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Form 1-A POS GenesisAI Corp

June 30, 2022 6:06 AM EDT

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    1-A POS
    
      LIVE
      
        
          0001797609
          XXXXXXXX
        
        024-11794
      
    
  
  
    
      GenesisAI Corporation
      DE
      2018
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      7370
      83-1119348
      8
      2
    
    
      201 SE 2nd Ave.
      Miami
      FL
      33131
      617-922-4131
      Louis A. Bevilacqua, Esq.
      Other
      1479904.00
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      67000.00
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      Pinnacle Accountancy Group of Utah
    
    
      Class B Common Stock
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      000000000
      N/A
    
    
      Class A Common Stock
      17438505
      000000000
      N/A
    
    
      Series A-2 Preferred Stock
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      000000000
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      000000000
      N/A
    
    
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      17438505
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      52400539.80
      22457374.20
      142086.00
      0.00
      75000000.00
      Dalmore Group, LLC
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      Pinnacle Accountancy Group of Utah
      10500.00
      Bevilacqua PLLC
      65000.00
      Bevilacqua PLLC
      12000.00
      136352
      52228868.80
      Anticipated fees include $38,171 in fees and commissions of Dalmore Group, LLC, as a former broker-dealer for this offering, up to $41,000 in estimated transfer agent fees, and $5,000 in estimated EDGAR filing agent fees.
    
    
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      GenesisAI Corporation
      Class B Common Stock; Class A Common Stock; Options to Purchase Class A Common Stock; Series A-2 Preferred Stock
      40903940
      9538
      27,080,000 shares of Class B Common Stock were issued in consideration for the cancellation, forfeiture and exchange of 27,080,000 shares of Class A Common Stock and a $70,000 cash bonus entitlement; 2,567,260 shares of Class A Common Stock were issued in previous offerings or private placements for aggregate consideration of $2,573,950; options to purchase 7,527,061 shares of Class A Common Stock were issued as compensation for employee or consultant or advisor services; 3,687,994 shares of Series A-2 Preferred Stock were issued upon conversion of previously-issued SAFEs that were issued for aggregate consideration of $625,390; 23,402 shares of Class A Common Stock were previously issued in this offering for aggregate consideration of $99,458.50; 9,538 shares of Class A Common Stock were issued upon the automatic conversion of 9,538 shares of Class B Common Stock upon the transfer of such shares pursuant to previous sales of such shares by a selling stockholder in this offering; 311 shares of Class A Common Stock were issued pursuant to the partial exercise of a stock option and payment of the aggregate exercise price of approximately $345; 8,374 shares of Class A Common Stock were issued to an employee as compensation
      9,538 shares of Class A Common Stock were sold for the account of a person who was an officer, director, promoter and principal securityholder of the issuer for total proceeds of $40,537 at a price per share of $4.25, in sales that were made as a selling stockholder in this offering.
    
    
      Regulation Crowdfunding; Regulation D; Section 4(a)(2) of the Securities Act of 1933
    
  



 

EXPLANATORY NOTE

 

This Post-Qualification Amendment No. 1 (this “Post-Qualification Amendment No. 1”) to the Offering Statement on Form 1-A (File No. 024-11794) (the “Offering Statement”), as originally qualified by the Securities and Exchange Commission (“SEC”) on February 1, 2022, is being filed to include information contained in the Special Financial Report on Form 1-K for the fiscal year ended December 31, 2021, to update the disclosures regarding the plan of distribution and offering expenses relating to the termination of Dalmore Group, LLC as the broker-dealer of record for this offering, to disclose that the minimum investment amount per investor will be reduced from $497.25, or 117 shares of Class A Common Stock, to $250.75, or 59 shares of Class A Common Stock, to file as an exhibit to the Offering Statement the revised form of Subscription Agreement for this offering, and to update certain other information in, and file certain additional exhibits to, the Offering Statement. Since the Offering Statement was initially filed, as of the date of this Post-Qualification Amendment No. 1, investors had purchased a total of 33,432 shares of common stock pursuant to the subscription agreement described in the offering circular contained in the Offering Statement. The number of shares of common stock being offered as set forth in the offering circular contained in this Post-Qualification Amendment No. 1 has therefore been reduced from what was stated in the Offering Statement as initially filed.

 

The information included in this filing amends the Offering Statement and the offering circular contained therein. No additional securities are being qualified under this Post-Qualification Amendment No. 1.

  

 

 

 

Post-Qualification Offering Circular Amendment No. 1

File No. 024-11794

 

Preliminary Offering Circular, Dated June 30, 2022

 

An offering statement pursuant to Regulation A relating to these securities has been filed with the Securities and Exchange Commission.  Information contained in this Preliminary Offering Circular is subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted before the offering statement filed with the Commission is qualified.  This Preliminary Offering Circular shall not constitute an offer to sell or the solicitation of an offer to buy nor may there be any sales of these securities in any state in which such offer, solicitation or sale would be unlawful before registration or qualification under the laws of any such state.  We may elect to satisfy our obligation to deliver a Final Offering Circular by sending you a notice within two business days after the completion of our sale to you that contains the URL where the Offering Circular was filed may be obtained.

 

PART II

OFFERING CIRCULAR

 

 

 

GenesisAI Corporation

201 SE 2nd Ave., Miami, Fl 33131

+1 (617) 922-4131, www.genesisai.io

 

We are offering 17,613,626 shares of Class A Common Stock, including up to 5,284,088 Shares of Class A Common Stock to be sold by selling stockholders, on a “best efforts” basis.

 

We and the selling stockholders are offering a maximum of 17,613,626 shares of Class A Common Stock. We are offering up to 12,329,538 shares of our Class A Common Stock at a fixed price of $4.25 per share, subject to a maximum of 70% of gross proceeds on a pro rata basis with the selling stockholders (the “Primary Offering”). The selling stockholders are offering up to 5,284,088 shares of our Class A Common Stock at a price of $4.25 per share, subject to a maximum of 30% of gross proceeds on a pro rata basis with the Primary Offering (the “Secondary Offering”). Both the Primary Offering and Secondary Offering will be conducted as a single “Tier 2 Offering” under Regulation A (the “Offering”). The minimum per-investor investment in this Offering is $250.75, or 59 shares of Class A Common Stock. The Primary Offering and Secondary Offering will occur simultaneously. The Primary Offering will be conducted on a “best-efforts” basis, which means our directors and officers will use their commercially reasonable best efforts in an attempt to offer and sell the shares. Our directors and officers will not receive any commission or any other remuneration for these sales. In offering the securities on our behalf, the directors and officers will rely on the safe harbor from broker-dealer registration set out in Rule 3a4-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Secondary Offering will be conducted by the selling stockholders in coordination with us and our agents, and we will not receive any of the proceeds from the Secondary Offering. We will bear all costs, expenses and fees in connection with the qualification or registration of the shares of Class A Common Stock being offered in the Secondary Offering, including with regard to compliance with state securities or “blue sky” laws. The selling stockholders will bear all commissions and discounts, if any, attributable to their sale of their shares of Class A Common Stock. See “Securities Being Offered” for a description of our Class A Common Stock.

 

 

 

 

The Company had formerly engaged Dalmore Group, LLC, member FINRA/SIPC (“Dalmore”), as broker-dealer of record, to perform broker-dealer, administrative and compliance related functions in connection with this Offering, but not for underwriting or placement agent services. Prior to the termination of Dalmore’s agreement with the Company, Dalmore became entitled to a 1% commission, a one-time advance payment for out-of-pocket expenses equal to $5,000, a consulting fee of $20,000, and $11,750 for fees payable to FINRA. On or around June 1, 2022, our broker-dealer agreement with Dalmore was terminated. In addition to the out-of-pocket expenses, consulting fees and FINRA fees indicated above, we and the selling stockholders are required to pay Dalmore total commissions of $1,420.86. For additional information regarding the methods of sale, refer to the section entitled “Plan of Distribution” in this offering circular (this “Offering Circular”).

 

The Offering will terminate on the earlier of: (i) such time as the Board of Directors decides that it is in our best interest to terminate the Offering; (ii) such time as $74,857,914.00 of our Class A Common Stock is sold; or (iii) February 17, 2025. This Offering does not have a minimum offering amount. The Company will not utilize a third-party escrow account for this Offering. All funds tendered by investors will be held in a segregated account until investor subscriptions are accepted by the Company. Once investor subscriptions are accepted by the Company funds will be deposited into an account controlled by the Company. In the event we terminate the Offering before the maximum offering amount is sold, we will close on all funds received and accepted up to that time and promptly issue all purchased and unissued Class A Common Stock. If an investor’s subscription is rejected, the investor’s payment (or portion thereof if partially rejected) will be returned within 30 days without interest.

 

We may hold a series of closings at which we and the selling stockholders receive the funds from a segregated investment account and issue the shares to investors. We may undertake one or more closings on a rolling basis. After each closing, funds tendered by investors will be available to us and the selling stockholders for securities sold by us and the selling stockholders, respectively, and we and the selling stockholders will have access to these funds even if they do not cover the expenses of this Offering. After the initial closing of this Offering, we expect to hold closings on at least a monthly basis.

 

The Class A Common Stock is not listed on any national securities exchange or in the over-the-counter inter-dealer quotation system.

 

   

 

Price to Public

   

 

Underwriting Discount and Commissions (1)

   

 

Proceeds to Company(2)

   

 

Proceeds to Other Persons(3)

 
Per Share:   $ 4.25                -     $ 4.25     $ 4.25  
Maximum Offering Amount:   $ 74,857,914       -     $ 52,400,539.80     $ 22,457,374.20  

 

(1) The Company had formerly engaged Dalmore as broker-dealer of record, to perform broker-dealer, administrative and compliance related functions in connection with this Offering, but not for underwriting or placement agent services. This table does not include a one-time advance payment for out-of-pocket expenses equal to $5,000, a consulting fee of $20,000, and $11,750 for fees payable to FINRA, payable by the Company to Dalmore. The broker-dealer agreement between the Company and Dalmore was terminated on or around June 1, 2022. The total amount raised during the time of our previous engagement with Dalmore, which took place from the commencement of this Offering to approximately June 1, 2022, was $142,086. Dalmore became entitled to approximately $1,421 in fees and commissions, equal to 1% of the dollar value of the shares previously issued to investors in this Offering. See “Plan of Distribution”.
  
(2) Maximum aggregate gross proceeds in this Offering to the Company in the Primary Offering will be $52,400,539.80.  The amounts in this column do not include legal, accounting, broker-dealer  or other expenses of this Offering, which are estimated at approximately $170,250 for a fully-subscribed offering. See “Plan of Distribution”.
  
(3) Maximum aggregate gross proceeds in this Offering to the selling stockholders in the Secondary Offering will be $22,457,374.20. See “Plan of Distribution – Selling Stockholders”.

 

The purchase of the securities offered through this Offering Circular involves a high degree of risk. You should carefully read the entire Offering Circular, including the section entitled “Risk Factors” beginning on page 5 before buying any Class A Common Stock.

 

THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS UPON THE MERITS OF OR GIVE ITS APPROVAL TO ANY SECURITIES OFFERED OR THE TERMS OF THE OFFERING, NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF ANY OFFERING CIRCULAR OR OTHER SOLICITATION MATERIALS. THESE SECURITIES ARE OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE COMMISSION; HOWEVER, THE COMMISSION HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES OFFERED ARE EXEMPT FROM REGISTRATION.

 

GENERALLY, NO SALE MAY BE MADE TO YOU IN THIS OFFERING IF THE AGGREGATE PURCHASE PRICE YOU PAY IS MORE THAN 10% OF THE GREATER OF YOUR ANNUAL INCOME OR NET WORTH. DIFFERENT RULES APPLY TO ACCREDITED INVESTORS AND NON-NATURAL PERSONS. BEFORE MAKING ANY REPRESENTATION THAT YOUR INVESTMENT DOES NOT EXCEED APPLICABLE THRESHOLDS, WE ENCOURAGE YOU TO REVIEW RULE 251(d)(2)(i)(C) OF REGULATION A. FOR GENERAL INFORMATION ON INVESTING, WE ENCOURAGE YOU TO REFER TO WWW.INVESTOR.GOV.

 

This Offering Circular is following the offering circular format described in Part II (a)(1)(ii) of Form 1-A.

