable Upon Conversion. The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of the Series A Preferred Stock, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of the Series A Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Series A Preferred Stock, the Company will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose.

 

(i) Notices. Any notice required by the provisions of this Section 1.5 to be given to the holders of shares of the Series A Preferred Stock shall be deemed given upon the earlier of actual receipt or deposit in the United States mail, by certified or registered mail, return receipt requested, postage prepaid, addressed to each holder of record at the address of such holder appearing on the books of the Company.

 

(j) No Impairment. The Company shall not avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but shall at all times in good faith assist in carrying out all such action as may be reasonably necessary or appropriate in order to protect the conversion rights of the holders of the Series A Preferred Stock against impairment.

 

Executed on April 30, 2008.

 

  PROMOTIONS ON WHEELS HOLDINGS, INC.
  a Nevada corporation
     
  By: /s/ Rowland W. Day II
    Rowland W. Day II
    President, Chief Executive Officer, Secretary and
    sole Director

 

 5 

 

Exhibit 21.0

 

Subsidiaries

 

Metalanguage Corp.

 

 

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