 

 

 

 

TABLE OF CONTENTS

 

    Page
     
SUMMARY   1
RISK FACTORS   5
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS   15
DILUTION   16
PLAN OF DISTRIBUTION   17
USE OF PROCEEDS   23
DESCRIPTION OF BUSINESS   24
DESCRIPTION OF PROPERTY   27
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS   28
DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES   37
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS   39
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITYHOLDERS   42
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS   43
SECURITIES BEING OFFERED   44
SELLING STOCKHOLDERS   50
LEGAL MATTERS   51
EXPERTS   51
WHERE YOU CAN FIND MORE INFORMATION   51
FINANCIAL STATEMENTS   FS-1

 

We have not authorized anyone to provide any information other than that contained or incorporated by reference in this Offering Circular prepared by us or to which we have referred you. We do not take responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This Offering Circular is an offer to sell only the Class A Common Stock offered hereby under circumstances and in jurisdictions where it is lawful to do so. The information contained in this Offering Circular is current only as of its date, regardless of the time of delivery of this Offering Circular or any sale of Class A Common Stock.

 

For investors outside the United States: We have not done anything that would permit this Offering or possession or distribution of this Offering Circular in any jurisdiction where action for that purpose is required, other than the United States. You are required to inform yourselves about and to observe any restrictions relating to this Offering and the distribution of this Offering Circular.

 

We are responsible for the disclosure in this Offering Circular, including disclosure regarding industry data. Certain industry data and market data included in this Offering Circular were obtained from independent third-party surveys, market research, publicly available information, reports of governmental agencies and industry publications and surveys. Our estimates presented herein are based upon our review of independent third-party surveys and industry publications prepared by a number of sources and other publicly available information. The market data used in this Offering Circular involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. We believe that the information from these industry publications and surveys that is included in this Offering Circular is reliable and we take responsibility for the disclosure in this Offering Circular. The industry in which we operate is subject to risks due to a variety of important factors, including those described in “Risk Factors.” These and other factors could cause results to differ materially from those expressed in the estimates made by the independent parties and by us.

 

This Offering Circular may contain trademarks, service marks and trade names of third parties, which are the property of their respective owners. Our use or display of third parties’ trademarks, service marks, trade names or products in this Offering Circular is not intended to, and should not be read to, imply a relationship with or endorsement or sponsorship of us.

 

i

 

 

SUMMARY

 

This summary highlights information contained elsewhere in this Offering Circular. This summary does not contain all of the information that you should consider before deciding to invest in our Class A Common Stock. You should read this entire Offering Circular carefully, including the “Risk Factors” section, our historical consolidated financial statements and the notes thereto, each included elsewhere in this Offering Circular. Unless the context requires otherwise, references in this Offering Circular to “the Company,” “we,” “us” and “our” refer to GenesisAI Corporation, a Delaware corporation.

 

On September 29, 2021, we completed a 10-for-1 forward stock split of our outstanding common stock. References to number of shares of our common stock, including the shares offered in this Offering, shares to be issued upon the conversion or exercise of certain convertible securities, and other future issuances, have given effect to this split.

 

Our Company

 

Overview

 

We have developed GenesisAI, an artificial intelligence, or AI, protocol and platform that enables different AI systems to communicate with each other, exchange data, and trade services. On top of this protocol, we are building an online marketplace for AI products and services. The marketplace will connect companies in need of AI services, data, and models with companies interested in monetizing their AI technology. We provide the web platform that will facilitate the offer and sale of a variety of low-cost advanced AI services. Our platform helps to make machine-learning AI technology more accessible and affordable for companies, governments, and other organizations around the world.

 

With the GenesisAI protocol, we envision a completely different world. The GenesisAI protocol will allow anybody to upload an AI service to the GenesisAI network. Under this system, AI becomes a globally accessible resource. Anyone can utilize its technological benefits, or become an agent in its development. Our existing AI applications help investors and traders find investment opportunities and save time doing investment research. GenesisAI will maximize the functionality and accuracy rate of AI models through cross-provider transfer learning, enabling multiple AI applications to exchange data and trade services.

 

Our AI protocol and platform and related online marketplace are not yet fully developed.

 

The Market

 

Artificial intelligence is growing rapidly. According to an April 2021 report by Transparency Market Research, the market for AI is estimated to grow to approximately $2.8 trillion by 2030. This revolutionary technology is becoming a part of many aspects of the internet and the global economy, including investing, trading, and social media. In our opinion, large companies are investing tens of billions of dollars into AI. But issues plaguing the AI industry are plentiful. For years, AI tools have been developed and operated in silos, created within a single company, or for a single purpose, without any means of exchanging data with each other, or learning from other developers. This has made it difficult to create synergistic AI applications. Furthermore, in our opinion, developers have had no easy way to monetize the technology that they have developed.

 

Based on our experience in this industry, currently AI development is hindered by two fundamental problems:

 

AI development is expensive.

 

It is our belief that Independent AI developers can neither easily monetize nor coordinate their capabilities with other AI developers to satisfy end users’ machine-learning needs.

 

In our opinion, the AI market today is fragmented and dominated by large, oligopolistic tech companies, which may charge inflated prices for their AI services. We believe the number of AI developers is very limited. There is no easy way for independently-developed AIs to exchange data, trade services, learn from each other, or expand their own capabilities. Most companies cannot afford to hire their own team of AI engineers to create in-house AIs, nor do they have enough technical capabilities to use open-source application programming interfaces, or APIs, to purchase and integrate the specific AI services that they need. Moreover, it is often difficult to judge the quality of independently-developed AIs because of the lack of credible reputation systems. Companies and others operating on a lean budget may face high-risk decisions when choosing which AIs to use.

 

1

 

 

While some open-source APIs are currently available on GitHub and elsewhere on the Internet such as on Google’s TensorFlow, they are sometimes hard to use and difficult to integrate even with technical expertise. Companies may need to spend tens of thousands of dollars simply to allow different AI capabilities to coordinate. We are democratizing access to the independent AI developers by wrapping their AI code in an easily accessible AI API. The common protocol will help reduce the cost of AI work by increasing the total supply of accessible AI services. The ease of using wrapped AIs empowers even people without technical expertise to reach their goals with the power of sophisticated AI. No or limited engineering work is required in order to use the AI technologies on GenesisAI. Our protocol enables AI developers to coordinate and end users to find and use the best outsourced AI programs to suit their needs and budgets.

 

Our Product

 

GenesisAI Artificial Intelligence Platform

 

The GenesisAI protocol and platform enables different AI systems to communicate with each other, exchange data, and trade services. On top of this protocol the GenesisAI platform will host an online marketplace for AI products and services. The marketplace will connect companies in need of AI services, data, and models with companies interested in monetizing their AI technology. Initially the platform focused on the asset management. We plan to generate revenues through the collection of a percentage of the transaction proceeds for transactions performed through our web platform. We expect that our web platform transaction fee will initially be 30%. We have not generated any revenues from our operations.

 

Competition

 

Our competitors include RapidAPI and SingularityNET. We believe we are different in that not only are we connecting buyers and sellers of AIs with each other, but our protocol also enables multiple AI products to work together seamlessly (e.g., a speech recognition program and a translation program working together to produce speech translation). We believe that these distinctions could give us a unique edge in providing potentially higher quality AI products and services and increased functionality.

 

Customer Base

 

We plan to operate as a marketplace. While there is no assurance that our software providers and user base will be large enough for us to reach profitability, we do not anticipate that we will be dependent on one or a few major customers or suppliers. On the supply side, we have several partnerships with AI companies and individuals who are interested in deploying their AI tool on our marketplace. On the demand side, we have over 1,600 individual registered users.

 

History of the Business and/or Founders

 

Our expert advisors have achieved two multi-billion-dollar exits, and include a former Dean of MIT Engineering, and professors of the Harvard computer science department and Harvard Business School.

 

Corporate Information

 

We presently maintain our principal office at 201 SE 2nd Ave., Miami, FL 33131.  Our telephone number is (617) 922-4131.  We maintain a website at www.genesisai.io/.  Information available on our website is not incorporated by reference in and is not deemed a part of this Offering Circular.

 

2

 

 

The Offering

 

 Securities Being Offered

 

Maximum of 17,613,626 shares of Class A Common Stock ($74.9 million). 

     
    Of the 17,613,626 shares of Class A Common Stock available in this Offering, up to 12,329,538 shares are being offered by the Company. See “Plan of Distribution” section for details.
     
    Of the 17,613,626 shares of Class A Common Stock available in this Offering, up to 5,284,088 shares are being offered by existing stockholders  . See “Plan of Distribution – Selling Stockholders” section for details.
     
Offering Price per Share  

$4.25 per share.

 

Minimum Investment Amount  

The minimum investment amount per investor is $250.75, or 59 shares of Class A Common Stock   .

 

Investment Amount Restrictions  

Generally, no sale may be made to you in this Offering if the aggregate purchase price you pay is more than 10% of the greater of your annual income or net worth. Different rules apply to accredited investors and non-natural persons. Before making any representation that your investment does not exceed applicable thresholds, we encourage you to review Rule 251(d)(2)(i)(c) of Regulation A. For general information on investing, we encourage you to refer to www.investor.gov.

 

Number of Shares Outstanding Before the Offering  

17,438,505 shares of Class A Common Stock and 27,070,462 shares of Class B Common Stock as of the date of this Offering Circular.

 

Number of Shares Outstanding After the Offering if All the Shares Being Offered are Sold  

A total of 34,958,076 shares of Class A Common Stock and 22,044,767 shares of Class B Common Stock will be issued and outstanding after this Offering is completed if all the shares being offered are sold.

 

Risk Factors   Investing in our Class A Common Stock involves risks. See the section entitled “Risk Factors” in this Offering Circular and other information included in this Offering Circular for a discussion of factors you should carefully consider before deciding to invest in our Class A Common Stock.
     
Use of Proceeds  

We intend to use the net proceeds of this Offering for mergers and acquisitions (although no specific candidates or type of candidates have been identified and no acquisition negotiations have occurred), sales and marketing, research and development, and working capital and other general corporate purposes. Pending such uses, we will invest the proceeds of the Offering in short-term, interest-bearing, investment-grade securities, certificates of deposit or direct or guaranteed obligations of the United States. See “Use of Proceeds” section for details.

 

Termination of the Offering  

The Offering will terminate on the earlier of: (i) such time as the Board of Directors decides that it is in our best interest to terminate the Offering; (ii) such time as $74,857,914.00 of our Class A Common Stock is sold; or (iii) February 17, 2025.

 

3

 

 

The number of shares of Class A Common Stock to be outstanding after this Offering does not include:

 

7,593,330 shares of Class A Common Stock underlying outstanding options that have been granted to our officers, directors, employees and consultants pursuant to the GenesisAI Corporation 2018 Stock Incentive Plan, as amended, or the Stock Incentive Plan or the Plan;

 

15,000,000 shares of Class A Common Stock that may be issued under the Plan, including the shares of Class A Common Stock underlying outstanding options previously granted to our officers, directors, employees and consultants pursuant to the Plan;
     
22,044,767 shares of Class A Common Stock that may be issued upon conversion of Class B Common Stock; and
     
  3,687,994 shares of Class A Common Stock that may be issued upon conversion of Series A-2 Preferred Stock.

 

 

4

 

 

RISK FACTORS

 

Investing in our Class A Common Stock involves a high degree of risk. You should carefully consider each of the following risks, together with all other information set forth in this Offering Circular, including the consolidated financial statements and the related notes, before making a decision to buy our Class A Common Stock. If any of the following risks actually occurs, our business could be harmed. In that case, the trading price of our Class A Common Stock, if any, could decline, and you may lose all or part of your investment.

 

Risks Related to the Company’s Business and Industry

 

Our auditors’ report includes a going concern paragraph.

 

Our financial statements include a going-concern qualification from our auditors, which expresses substantial doubt about our ability to continue as a going concern. We have operated at a loss since inception. Our ability to operate profitably is dependent upon, among other things, obtaining additional financing for our operations. These factors, among others, raise substantial doubt about our ability to continue as a going concern. The accompanying financial statements do not include any adjustments that take into consideration the uncertainty of our ability to continue operations.

 

GenesisAI is an early-stage startup, and that comes with the typical risks of a company at this stage.

 

GenesisAI is an early-stage startup, which comes with the typical risks of a company at this stage. Relevant risks include unstable revenues in the initial phase of revenue creation, due to external developments in the addressed market, and new competitor entrance. This condition will limit our ability to pay dividends until we reach financial stability.

 

Any valuation at this stage is difficult to assess.

 

Any valuation at this stage is difficult to assess. The valuations for our Regulation Crowdfunding and Regulation A offerings have been established by the Company. Unlike listed companies that are valued publicly through market-driven stock prices, the valuation of private companies, especially startups, is difficult to assess and you may risk overpaying for your investment.

 

We have a small team and our future success depends on the ability of the core team to recruit key personnel.

 

We have a small team and our future success depends on the ability of the core team to recruit key personnel to face a sustainable scaling effort. Job market conditions may affect our ability to recruit the talent we need to add new skills and competences in our company. In addition to full-time employees and full-time contractors, GenesisAI has part-time team members who are putting a limited number of hours in GenesisAI. This might hinder our ability to grow fast.

 

We are dependent on general economic conditions.

 

We are dependent on general economic conditions. Potential customers may be less willing to invest in innovation and forward-looking improvements if they are facing an economic downturn. This may temporarily reduce our market size. Furthermore, a global crisis might make it harder to diversify.

 

Intense competition in the markets in which we compete could prevent us from increasing or sustaining our revenue growth and increasing or maintaining profitability.

 

Intense competition in the markets in which we compete could prevent us from increasing or sustaining our revenue growth and increasing or maintaining profitability. The business of cloud software solutions is competitive, and we expect it to become increasingly competitive in the future. We may also face competition from large Internet companies, any of which might launch or launched its own cloud-based business communications services or acquire other cloud-based business communications companies in the future.

 

Our ability to succeed depends on how successful we will be in our fundraising efforts.

 

Our ability to succeed depends on how successful we will be in our fundraising efforts. We rely on investment funds in order to use resources to build the necessary tech and business infrastructure to be successful in the long-term. In the event of competitors being better capitalized than we are, that would give them a significant advantage in marketing and operations.

 

Voting control will be given to a small number of stockholders.

 

Investors in the Company will have only a minority of voting rights in corporate matters requiring stockholder approval, including the election of directors, major changes to our company governance documents, expanding employee option pools, or actions including mergers, consolidation, asset sales and other major actions requiring stockholder approval. Our majority stockholder and sole executive officer and director, Mr. Archil Cheishvili, makes all major decisions regarding the Company. All other stockholders of the Company are minority stockholders and, in some cases, a signatory to a proxy agreement designating Mr. Cheishvili as your voting proxy, and therefore may not have a say in these decisions.

 

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Future fundraising may affect the rights of investors.

 

Future fundraising may affect the rights of investors. In order to expand, the Company is raising funds, and may raise additional funds in the future, either by offerings of securities or through borrowing from banks or other sources. The terms of future capital raising, such as loan agreements, may include covenants that give creditors greater rights over the financial resources of the company.

 

The Company may never receive a future equity financing or undergo a liquidity event such as a sale of the Company or an initial public offering, and you may not be able to sell any shares that you purchase in this Offering.

 

The Company may never receive a future equity financing, or undergo a liquidity event such as a sale of the Company or an initial public offering (IPO). If a liquidity event occurs such as a sale of the Company or an IPO, the purchasers could be left holding Company securities in perpetuity. The Company’s securities have numerous transfer restrictions and will likely be highly illiquid, with potentially no secondary market on which to sell them. The securities have only a minority of voting rights and do not provide the ability to direct the Company or its actions.

 

Our future success depends on the efforts of a small management team.

 

Our future success depends on the efforts of a small management team. The loss of services of the members of the management team may have an adverse effect on the company. There can be no assurance that we will be successful in attracting and retaining other personnel we require to successfully grow our business.

 

Major health epidemics, such as the outbreak caused by a coronavirus (COVID-19), and other outbreaks or unforeseen or catastrophic events could disrupt and adversely affect our operations, financial condition, and business.

 

Major health epidemics, such as the outbreak caused by a coronavirus (COVID-19), and other outbreaks or unforeseen or catastrophic events could disrupt and adversely affect our operations, financial condition, and business. The United States and other countries have experienced and may experience in the future, major health epidemics related to viruses, other pathogens, and other unforeseen or catastrophic events, including natural disasters, extreme weather events, power loss, acts of war, and terrorist attacks. For example, there was an outbreak of COVID-19, a novel virus, which has spread to the United States and other countries and declared a global pandemic. The global spread of COVID-19 has created significant volatility and uncertainty in financial markets. There is significant uncertainty relating to the potential impact of COVID-19 on our business. The extent to which COVID-19 impacts our current capital raise and our ability to obtain future financing, as well as our results of operations and financial condition, generally, 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 taken by governments and private businesses to contain COVID-19 or treat its impact, among others. If the disruptions posed by COVID-19 continue for an extensive period of time, our business, results of operations, and financial condition may be materially adversely affected.

 

The market for cloud software solutions is subject to rapid technological change, and we depend on new product and service introductions in order to maintain and grow our business.

 

The market for cloud software solutions is subject to rapid technological change, and we depend on new product and service introductions in order to maintain and grow our business. We operate in an emerging market that is characterized by rapid changes in customer requirements, frequent introductions of new and enhanced products, and continuing and rapid technological advancement. To compete successfully in this emerging market, we must continue to design, develop, manufacture, and sell new and enhanced cloud software solutions products and services that provide higher levels of performance and reliability at lower cost. If we are unable to develop new services that address our customers’ needs, to deliver our applications in one seamless integrated product offering that addresses our customers’ needs, or to enhance and improve our services in a timely manner, we may not be able to achieve or maintain adequate market acceptance of our services. Our ability to grow is also subject to the risk of future disruptive technologies. Access and use of our services is provided via the cloud, which, itself, has been disruptive.

 

Failure to comply with laws and contractual obligations related to data privacy and protection could have a material adverse effect on our business, financial condition and operating results.

 

Failure to comply with laws and contractual obligations related to data privacy and protection could have a material adverse effect on our business, financial condition and operating results. We are subject to the data privacy and protection laws and regulations adopted by federal, state and foreign governmental agencies. Data privacy and protection is highly regulated and may become the subject of additional regulation in the future. Privacy laws restrict our storage, use, processing, disclosure, transfer and protection of personal information, including credit card data, provided to us by our customers as well as data we collect from our customers and employees. We strive to comply with all applicable laws, regulations, policies and legal obligations relating to privacy and data protection. However, it is possible that these requirements may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices. Should this occur, we may be subject to fines, penalties and lawsuits, and our reputation may suffer. We may also be required to make modifications to our data practices that could have an adverse impact on our business.

 

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Inability to protect our proprietary technology would disrupt our business.

 

Inability to protect our proprietary technology would disrupt our business. We rely, in part, on trademark, copyright, and trade secret law to protect our intellectual property in the United States and abroad. Although we operate and promote an open-source environment, we have secrets that require us to protect certain software, documentation, and other written materials under trade secret and copyright law, which afford only limited protection. Any intellectual property rights we obtain may not be sufficient to provide us with a competitive advantage, and could be challenged, invalidated, infringed or misappropriated. We may not be able to protect our proprietary rights in the United States or internationally (where effective intellectual property protection may be unavailable or limited), and competitors may independently develop technologies that are similar or superior to our technology, duplicate our technology or design around any patent of ours. We attempt to further protect our proprietary technology and content by requiring our employees and consultants to enter into confidentiality and assignment of inventions agreements and third parties to enter into nondisclosure agreements. These agreements may not effectively prevent unauthorized use or disclosure of our confidential information, intellectual property or technology and may not provide an adequate remedy in the event of unauthorized use or disclosure of our confidential information, intellectual property or technology. Litigation may be necessary in the future to enforce our intellectual property rights, to determine the validity and scope of our proprietary rights or the rights of others, or to defend against claims of infringement or invalidity. Such litigation could result in substantial costs and diversion of management time and resources and could have a material adverse effect on our business, financial condition, and operating results. Any settlement or adverse determination in such litigation would also subject us to significant liability.

 

Third parties might infringe upon our technology.

 

Third parties might infringe upon our technology. We cannot assure you that the steps we have taken to protect our property rights will prevent misappropriation of our technology. To protect our rights to our intellectual property, we rely on a combination of trade secrets, confidentiality agreements and other contractual arrangements with our employees, affiliates, strategic partners and others. We may be unable to detect inappropriate use of our technology. Failure to adequately protect our intellectual property could materially harm our brand, devalue our proprietary content and affect our ability to compete effectively. Further, defending any technology rights could result in significant financial expenses and managerial resources.

 

Third parties may claim that our services infringe upon their intellectual property rights.

 

Third parties may claim that our services infringe upon their intellectual property rights. Third parties may assert that we have violated a patent or infringed a copyright, trademark or other proprietary right belonging to them and subject us to expensive and disruptive litigation. In addition, we incorporate licensed third-party technology in some of our products and services. In these license agreements, the licensors have agreed to indemnify us with respect to any claim by a third party that the licensed software infringes any patent or other proprietary right so long as we have not made changes to the licensed software. We cannot assure you that these provisions will be adequate to protect us from infringement claims. Any infringement claims and lawsuits, even if not meritorious, could be expensive and time consuming to defend; divert management’s attention and resources; require us to redesign our products, if feasible; require us to pay royalties or enter into licensing agreements in order to obtain the right to use necessary technologies; and/or may materially disrupt the conduct of our business.

 

We are required to indemnify our officers and directors.

 

Under Delaware law, our charter documents and certain indemnification agreements, we may be obligated to indemnify our directors, officers, employees, and agents, under certain circumstances, against attorney’s fees and other expenses incurred by them in any litigation to which they become a party arising from their association with or activities on our behalf. If we were called upon to indemnify an officer or director, then the portion of our available funds expended for such purpose would reduce the amount otherwise available for our business. This indemnification obligation and the resultant costs associated with indemnification may also discourage us from bringing a lawsuit against directors and officers for breaches of their fiduciary duties and may similarly discourage the filing of derivative litigation by our stockholders against our directors and officers even though such actions, if successful, might otherwise benefit our company and stockholders.

 

Under certain conditions, we may agree to indemnify customers, investors, underwriters, placement agents and other third parties, which exposes us to substantial potential liability.

 

Our contracts with customers, investors and other third parties may include indemnification provisions under which we agree to defend and indemnify them against claims and losses arising from alleged infringement, misappropriation, or other violation of intellectual property rights, data protection violations, breaches of representations and warranties, damage to property or persons, or other liabilities arising from our products or solutions. In addition, we agreed to indemnify and hold Dalmore, its affiliates and their representatives and agents harmless from, any and all actual or direct losses, liabilities, judgments, arbitration awards, settlements, damages and costs, resulting from or arising out of any third party suits, actions, claims, demands or similar proceedings to the extent they are based upon (i) a breach of our broker-dealer agreement with Dalmore, (ii) our wrongful acts or omissions, or (iii) this Offering. Our agreement with Dalmore was terminated on or around June 1, 2022, however, our indemnification obligations to Dalmore arising under the terms of the agreement continue to be in effect. Although we attempt to limit our indemnity obligations, an event triggering our indemnity obligations could give rise to multiple claims involving multiple customers or other third parties. We may be liable for up to the full amount of the indemnified claims, which could result in substantial liability or material disruption to our business or could negatively impact our relationships with customers or other third parties, reduce demand for our products and solutions, and adversely affect our business, financial condition, and results of operation.

 

 

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The market size for AI services may be smaller than we have estimated.

 

The public data regarding the market for AI services may be incomplete. Therefore, some of our estimates and judgments are based on various sources which we have not independently verified and which potentially include outdated information, or information that may not be precise or correct, potentially rendering the market size for AI services smaller than we have estimated, which may reduce our potential and ability to increase revenue. Although we have not independently verified the data obtained from these sources, we believe that such data provide the best available information relating to the present market for AI services, and we often use such data for our business and planning purposes.

 

We may depend on a limited number of software providers for our service to function adequately. Failure to obtain satisfactory performance from our suppliers or loss of our existing suppliers could cause us to lose sales, incur additional costs and lose credibility in the market.

 

We may depend on a limited number of third-party software providers in order for our software services to function adequately. Most of our agreements with suppliers are not long-term and typically only secure suppliers’ software services for at most a one-year term. The termination of our supplier relationships or an adverse change in the terms of these arrangements could have a negative impact on our business. Our suppliers’ failure to perform satisfactorily or handle increased orders or the loss of our existing suppliers, especially our key suppliers, could disrupt our services or reduce their functionality, cause us to lose sales, incur additional costs and/or expose us to other issues. In turn, this could cause us to lose credibility in the market and damage our relationships with our users, ultimately leading to a decline in our business and results of operations. If we are not able to renegotiate these contracts on acceptable terms or find suitable alternatives, our business, financial condition or results of operations could be negatively impacted.

 

Our business may face risks of fee non-payment, users may seek to renegotiate existing fees and contract arrangements, and users may not accept price increases, which could result in loss of users, fee write-offs, reduced revenues and decreased profitability.

 

In some cases, our business may be engaged by users who are experiencing or anticipate experiencing financial distress or are facing complex challenges, are engaged in litigation or regulatory or judicial proceedings, or are facing foreclosure of collateral or liquidation of assets. This may be true in light of general economic conditions; lingering effects of past economic slowdowns or recession caused by the novel coronavirus; or business- or operations-specific reasons. Such users may not have sufficient funds to continue operations or to pay for our services. With respect to bankruptcy cases, bankruptcy courts have the discretion to require us to return all, or a portion of, our fees.

 

We may receive requests to discount our fees for our services and to agree to contract terms relative to the scope of services and other terms that may limit the size of an engagement or our ability to pass through costs. We consider these requests on a case-by-case basis. We may routinely receive these types of requests and expect this to continue in the future. In addition, our users and prospective users may not accept rate increases that we put into effect or plan to implement in the future. Fee discounts, pressure not to increase or even decrease our rates, and less advantageous contract terms could result in the loss of users, lower revenues and operating income, higher costs and less profitable engagements. More discounts or write-offs than we expect in any period would have a negative impact on our results of operations. There is no assurance that significant user engagements will be renewed or replaced in a timely manner or at all, or that they will generate the same volume of work or revenues or be as profitable as past engagements.

 

Computer malware, viruses, hacking, phishing attacks and spamming that could result in security and privacy breaches and interruption in service could harm our business and our customers.

 

Computer malware, viruses, physical or electronic break-ins and similar disruptions could lead to interruption and delays in our services and operations and loss, misuse or theft of data. Computer malware, viruses, computer hacking and phishing attacks against online networking platforms have become more prevalent and may occur on our systems in the future. Any attempts by hackers to disrupt our website service or our internal systems, if successful, could harm our business, be expensive to remedy and damage our reputation or brand. Efforts to prevent hackers from entering our systems are expensive to implement and may limit the functionality of our services. Though it is difficult to determine what, if any, harm may directly result from any specific interruption or attack, any failure to maintain performance, reliability, security and availability of our products and services and technical infrastructure may harm our reputation, brand and our ability to attract users. Any significant disruption to our internet-based software platform or internal computer systems could result in a loss of users and could adversely affect our business and results of operations.

 

We may in the future experience, service disruptions, outages and other performance problems due to a variety of factors, including infrastructure changes, third-party service providers, human or software errors and capacity constraints. If our platform is unavailable when users attempt to access it or it does not load as quickly as they expect, users may seek other services.

 

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Our platform is highly technical and complex and may now or in the future contain undetected errors, bugs, or vulnerabilities. Some errors in our code may only be discovered after the code has been deployed. Any errors, bugs or vulnerabilities discovered in our code after deployment, inability to identify the cause or causes of performance problems within an acceptable period of time or difficultly maintaining and improving the performance of our platform, particularly during peak usage times, could result in damage to our reputation or brand, loss of revenues, or liability for damages, any of which could adversely affect our business and financial results.

 

We expect to continue to make significant investments to maintain and improve the availability of our platform and to enable rapid releases of new features and products. To the extent that we do not effectively address capacity constraints, upgrade our systems as needed and continually develop our technology and network architecture to accommodate actual and anticipated changes in technology, our business and operating results may be harmed.

 

We are subject to income taxes as well as non-income-based taxes, such as payroll, sales, use, value-added, net worth, property and goods and services taxes.

 

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

 

We may be unable to generate significant revenues and may never become profitable.

 

We generated no revenue for the years ended December 31, 2021 and 2020 and do not currently have any material recurring sources of revenues, making it difficult to predict when we will be profitable. We expect to incur significant research and development costs for the foreseeable future. We may not be able to successfully market our products and services in the future that will generate significant revenues. In addition, any revenues that we may generate may be insufficient for us to become profitable.

 

If we fail to maintain proper and effective internal and disclosure controls, our ability to produce accurate financial statements and other disclosures on a timely basis could be impaired.

 

We may err in the design or operation of our controls. In addition, a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud will be detected.

 

We may in the future discover areas of our internal controls over financial reporting that need improvement. If additional material weaknesses or significant deficiencies in our internal control are discovered or occur in the future, our consolidated financial statements may contain material misstatements and we could be required to restate our financial results. In addition, the market price of our stock price could decline and we could be subject to sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial and management resources and could lead to substantial additional costs for accounting and legal fees.

 

We may not be able to remediate any future material weaknesses, or to complete our evaluation, testing and any required remediation in a timely fashion. If we are not able to conclude that our internal control over financial reporting is effective, or if our auditors are unable to express an opinion that our internal controls over financial reporting are effective investors could lose confidence in the accuracy and completeness of our financial reports, which could harm our stock price, and we could be subject to sanctions or investigations by SEC or other regulatory authorities. Failure to remediate any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems, could also restrict our future access to the capital markets.

 

We have broad discretion over the use of proceeds from securities offerings.

 

The Company’s management will have broad discretion with respect to the application of net proceeds received and accepted by the Company from the sale of securities and may spend such proceeds in ways that do not improve the Company’s results of operations or enhance the value of the Company’s other issued and outstanding securities from time to time. For example, if we were to acquire a company with the proceeds of this Offering, the acquired company could fail to be profitable, and therefore could cause us to incur significant losses. Any failure by management to apply these funds effectively could result in financial losses that could have a material adverse effect on the Company’s business or cause the price of the Company’s issued and outstanding securities to decline.

 

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We could be adversely affected if we are unable to renegotiate equity agreements with our employees and advisors. In addition, we may be adversely affected by negotiations if such negotiations are not in line with our business plan and financial condition and we may not be able to pass on our cost increases by means of adjusting the contractual rates we charge users, which may affect our operating results. 

 

Our negotiations regarding equity agreements with our employees and advisors are not always in line with our business plan. Consequently, the results of the negotiations would adversely affect us. Additionally, we might not be able to pass on cost increases due to the renegotiation of equity agreements to the fees we charge our users, and this could have a material adverse effect on our business.

 

Risks Related to Ownership of our Class A Common Stock

 

The structure of our common stock has the effect of concentrating voting control with our officers and directors, and their affiliates; this will limit or preclude your ability to influence corporate matters.

 

We are authorized to issue two classes of common stock, Class B Common Stock and Class A Common Stock, and six classes of preferred stock: Series A-1 Preferred Stock, Series A-2 Preferred Stock, Series A-3 Preferred Stock, Series A-4 Preferred Stock, Series A-5 Preferred Stock, and Series A-6 Preferred stock (the “Series A Preferred Stock”). Class A Common Stock is entitled to one vote per share on proposals requiring or requesting stockholder approval, and Class B Common Stock is entitled to ten votes on any such matter. Each share of Series A Preferred Stock and Class A Common Stock has one vote on an as-converted basis on all matters for which the holders of common stock vote at an annual or special meeting of stockholders or act by written consent, and as otherwise required by law.  In this Offering, we are offering shares of Class A Common Stock. As of the date of this Offering Circular,  there are 17,438,505 shares of Class A Common Stock outstanding representing voting power of 17,438,505 votes, and 3,687,994 shares of Series A Preferred Stock outstanding representing voting power of 3,687,994 votes. Our sole executive officer, Mr. Archil Cheishvili, owns 100%, or 27,070,462 shares, of our outstanding Class B Common Stock, which amounts to 270,704,620 votes. Therefore, the total number of votes of both classes of our common stock and our Series A Preferred Stock is 291,831,119 votes, of which Mr. Cheishvili controls approximately 92.8% in overall voting power. As a result, Mr. Cheishvili controls approximately 92.8% of the voting power before this Offering. Following this Offering, taking into consideration the shares of common stock expected to be offered hereby, even if 100% of the shares of Mr. Cheishvili and newly-issued shares of Class A Common Stock being offered are sold, Mr. Cheishvili will retain controlling voting power in the Company based on having approximately 85.1 % of all voting rights. This concentrated control will limit or preclude your ability to influence corporate matters including significant business decisions for the foreseeable future and could harm the market value of your common stock. This concentrated control will limit or preclude your ability to influence corporate matters for the foreseeable future and could harm the market value of your common stock.

 

There is no public market for our Class A Common Stock.

 

There is no established public trading market for our Class A Common Stock, and a market may not develop. We do not intend to apply for listing of our Class A Common Stock on any securities exchange or other trading market. Without an active market, the liquidity of the Class A Common Stock will be limited.

 

This offering is being conducted on a “best efforts” basis and we may not be able to execute our growth strategy if the $75.0 million maximum is not sold.

 

If you invest in the Class A Common Stock but less than all of the offered shares are sold, the risk of losing your entire investment will be increased. We are offering our Class A Common Stock on a “best efforts” basis, and we can give no assurance that all of the offered Class A Common Stock will be sold. Our officers, directors and affiliates may, but are not obligated to, purchase Class A Common Stock in the Offering. Any such purchases will be made for investment purposes only, and not with a view toward redistribution. However, if less than all of the Class A Common Stock shares offered are sold, we may be unable to fund all the intended uses described in this Offering Circular from the net proceeds anticipated from this Offering without obtaining funds from alternative sources or using working capital that we generate. Alternative sources of funding may not be available to us at what we consider to be a reasonable cost, and the working capital generated by us may not be sufficient to fund any uses not financed by Offering net proceeds. See “Use of Proceeds” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Plan of Operations” for more information.

 

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The shares sold in this Offering will be offered simultaneously with sales of shares by current stockholders, which may adversely affect our ability to sell all of the shares in the primary offering by us.

 

The selling stockholders in the Secondary Offering portion of this Offering may make offers and sales of their shares of up to 30% of the gross proceeds from this Offering, or up to approximately $22.5 million, whichever is less, and may make offers and sales at the same time as the Primary Offering portion of this Offering on a 30%/70% pro rata basis with our primary sales. Please see “Plan of Distribution – Selling stockholder”. The selling stockholders’ offers or sales will reduce the number of shares that we are able to sell in this Offering to raise funds, which could have a negative impact on our plans to finance our business operations from these funds. In addition, if a market for our stock develops among other current stockholders during this Offering and the market price of the shares is lower than the offering price by us in this Offering, investors may decide to purchase shares from other existing stockholders in the open market rather than from us in this Offering, which may adversely affect our ability to raise the amount of funds needed to fund our operations and growth.

 

The sale of shares by insiders, or even the perception that they may do so, could cause our stock price to decline.

 

The price of our shares could decline if there are substantial sales of our common stock, particularly by our chief executive officer, Mr. Archil Cheishvili, who is selling the majority of our common stock in the Secondary Offering portion of this Offering. Mr. Cheishvili may sell up to 5,025,695 shares, which represents approximately 18.6% of his holdings of our common stock and approximately 11.3% of the total outstanding shares of our common stock. The perception in the public market that our sole officer and director wishes to dispose of a significant amount of holdings in our company may have an adverse effect on our stock price and impair our ability to raise additional capital through the sale of securities, should we desire to do so.

 

You will experience immediate and substantial dilution as a result of this Offering.

 

As of December 31, 2021, our net tangible book value was $1,545,373, or approximately $0.03  per share. The price per share of the Class A Common Stock being offered in this Offering is substantially higher than the net tangible book value per share of our common stock as of December 31, 2021. You will therefore likely suffer substantial dilution with respect to the net tangible book value of the stock you purchase in this Offering. For example, based on the public offering price of $4.25 per share of Class A Common Stock being sold in this Offering, assuming our net tangible book value per share of approximately $0.03 per share as of December 31, 2021 is still our net tangible book value per share, after gross receipts and estimated commissions, discounts, fees and expenses from this Offering, if you purchase shares of Class A Common Stock in this Offering and we issue the maximum number of Class A Common Stock, you will suffer immediate and substantial dilution of approximately $3.31 per share with respect to the net tangible book value of the common stock as of December 31, 2021 on a pro forma basis. See the section titled “Dilution” for a more detailed discussion of the dilution you will incur if you purchase securities in this Offering.

 

In December 2021, we issued 3,687,994 shares of Series A Preferred Stock to the holders of our SAFEs for no additional consideration pursuant to the amendment and conversion of the SAFEs. These shares may be converted into the same number of shares of Class A Common Stock at the option of the holders. In addition, one of our selling stockholders will be exercising options to purchase up to 164,335 shares of Class A Common Stock at $1.106 per share in order to deliver any shares sold by the selling stockholder in this Offering. Taking into account these additional shares of capital stock that were issued or expected to be issued immediately upon the closing of this Offering, and the fact that all were sold or will be sold below the price per share you will be paying in this Offering, the dilution in your investment will be greater than that described above and in the section entitled “Dilution” of this Offering Statement. See “Securities Being Offered – Series A Preferred Stock” for further details about the terms of the Series A Preferred Stock.

 

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Substantial future sales of our preferred stock or common stock, or the perception in the public markets that these sales may occur, may depress our stock price.

 

The shares of Class A Common Stock offered in this Offering will become legally freely tradable without restriction under the Securities Act of 1933, as amended, or the Securities Act. Sales of substantial amounts of our preferred stock or common stock in the public market after this Offering, or the perception that these sales could occur, could adversely affect the price of our preferred stock or common stock and could impair our ability to raise capital through the sale of additional shares.

 

Future equity financing may dilute the value of your shares.

 

The amount of additional financing that the Company may need will depend upon several contingencies not foreseen at the time of this Offering. Each such round of financing (whether from the Company or other investors) is typically intended to provide the Company with enough capital to reach the next major corporate milestone. If the funds are not sufficient, the Company may have to raise additional capital at a price unfavorable to the existing investors. The availability of capital is at least partially a function of capital market conditions that are beyond the control of the Company. There can be no assurance that the Company will be able to predict accurately the future capital requirements necessary for success or that additional funds will be available from any source. Failure to obtain such financing on favorable terms could dilute or otherwise severely impair the value of the investor’s Company securities.

 

We are authorized to issue “blank check” preferred stock without stockholder approval, which could adversely impact the rights of holders of our common stock.

 

Our restated certificate of incorporation authorizes us to issue up to 50,000,000 shares of blank check preferred stock. Of these, we have authorized 13,592,029 shares of Series A Preferred Stock and issued 3,687,994 such shares. We expect to issue an additional 8,916,640 of the remaining authorized but unissued shares of Series A Preferred Stock if certain Simple Agreement for Future Equity, or SAFE, instruments’ conversion terms are triggered. Each series of Series A Preferred Stock ranks senior to all Class A Common Stock as to distribution of any asset or property of the Company upon liquidation, dissolution or winding up of the Company, whether voluntary or involuntary. Shares of the Series A Preferred Stock have one vote and vote together with the holders of common stock on an as-converted basis on all matters for which the holders of common stock vote at an annual or special meeting of stockholders or act by written consent, and as otherwise required by law. Each share of Series A Preferred Stock is convertible, without any payment, into a number of fully paid and non-assessable shares of Class A Common Stock as is determined by dividing its original issue price by the applicable conversion price. Any preferred stock that we issue in the future may also rank ahead of our Class A Common Stock in terms of dividend priority or liquidation premiums, may have greater voting rights than our Class A Common Stock, or have similar or greater conversion rights and other rights that the Class A Common Stock does not have. Our current and potential future preferred stock’s conversion provisions allowing those shares to be converted into shares of common stock could dilute the value of common stock to current stockholders and could adversely affect the market price, if any, of our stock. In addition, the preferred stock could be utilized, under certain circumstances, as a method of discouraging, delaying or preventing a change in control of our company. Although we have no present intention to issue any shares of authorized preferred stock, including as to the authorized but unissued shares of Series A Preferred Stock referred to above, there can be no assurance that we will not do so in the future.

 

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The Offering is a fixed price offering and the fixed offering price may not accurately represent our current value or our assets at any particular time. Therefore, the purchase price you pay for our shares may not be supported by the value of our assets at the time of your purchase.

 

The Offering is a fixed price offering, which means that the offering price for our shares of Class A Common Stock is fixed and will not vary based on the underlying value of our assets at any time.  Our board of directors has determined the offering price in its sole discretion without the input of an investment bank or other third party.  The fixed offering price for our shares has not been based on appraisals of any assets we own or may own, or of our company as a whole, nor do we intend to obtain such appraisals.  Therefore, the fixed offering price established for our shares of Class A Common Stock may not be supported by the current value of our company or our assets at any particular time.

 

We may use the proceeds of this Offering in ways with which you may not agree.

 

While we currently intend to use the proceeds of this Offering for the purposes described in “Use of Proceeds”, we have considerable discretion in the application of the proceeds. You will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used in a manner agreeable to you. You must rely on our judgment regarding the application of these proceeds. The proceeds may be used for corporate purposes that do not immediately improve our profitability or increase our stock price.

 

We do not intend to pay dividends for the foreseeable future.

 

For the foreseeable future, we intend to retain any earnings to finance the development and expansion of our business, and we do not anticipate paying any cash dividends on our Class A Common Stock. Accordingly, investors must be prepared to rely on sales of their Class A Common Stock after price appreciation to earn an investment return, which may never occur. Investors seeking cash dividends should not purchase our Class A Common Stock. Any determination to pay dividends in the future will be made at the discretion of our board of directors and will depend on our results of operations, financial condition, contractual restrictions, restrictions imposed by applicable law and other factors our board deems relevant.

 

Short sellers of our stock may be manipulative and may drive down the market price of our common stock.

 

Short selling is the practice of selling securities that the seller does not own but rather has borrowed or intends to borrow from a third party with the intention of buying identical securities at a later date to return to the lender. A short seller hopes to profit from a decline in the value of the securities between the sale of the borrowed securities and the purchase of the replacement shares, as the short seller expects to pay less in that purchase than it received in the sale. As it is therefore in the short seller’s interest for the price of the stock to decline, some short sellers publish, or arrange for the publication of, opinions or characterizations regarding the relevant issuer, its business prospects and similar matters calculated to or which may create negative market momentum, which may permit them to obtain profits for themselves as a result of selling the stock short. Issuers whose securities have historically had limited trading volumes and/or have been susceptible to relatively high volatility levels can be particularly vulnerable to such short seller attacks. Efforts by such short seller or by other short sellers, whether or not they identify themselves as such, may cause precipitating decline in the market price of our common stock, and no assurances can be made that any such effect would be temporary or insignificant.

 

We will be subject to ongoing public reporting requirements that are less rigorous than rules for more mature public companies, and our stockholders receive less information.

 

We are required to file public reports on an ongoing basis under the reporting rules set forth in Regulation A for Tier 2 issuers and under Regulation Crowdfunding. The ongoing reporting requirements under Regulation A and Regulation Crowdfunding are more relaxed than for public companies reporting under the Exchange Act. The differences include, but are not limited to, being required to file only annual and semiannual reports, rather than annual and quarterly reports. Annual reports are due within 120 calendar days after the end of the issuer’s fiscal year, and semiannual reports are due within 90 calendar days after the end of the first six months of the issuer’s fiscal year.

 

We may elect to become a public reporting company under the Exchange Act. If we elect to do so, we will be required to publicly report on an ongoing basis as an emerging growth company (as defined in the Jumpstart Our Business Startups Act, or JOBS Act) under the reporting rules set forth under the Exchange Act. For so long as we remain an emerging growth company, we may take advantage of certain exemptions from various reporting requirements that are applicable to other Exchange Act reporting companies that are not emerging growth companies, including but not limited to:

 

not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act;

 

being permitted to comply with reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and

 

being exempt from the requirement to hold a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

 

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In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We expect to elect to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.

 

We would expect to take advantage of these reporting exemptions until we are no longer an emerging growth company. We would remain an emerging growth company for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our total annual gross revenues exceed $1 billion, (ii) the date that we become a large accelerated filer as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.

 

If we decide to apply for the quotation of our Class A Common Stock on the OTCQB or OTCQX market, we will be subject to the OTC Market’s Reporting Standards, which can be satisfied in a number of ways, including by remaining in compliance with (i) the SEC reporting requirements, if we elect to become a public reporting company under the Exchange Act, or (ii) Regulation A reporting requirements, if we elect not to become a reporting company under the Exchange Act.

 

In either case, we will be subject to ongoing public reporting requirements that are less rigorous than Exchange Act rules for companies that are not emerging growth companies, and our stockholders could receive less information than they might expect to receive from more mature public companies.

 

If our common stock becomes subject to the penny stock rules, it will become more difficult to trade our shares.

 

The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or authorized for quotation on certain automated quotation systems, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. If we do not obtain and retain a listing or quotation of our Class A Common Stock and if the price of our Class A Common Stock is less than $5.00, our Class A Common Stock will be deemed a penny stock. The penny stock rules require a broker-dealer, before a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document containing specified information. In addition, the penny stock rules require that before effecting any transaction in a penny stock not otherwise exempt from those rules, a broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive (i) the purchaser’s written acknowledgment of the receipt of a risk disclosure statement; (ii) a written agreement to transactions involving penny stocks; and (iii) a signed and dated copy of a written suitability statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our common stock, and therefore stockholders may have difficulty selling their shares.

 

If securities industry analysts do not publish research reports on us, or publish unfavorable reports on us, then the market price and market trading volume of our Class A Common Stock could be negatively affected.

 

Any trading market for our Class A Common Stock will be influenced in part by any research reports that securities industry analysts publish about us. We do not currently have and may never obtain research coverage by securities industry analysts. If no securities industry analysts commence coverage of us, the market price and market trading volume of our Class A Common Stock could be negatively affected. In the event we are covered by analysts, and one or more of such analysts downgrade our securities, or otherwise reports on us unfavorably, or discontinues coverage of us, the market price and market trading volume of our Class A Common Stock could be negatively affected.

 

Other Risks Related to this Offering

 

The U.S. Securities and Exchange Commission does not pass upon the merits of any securities offered or the terms of the Offering, nor does it pass upon the accuracy or completeness of any offering document or literature.

 

You should not rely on the fact that our Form 1-A is accessible through the U.S. Securities and Exchange Commission’s EDGAR filing system as an approval, endorsement or guarantee of compliance as it relates to this Offering.

 

We have the right to end the Offering early and reject subscriptions for any reason or no reason.

 

We may terminate the Offering on the earlier of: (i) such time as the Board of Directors decides that it is in our best interest to terminate the Offering; (ii) such time as $74,857,914.00 of our Class A Common Stock is sold; or (iii) February 17, 2025. Funds for the shares will be deposited into a segregated account until investor subscriptions are accepted by the Company. In the event we terminate this Offering before the maximum offering amount of $74,857,914.00 is reached, we will close on those funds received and accepted and promptly issue the Class A Common Stock. Any funds received may be rejected by us for any reason or no reason. Any subscriptions received but not accepted by us will be rejected and returned within 30 days. This means that we may limit the amount of capital we can raise during the Offering by ending it early and potentially limit the amount of liquidity of any stock that you purchase in this Offering.

 

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This Offering Circular contains forward-looking statements. The forward-looking statements are contained principally in the sections entitled “Summary,” “Risk Factors,” “Description of Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to, the factors described in the section captioned “Risk Factors” above. In some cases, you can identify forward-looking statements by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “would” and similar expressions intended to identify forward-looking statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. These forward-looking statements include, among other things, statements relating to:

 

our dependence upon external sources for the financing of our operations;

 

our ability to successfully and profitably market our products;

 

the acceptance of our products by users;

 

the amount and nature of competition from other competitors;

 

our dependence on a limited number of suppliers;

 

our ability to protect our highly technical and complex internet-based software platform from computer malware, viruses, hacking, phishing attacks and spamming that could result in security and privacy breaches and interruption in service;

 

our ability to obtain and enforce patents and to protect our proprietary technology, others could use our technology to compete with us, which could create undue competition and pricing pressures; and

 

our ability to maintain regulatory approvals and comply with applicable laws and regulations.

 

While we believe we have identified material risks, these risks and uncertainties are not exhaustive. Other sections of this Offering Circular describe additional factors that could adversely impact our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible to predict all risks and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

 

Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. We are under no duty to update any of these forward-looking statements after the date of this Offering Circular to conform our prior statements to actual results or revised expectations, and we do not intend to do so.

 

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DILUTION

 

The Company is offering up to 12,329,538 shares of Class A Common Stock at an offering purchase price of $4.25 per share. If we sell all 12,329,538 shares of Class A Common Stock, the Company will receive approximately $52.4 million before fees and expenses.

 

Purchasers of our Class A Common Stock in our offering will experience an immediate dilution of net tangible book value per share from the public offering price.  Dilution in net tangible book value per share represents the difference between the amount per share paid by the purchasers of shares of Class A Common Stock and the net tangible book value per share immediately after this Offering.

 

The net tangible book value of our capital stock as of December 31, 2021 was $1,545,373, or approximately $0.03 per share with 44,476,880 shares outstanding.

 

After giving effect to the sale of 12,329,538 shares of our Class A Common Stock in our offering at the public offering price of $4.25 per share, and after deducting the estimated offering discounts, commissions, fees and expenses payable by us of $695,250, our adjusted net tangible book value at December 31, 2021 would have been approximately $53.3 million, or approximately $0.94 per share. Assuming maximum offering size, an immediate increase in net tangible book value per share of approximately $0.91 would occur to the existing stockholders, and dilution in net tangible book value per share of approximately $3.31 to new investors who purchase shares in the Offering.

 

The following table sets forth the estimated net tangible book value per share after the Offering and the dilution to persons purchasing Class A Common Stock based on the foregoing maximum offering assumptions.

 

   

Maximum

Offering

 
Public offering price per share   $ 4.25  
Net tangible book value per share at December 31, 2021 with 44,476,880 shares of common stock outstanding(1)(2)   $ 0.03  
Adjusted net tangible book value per share after this Offering, including the maximum number of shares issuable in this Offering, or 56,806,418 shares of common stock outstanding(1)(2)   $ 0.94  
Increase in net tangible book value per share to existing stockholders attributable to this Offering   $ 0.91  
Dilution in net tangible book value per share to new investors attributable to this Offering   $ 3.31  

 

(1) Except as otherwise disclosed above, the share amounts do not take into account all shares of our capital stock expected to be issued and outstanding after this Offering, including shares of preferred stock that were outstanding as of December 31, 2021, shares of capital stock that were issued since December 31, 2021, and shares expected to be issued upon conversion of outstanding convertible securities prior to or immediately after this Offering. See “Risk Factors – Risks Related to the Company’s Business and Industry – You will experience immediate and substantial dilution as a result of this Offering.” and “Securities Being Offered – Series A Outstanding Preferred Stock” for further details. These issuances may result in an additional amount of dilution to the net tangible book value per share to new investors.

 

(2) This table excludes the following:

 

· 7,593,330 shares of Class A Common Stock underlying outstanding options to our officers, directors, employees and consultants pursuant to the GenesisAI Corporation 2018 Stock Incentive Plan, as amended, or the Stock Incentive Plan or the Plan;

 

· 15,000,000 shares of Class A Common Stock that may be issued under the Plan, including the shares of Class A Common Stock underlying outstanding options previously granted to our officers, directors, employees and consultants pursuant to the Plan; and

 

3,687,994 shares of Class A Common Stock that may be issued upon conversion of Series A-2 Preferred Stock.

 

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PLAN OF DISTRIBUTION

 

Offering Amount and Distribution

 

We and the selling stockholders are together offering a maximum of 17,613,626 shares of Class A Common Stock in this Offering for a purchase price of $4.25 per share. Our portion of the Offering consists of 12,329,538 shares at $4.25 per share. The selling stockholders are offering up to 5,284,088 shares of Class A Common Stock at $4.25 per share.

 

No Broker-Dealer

 

We had previously engaged Dalmore Group, LLC, or Dalmore, a broker-dealer registered with the SEC and a member of FINRA, to perform the following broker-dealer, administrative and technology-related functions in connection with this Offering, and as broker-dealer of record, but not for underwriting or placement agent services:

 

Review investor information, including Know Your Customer (KYC) and Anti Money Laundering (AML) data, perform other compliance background checks as needed, and provide recommendations to the Company as to acceptance of investments.

 

Review each investor’s subscription agreement to confirm such investor’s participation in the Offering, and provide determinations to us as to whether to accept such investor’s subscription.

 

Contact and/or notify us, if needed, to gather additional information or clarification on an investor.

 

Not provide any investment advice nor any investment recommendations to any investor.

 

Keep investor details and data confidential and not disclose to any third party except as required by regulators or pursuant to the terms of our broker-dealer agreement (e.g., as needed for AML and background checks).

 

Responsibility for all FINRA 5110 filings and updates.

 

Assessment of selection criteria for online communication channels and review of online communications for compliance with applicable rules.

 

Coordinate with third-party providers to ensure adequate review and compliance.

 

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As compensation for the services listed above, we agreed to pay Dalmore the following fees:

 

$5,000 advance payment for out-of-pocket expenses.

 

$20,000 consulting fee due and payable immediately after FINRA issues a no objection letter.

 

$11,750 for fees to be paid to FINRA.

 

In addition, we agreed to pay Dalmore a commission equal to 1% of the amount raised in the Offering to support the Offering once the SEC has qualified the Offering Statement and the Offering commences.

 

On or around June 1, 2022, our broker-dealer agreement with Dalmore was terminated. In addition to the out-of-pocket expenses, consulting fees and FINRA fees indicated above, we and the selling stockholders are required to pay Dalmore total commissions of $1,420.86.

 

As a result of Dalmore’s termination, we will not have a broker-dealer of record for the Offering. We intend to manage the administrative and technology-related functions in connection with the Offering.

 

While we do not anticipate engaging a new broker-dealer for purposes of the Offering, should we determine nonetheless to do so, the name of any such broker-dealer, any applicable commissions or discounts with respect to such broker-dealer, and any other material subscription or other distribution terms relating to such broker-dealer, will be set forth in an accompanying offering statement supplement or, if appropriate, a post-qualification amendment.

 

Investment Account Arrangements

 

The Company will not utilize a third-party escrow account for this Offering. All funds tendered by investors will be held in a segregated account until investor subscriptions are accepted by the Company. Once investor subscriptions are accepted by the Company, investor funds will be deposited into an account controlled by the Company. In the event we terminate the Offering before the maximum offering amount is sold, we will close on all funds received and accepted up to that time and promptly issue all purchased and unissued Class A Common Stock. If an investor’s subscription is rejected, the investor’s payment (or portion thereof if partially rejected) will be returned within 30 days without interest.

 

Offering Period and Expiration Date

 

This Offering will start on the date this Offering Circular is declared qualified by the SEC. The Offering will terminate on the earlier of: (i) such time as the Board of Directors decides that it is in our best interest to terminate the Offering; (ii) such time as $74,857,914.00 of our Class A Common Stock is sold; or (iii) February 17, 2025. This Offering does not have a minimum offering amount. The Company may close on investments on a “rolling” basis (so not all investors will receive their shares on the same date). 

 

Process of Subscribing

 

After the Offering Statement has been qualified by the SEC, we will accept tenders of funds to purchase shares. We may close on investments on a “rolling” basis (so not all investors will receive their shares on the same date). Investors may subscribe by tendering funds by check, wire transfer, debit card or ACH transfer to a segregated investment account, subject to our right to reject any payments by wire transfer in our sole discretion. The funds tendered by potential investors will be held in a segregated account exclusively for our benefit. Funds will be transferred to us at each closing.

 

Investors will be required to complete a subscription agreement in order to invest. The subscription agreement includes a representation by each investor to the effect that, if the investor is not an “accredited investor” as defined under securities law, the investor is investing an amount that does not exceed the greater of 10% of their annual income or 10% of their net worth (excluding the investor’s principal residence).

 

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Any potential investor must review the subscription agreement prior to making any final investment decision. We will review all subscription agreements completed by each investor. After we have completed our review of a subscription agreement for an investment in this Offering, the funds may be released to us from the segregated account.

 

If a submitted subscription agreement is not complete or there is other missing or incomplete information, the funds will not be released until the investor provides all required information. In the case of a debit card payment, provided the payment is approved, we will generally confirm within three days whether all documentation is complete. We will generally review all subscription agreements on the same day, but not later than the day after the submission of the subscription agreement.

 

All funds tendered (by check, wire, debit card, or electronic funds transfer via ACH to the specified account) by investors will be deposited into a segregated account for our benefit. All funds accepted and received by wire transfer will be made available immediately while funds transferred by ACH will be restricted for a minimum of three days to clear the banking system prior to deposit into the segregated account. We reserve the right to reject any payments by wire transfer in our sole discretion.

 

We maintain the right to accept or reject subscriptions in whole or in part, for any reason or for no reason, including, but not limited to, in the event that an investor fails to provide all information required by the subscription agreement, fails to provide requested further information necessary to complete background checks, fails background checks, or in the event the Company receives oversubscriptions in excess of the maximum offering amount.

 

In the interest of allowing interested investors as much time as possible to complete the paperwork associated with a subscription, we have not set a maximum period of time in which to accept or reject a subscription. If a subscription is rejected, funds will not be accepted by wire transfer or ACH, and payments made by debit card or check will be returned to subscribers within 30 days of such rejection without deduction or interest. Upon acceptance of a subscription, we will send a confirmation of such acceptance to the subscriber.

 

No broker-dealer has investigated the desirability or advisability of investment in the shares of Class A Common Stock being offered, or approved, endorsed or passed upon the merits of purchasing the shares. No broker-dealer is participating as an underwriter and no broker-dealer has agreed with us to recommend our securities or provide investment advice to any prospective investor, or make any securities recommendations to investors. No broker-dealer is distributing any offering circulars or making any oral representations concerning this Offering Circular or this Offering. No broker-dealer has, or has agreed to, conduct extensive due diligence of this Offering and no investor should rely on any basis for a belief that extensive due diligence has otherwise been conducted. No broker-dealer expressly or impliedly affirms the completeness or accuracy of the Offering Statement and/or Offering Circular presented to investors by the Company. All inquiries regarding this Offering should be made directly to the Company.

 

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Upon confirmation that an investor’s funds have cleared, we will instruct our transfer agent to issue shares to the investor. The transfer agent will notify an investor when shares are ready to be issued and the transfer agent has set up an account for the investor.

 

Selling Stockholders

 

We are qualifying the resale of shares of Class A Common Stock by the selling stockholders named herein. The selling stockholders may make offers and sales of their shares of up to 30% of the gross proceeds from this Offering, or up to $22,457,374.20 if maximum gross proceeds from the Primary Offering are attained. The gross proceeds of this Offering will therefore be split between the Company and the selling stockholders on a pro-rata basis 70% to 30%. At each closing in which the selling stockholders are participating, the selling stockholders will be able to sell 30% of all shares offered up to the total offering amount (as set forth in the table in the section entitled “Selling Stockholders) of the number of securities being issued to investors. For example, if the Company holds a closing for $1,000,000 in gross proceeds, the Company will issue shares and receive gross proceeds of $700,000 while the selling stockholders may receive up to $300,000 in gross proceeds and will transfer the shares purchased from them as of that closing to investors in this Offering. The selling stockholders will not offer fractional shares and the shares represented by the selling stockholders’ portion will be determined by rounding down to the nearest whole share.

 

One of the selling stockholders will convert offered shares from Class B Common Stock into Class A Common Stock prior to participating in any closing. In addition, one of the selling stockholders will exercise options to purchase Class A Common Stock and will pay for such shares simultaneously with such selling stockholder’s participation in any closing.

 

Our selling stockholders may sell their shares through any of the alternative methods described below. Each of the selling stockholders has entered into an irrevocable power of attorney (“POA”) with the Company and an employee of the Company as attorney-in-fact, in which they direct the Company and the attorney-in-fact to take the actions necessary in connection with the offering and sale of their shares. A form of the POA is filed as an exhibit to the Offering Statement of which this Offering Circular forms a part.

 

Subject to the sale limits described above, the selling stockholders may use any one or more of the following alternative methods when disposing of their shares of Class A Common Stock:

 

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

 

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

 

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

 

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

 

  privately negotiated transactions;

 

  in underwriting transactions;

 

  short sales;

 

  through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;

 

  broker-dealers may agree with the selling stockholder to sell a specified number of such shares at a stipulated price;

 

  a combination of any such methods of sale; and

 

  any other method permitted pursuant to applicable law.

 

The selling stockholders may also, from time to time, pledge or grant a security interest in some or all of the shares of Class A Common Stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell their shares, from time to time, under this Offering Statement, or under an amendment or supplement to this Offering Statement under the applicable provision of the Securities Act amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this Offering Statement. The selling stockholders also may transfer their shares in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this Offering Statement.

 

In connection with the sale of their Class A Common Stock or interests therein, the selling stockholders may also enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of our securities in the course of hedging the positions they assume. The selling stockholders may also sell their securities short and deliver these securities to close out their short positions, or loan or pledge such securities to broker-dealers that in turn may sell these securities. The selling stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of the shares offered by this Offering Statement, which shares such broker-dealer or other financial institution may resell pursuant to this Offering Statement (as supplemented or amended to reflect such transaction).

 

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The aggregate proceeds to the selling stockholders from the sale of the shares offered by them will be the purchase price of the shares less discounts or commissions, if any. The selling stockholders reserve the right to accept and, together with their agents from time to time, to reject, in whole or in part, any proposed purchase of their shares to be made directly or through agents.

 

The selling stockholders also may resell all or a portion of their shares in open market transactions in reliance upon Rule 144 under the Securities Act, provided that they meet the criteria and conform to the requirements of that rule.

 

We will not receive any of the proceeds from the resale of shares of Class A Common Stock being offered by the selling stockholders named herein.

 

In connection with an underwritten offering, underwriters or agents may receive compensation in the form of discounts, concessions or commissions from the selling stockholders or from purchasers of the offered shares for whom they may act as agents. In addition, underwriters may sell the shares to or through dealers, and those dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters and/or commissions from the purchasers for whom they may act as agents. The selling stockholders and any underwriters, dealers or agents participating in a distribution of the shares may be deemed to be “underwriters” within the meaning of the Securities Act, and any profit on the sale of the shares by the selling stockholders and any commissions received by broker-dealers may be deemed to be underwriting commissions under the Securities Act.

 

To the extent required, the shares of Class A Common Stock to be sold, the names of the selling stockholders, the names of any agent, dealer or underwriter, and any applicable commissions or discounts with respect to a particular offer will be set forth in an accompanying offering statement supplement or, if appropriate, a post-qualification amendment.

 

Investment Amount Limitations

 

Investors must answer certain questions to determine compliance with the investment limitation set forth in Rule 251(d)(2)(i)(C) under the Securities Act, which states that in offerings such as this one, where the securities will not be listed on a registered national securities exchange upon qualification, the aggregate purchase price to be paid by the investor for the securities cannot exceed 10% of the greater of the investor’s annual income or net worth. In the case of an investor who is not a natural person, revenues or net assets for the investor’s most recently completed fiscal year are used instead. The investment limitation does not apply to accredited investors, as that term is defined in Rule 501 under the Securities Act.

 

An individual is an accredited investor if he/she meets one of the following criteria:

 

a natural person whose individual net worth, or joint net worth with the undersigned’s spouse, excluding the “net value” of his or her primary residence, at the time of this purchase exceeds $1,000,000 and having no reason to believe that net worth will not remain in excess of $1,000,000 for the foreseeable future, with “net value” for such purposes being the fair value of the residence less any mortgage indebtedness or other obligation secured by the residence, but subtracting such indebtedness or obligation only if it is a liability already considered in calculating net worth;

 

a natural person who has individual annual income in excess of $200,000 in each of the two most recent years or joint annual income with that person’s spouse in excess of $300,000 in each of those years and who reasonably expects an income in excess of those levels in the current year;

 

an individual who holds one of the following licenses in good standing: General Securities Representative license (Series 7), the Private Securities Offerings Representative license (Series 82), or the Investment Adviser Representative license (Series 65);

 

a “knowledgeable employee,” as defined in Rule 3c5(a)(4) under the Investment Company Act of 1940 (17 CFR 270.3c-5(a)(4)), of the Company where the Company would be an investment company, as defined in section 3 of such act, but for the exclusion provided by either section 3(c)(1) or section 3(c)(7) of such act;

 

A “family client,” as defined in Rule 202(a)(11)(G)-1 under the Investment Advisers Act of 1940 (17 CFR 275.202(a)(11)(G)-1)), or the Advisers Act, of a family office meeting the requirements described immediately below and whose prospective investment in the Company is directed by such family office;

 

An entity other than a natural person is an accredited investor if it falls within any one of the following categories:

 

an employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974, as amended, (i) if the decision to invest is made by a plan fiduciary which is either a bank, savings and loan association, insurance company, or registered investment adviser; (ii) if such employee benefit plan has total assets in excess of $5,000,000; or (iii) if it is a self-directed plan whose investment decisions are made solely by accredited investors;

 

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a tax-exempt organization described in Section 501(c)(3) of the Internal Revenue Code, a corporation, a Massachusetts or similar business trust or a partnership, which was not formed for the specific purpose of acquiring the securities offered and which has total assets in excess of $5,000,000;

 

a trust, with total assets in excess of $5,000,000, which was not formed for the specific purpose of acquiring the securities offered, whose decision to purchase such securities is directed by a “sophisticated person” as described in Rule 506(b)(2)(ii) under Regulation D;

 

certain financial institutions such as banks and savings and loan associations, registered broker-dealers, insurance companies, and registered investment companies;

 

investment advisers that are either registered with the SEC, registered with a state, or is relying on an exemption from registering with the Commission under section 203(l) or (m) of the Advisers Act;

 

rural business investment companies, as defined in defined in Section 384A of the Consolidated Farm and Rural Development Act;

 

certain limited liability companies with more than $5 million in assets, which have not been formed for the specific purpose of acquiring the securities offered;

 

certain family offices that come within the definition of “family office” in Rule 202(a)(11)(G)–1 under the Advisers Act, have assets under management in excess of $5 million, have not been formed for the specific purpose of acquiring the securities offered, and have their prospective investments be directed by a person who has such knowledge and experience in financial and business matters that such family office is capable of evaluating the merits and risks of the prospective investment;

 

certain entities that (i) come within the definition of “family client” in Rule 202(a)(11)(G)–1 under the Advisers Act, (ii) are a family client of a family office that itself qualifies as an accredited investor, and (iii) have its investment be directed by the family office; or

 

certain entities owning “investments” in excess of $5 million as defined in Rule 2a51–1(b) under the Investment Company Act to include securities; real estate, commodity interests, physical commodities, and non-security financial contracts held for investment purposes; and cash and cash equivalents.

 

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USE OF PROCEEDS

 

We estimate that we will receive gross proceeds before expenses of approximately $52,400,539.80 if the maximum number of shares of Class A Common Stock being offered by us are sold and assuming that the selling stockholders sell the maximum amount of shares of Class A Common Stock that they are permitted to sell in this Offering, or 30% of total Offering gross proceeds.

 

The following table below sets forth the uses of proceeds assuming the sale of 25%, 50%, 75% and 100% of the securities offered for sale in this Offering by us. For further discussion, see the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Plan of Operations.

 

    25% of Offering Sold     50% of Offering Sold     75% of Offering Sold     100% of Offering Sold  
Secondary Offering Proceeds                                
Gross Proceeds to Selling Stockholders from the Secondary Offering   $ 5,614,343.55     $ 11,228,687.10     $ 16,843,030.65     $ 22,457,374.20  
                                 
Primary Offering Proceeds                                
Gross Proceeds from the Primary Offering   $ 13,100,134.95     $ 26,200,269.90     $ 39,300,404.85     $ 52,400,539.80  
Net Proceeds Before Expenses   $ 13,100,134.95     $ 26,200,269.90     $ 39,300,404.85     $ 52,400,539.80  
                                 
Offering Expenses                                
Broker-Dealer Fees and Expenses     38,171       38,171       38,171       38,171  
Legal & Accounting     75,500       75,500       75,500       75,500  
Publishing/EDGAR     5,000       5,000       5,000       5,000  
Transfer Agent     12,000       21,000       30,000       41,000  
Blue Sky Compliance     12,000       12,000       12,000       12,000  
Total Offering Expenses   $ 142,671.00     $ 151,671.00     $ 160,671.00     $ 171,671.00  
                                 
Amount of Offering Proceeds Available for Use   $ 12,957,463.95     $ 26,048,598.90     $ 39,139,733.85     $ 52,228,868.80  
                                 
Uses                                
Mergers and Acquisitions   $ 1,000,000     $ 1,500,000     $ 2,000,000     $ 3,500,000  
Sales and Marketing     5,006,922.18       10,320,654.53       15,634,386.89       20,447,269.24  
Research and Development     5,006,922.18      

10,320,654.53

     

15,634,386.89

     

20,447,269.24

 
Working Capital and Other General Corporate Purposes     1,943,619.59       3,907,289.84       5,870,960.08       7,834,330.32  
Total Expenditures   $ 12,957,463.95     $ 26,048,598.90     $ 39,139,733.85     $ 52,228,868.80  

 

We intend to use the net proceeds from this Offering for potential mergers and acquisitions of other companies or businesses, although no specific candidates or type of candidates have been identified and no acquisition negotiations have occurred; sales and marketing; research and development; and working capital and other general corporate purposes.

 

The selling stockholders in this Offering may make offers and sales of their shares of up to 30% of the gross proceeds from this Offering, or up to $22,457,374.20 only if the maximum gross proceeds of $74,857,914.00 of this Offering are received and accepted, and the selling stockholders may make offers and sales at the same time as the Primary Offering will occur. Therefore, up to 30% of the gross proceeds, or up to approximately $22.5 million, will be allocated to the Secondary Offering and received by the selling stockholders in exchange for the shares of Class A Common Stock that they agree to sell in this Offering. See also “Selling stockholders” and “Plan of Distribution – Selling Stockholders”.

 

As of the date of this Offering Circular and except as explicitly set forth herein, we cannot specify with certainty all of the particular uses of the net proceeds from this Offering. Pending use of the net proceeds from this Offering as described above, we may invest the net proceeds in short-term interest-bearing investment grade instruments.

 

The expected use of net proceeds from this Offering represents our intentions based upon our current plans and business conditions, which could change in the future as our plans and business conditions evolve and change. The amounts and timing of our actual expenditures, specifically with respect to working capital, may vary significantly depending on numerous factors. As a result, our management will retain broad discretion over the allocation of the net proceeds from this Offering.

 

The above description of the anticipated use of proceeds is not binding on us and is merely a description of our current intentions. We reserve the right to change the above use of proceeds if management believes it is in the best interests of our company.

 

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DESCRIPTION OF BUSINESS

 

Overview

 

Artificial intelligence is growing rapidly. This revolutionary technology is becoming a part of many aspects of the internet and the global economy, including investing, trading, and social media. Now, large companies are investing tens of billions of dollars into AI. But issues plaguing the AI industry are plentiful. For years, AI tools have been developed and operated in silos, created within a single company, or for a single purpose, without any means of exchanging data with each other, or learning from other developers. This has made it difficult to create synergistic AI applications. Furthermore, in our opinion, developers have had no way to monetize the technology that they have developed.

 

With our GenesisAI protocol, we envision a completely different world. The GenesisAI protocol will allow anybody to upload an AI service to the GenesisAI network. Under this system, AI becomes a globally accessible resource. Anyone can utilize its technological benefits, or become an agent in its development. GenesisAI’s existing AI applications help investors and traders find investment opportunities and save time doing investment research. GenesisAI will maximize the functionality and accuracy rate of AI models through cross-provider transfer learning, enabling multiple AI applications to exchange data and trade services.

 

Our AI protocol and platform and related online marketplace are not yet fully developed.

 

Market

 

According to an April 2021 report by Transparency Market Research, the market for AI is estimated to grow to approximately $2.8 trillion by 2030. According to PwC’s report, “Sizing the Prize: What’s the Real Value of AI for Your Business and How Can You Capitalize?”, PwC estimates $15.7 trillion in potential contributions to the global economy by 2030 from the AI industry. Out of this amount, $6.6 trillion is likely to come from increases in productivity and around $9 trillion is likely to come from consumption-side effects. During the next decade it is estimated that there will be a substantial impact on global GDP from AI: “Up to 26% boost in GDP for local economies from AI by 2030”. According to PwC, all regions of the global economy will experience benefits from AI. The biggest sector gains will be in retail, financial services and healthcare as AI increases productivity, product quality and consumption. The greatest economic gains from AI technology are expected in China (up to 26% GDP boost by 2030) and North America (potential 14% GDP boost). One of the areas that PwC considers to be a high-potential use case is personalized financial planning. This application is one of the focuses of our AI platform: providing AI-powered tools to retail investors to enable them to control their financial future and better plan their investment allocations.

 

McKinsey and Co.’s “The State of AI in 2020” survey found that “organizations are using AI as a tool for generating value. Increasingly, that value is coming in the form of revenues. A small contingent of respondents coming from a variety of industries attribute 20% or more of their organizations’ earnings before interest and taxes (EBIT) to AI. These companies plan to invest even more in AI in response to the COVID-19 pandemic and its acceleration of all things digital.”

 

Based on our experience in this industry, currently AI development is hindered by two fundamental problems:

 

AI development is expensive.

 

Independent AI developers can neither easily monetize nor coordinate their capabilities with other AI developers to satisfy end users’ machine-learning needs.

 

In our opinion, the AI market today is fragmented and dominated by large, oligopolistic tech companies, which may charge inflated prices for their AI services. We believe the number of AI developers is very limited. There is no easy way for independently-developed AIs to exchange data, trade services, learn from each other, or expand their own capabilities. Most companies cannot afford to hire their own team of AI engineers to create in-house AIs, nor do they have enough technical capabilities to use open-source application programming interfaces, or APIs, to purchase and integrate the specific AI services that they need. Moreover, we believe it is often difficult to judge the quality of independently-developed AIs because of the lack of credible reputation systems. Companies and others operating on a lean budget may face high-risk decisions when choosing which AIs to use.

 

While some open-source APIs are currently available on GitHub and elsewhere on the Internet such as on Google’s TensorFlow, they are sometimes hard to use and difficult to integrate even with technical expertise. Companies may need to spend tens of thousands of dollars simply to allow different AI capabilities to coordinate. We are democratizing access to the independent AI developers by wrapping their AI code in an easily accessible AI protocol. The common protocol will help reduce the cost of AI work by increasing the total supply of accessible AI services. The ease of using wrapped AIs empowers even people without technical expertise to reach their goals with the power of sophisticated AI. No or limited engineering work is required in order to use the AI technologies on GenesisAI. Our protocol enables AI developers to coordinate and end users to find and use the best outsourced AI programs to suit their needs and budgets.

 

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Our Solutions

 

We have developed GenesisAI, an artificial intelligence, or AI, protocol and platform that enables different AI systems to communicate with each other, exchange data, and trade services. On top of this protocol, we are building an online marketplace for AI products and services. The marketplace will connect companies in need of AI services, data, and models with companies interested in monetizing their AI technology. We provide the web platform that will facilitate the offer and sale of a variety of low-cost advanced AI services. Our platform helps to make machine-learning AI technology more accessible and affordable for companies, governments, and other organizations around the world.

 

By using our services, we expect the public will finally have access to services that are currently out of their reach due to limited resources. When they access the GenesisAI marketplace, they will be able to search for the service they want, and our system is designed to couple them with some existing provider, similar to how Uber matches drivers and riders. The GenesisAI platform will couple them with the service provider, and we anticipate they will rely on our platform to evaluate service quality and choose the most appropriate service from a numerous set of services. On the supply side, independent AI service providers will be able to develop, combine and compete with the large tech companies to capture the AI services market. Our web platform matches unused resources, such as in-house developed AI platforms and open-source Github AI code, with organizations in need of these resources.

 

GenesisAI itself will use AI-powered technology to match buyers and sellers. This technology will account for users’ past behavior, willingness to pay, and needs. For example, if users recently ordered AI services for speech recognition, they may receive suggestions about similar and complimentary AI services. Moreover, buyers will be able to filter their searches based on their willingness to pay for a particular service, the reviewer’s rating, and on how quickly they want to get the service.

 

Our goal is to eliminate an oligopolistic system where a few large tech companies hold a strong majority of the AI industry, and we hope to be significantly closer to this vision in five years. If we achieve our vision, we believe GenesisAI has the potential to become one of the most valuable technologies of all time.

 

GenesisAI Artificial Intelligence Platform

 

The GenesisAI protocol and platform enables different AI systems to communicate with each other, exchange data, and trade services. On top of this protocol the GenesisAI platform will host an online marketplace for AI products and services. The marketplace will connect companies in need of AI services, data, and models with companies interested in monetizing their AI technology. Initially the platform focused on financial assets management, and its scope has been expanded to cover additional products and services such as analyzing customer reviews. We plan to generate revenues through the collection of a percentage of the transaction proceeds for transactions performed through our web platform. We expect that our web platform transaction fee will initially be 30%. We have not generated any revenues from our operations.

 

In addition to these services, our platform will broaden to enable the AI interoperability and marketplace services described above in any market sector. For example, a hotel could use an AI provider’s AI to request a summary of customer behavior depending on different variables and recommendations to increase the customer base. The hotel’s AI provider could in turn use another AI provider’s AI to use a service that uses pattern recognition to recognize the hotel’s customer behavior and customer pain points. After receiving the output from the second provider, the first provider could use the input to provide data-rich models of customer behavior and strategies for increasing customer capture and retention.

 

Our web platform is the beta stage of development and we have partnerships with several AI supply-side firms who wish to place their technology offerings on our marketplace. We plan to generate revenues through the collection of a percentage of the transaction proceeds for transactions performed through our web platform. We believe that this transaction fee is substantially lower than the marketing costs that our platform users would expect to spend in generating the same transaction volume.

 

Commercialization

 

Currently we are focused on developing the product, learning from the users, and increasing the number of users we have on the platform. Our goal is to start commercializing the product once we have enough users to support the commercialization. We plan to have two major sources of revenue. First, we will be charging users monthly subscription fees to use all of our tools on the GenesisAI platform. Second, we expect to earn a 30% commission from marketplace transactions. For example, if a buyer posts a request for an AI service for which he is willing to pay $10,000 to the service provider, then GenesisAI would earn a 30% commission from that transaction.

 

Competition

 

Our competitors include RapidAPI and SingularityNET. We believe we are different in that not only are we connecting buyers and sellers of AIs with each other, but our protocol also enables multiple AI products to work together seamlessly (e.g., a speech recognition program and a translation program working together to produce speech translation). We believe that these distinctions could give us a unique edge in providing potentially higher quality AI products and services and increased functionality.

 

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Customer Base

 

We plan to operate as a marketplace. While there is no assurance that our software providers and user base will be large enough for us to reach profitability, we do not anticipate that we will be dependent on one or a few major customers or suppliers. On the supply side, we have partnerships with several AI companies and individuals who are interested in deploying their AI tool on our marketplace. On the demand side, we have over 1,600 individual users according to data from our cloud application provider. For further discussion, see “Risk Factors – We depend on a limited number of software providers for our service to function adequately. Failure to obtain satisfactory performance from our suppliers or loss of our existing suppliers could cause us to lose sales, incur additional costs and lose credibility in the market.”, and “Risk Factors – The market size for AI services may be smaller than we have estimated.

 

Intellectual Property

 

We do not own any patents and have not registered any trademarks or copyrights. We have filed an application to register for trademark protection our web platform technology on our website featuring an online marketplace for exchanging goods and services with other users. We may also seek copyright and other applicable intellectual property protections when we have finished development. All of our current and former employees and independent contractors have agreed to standard assignments of all rights to any intellectual property that was developed in the course of employment or engagement.

 

Employees

 

As of June 10, 2022, we had eight full-time employees, two part-time employee, and one full-time contractors.

 

We believe that we maintain a satisfactory working relationship with our employees and consultants, and we have not experienced any significant labor disputes or any difficulty in recruiting staff for our operations. None of our employees is represented by a labor union.

 

Governmental/Regulatory Approval and Compliance

 

To our knowledge, there are no governmental regulations that directly apply to our business.

 

Corporate History

 

We were incorporated in the State of Delaware on July 3, 2018 under the name “GenesisAI Corporation.”

 

Legal Proceedings

 

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.

 

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DESCRIPTION OF PROPERTY

 

As we are a small company, we do not have any significant owned or rented property other than three offices consisting of two U.S.-based offices in Boston, Massachusetts and Miami, Florida and one Europe-based office in Tbilisi, Georgia, for approximately $1,350 per month in total rent. All employees and independent contractors supply their own equipment and facilities other than a small amount of computer and office equipment purchased by the Company for the use of our chief executive officer; our chief executive officer’s brother for his work for us as a full-time employee; our part-time Chief AI Scientist; and two software engineers.

 

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following discussion and analysis summarizes the significant factors affecting our operating results, financial condition, liquidity and cash flows of our company as of and for the periods presented below. The following discussion and analysis should be read in conjunction with our financial statements and the related notes thereto included elsewhere in this Offering Circular. The discussion contains forward-looking statements that are based on the beliefs of management, as well as assumptions made by, and information currently available to, our management. Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those discussed below and elsewhere in this Offering Circular, particularly in the sections titled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements”.

 

Overview

 

GenesisAI Corporation was formed in the State of Delaware in July 2018. Our principal executive office is located at 201 SE 2nd Ave., Miami, FL 33131.

 

We have developed GenesisAI, an artificial intelligence, or AI, protocol and platform that enables different AI systems to communicate with each other, exchange data, and trade services. On top of this protocol, we are building an online marketplace for AI products and services. The marketplace will connect companies in need of AI services, data, and models with companies interested in monetizing their AI technology. We provide the web platform that will facilitate the offer and sale of a variety of low-cost advanced AI services. Our platform helps to make machine-learning AI technology more accessible and affordable for companies, governments, and other organizations around the world.

 

With the GenesisAI protocol, we envision a completely different world. The GenesisAI protocol will allow anybody to upload an AI service to the GenesisAI network. Under this system, AI becomes a globally accessible resource. Anyone can utilize its technological benefits, or become an agent in its development. Our existing AI applications help investors and traders find investment opportunities and save time doing investment research. GenesisAI will maximize the functionality and accuracy rate of AI models through cross-provider transfer learning, enabling multiple AI applications to exchange data and trade services.

 

Our AI protocol and platform and related online marketplace are not yet fully developed and to date we have not generated any revenues from our operations.

 

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Recent Developments

 

Regulation A Offering

 

On February 18, 2022, the SEC qualified our Form 1-A Regulation A Offering Statement under the Securities Act of 1933. Pursuant to this qualification, we and the selling stockholders commenced an offering of a maximum of 17,647,058 shares of Class A Common Stock under Regulation A on a delayed or continuous basis pursuant to Rule 251(d)(3) under the Securities Act. Subsequently, we commenced our portion of the offering for to 12,352,940 shares of our Class A Common Stock at a fixed price of $4.25 per share, subject to a maximum of 70% of gross proceeds on a pro rata basis with the selling stockholders (the “Primary Offering”). The selling stockholders also commenced their offering up to 5,294,118 shares of our Class A Common Stock at a price of $4.25 per share, subject to a maximum of 30% of gross proceeds on a pro rata basis with the Primary Offering (the “Secondary Offering”). Both the Primary Offering and Secondary Offering are being conducted as a single “Tier 2 Offering” under Regulation A (the “Offering”). The minimum per-investor investment in this Offering was originally $497.25, or 117 shares of Class A Common Stock. In order to enable more investors to invest, we are seeking to lower this minimum investment amount to $250.75, or 59 shares. The Primary Offering and Secondary Offering are occurring simultaneously. The Primary Offering is being conducted on a “best-efforts” basis, which means our directors and officers are using their commercially reasonable best efforts in an attempt to offer and sell the shares. Our directors and officers are not receiving any commission or any other remuneration for these sales. In offering the securities on our behalf, the directors and officers are relying on the safe harbor from broker-dealer registration set out in Rule 3a4-1 under the Exchange Act. The Secondary Offering is being conducted by the selling stockholders in coordination with us and our agents, and we will not receive any of the proceeds from the Secondary Offering. We will bear all costs, expenses and fees in connection with the qualification or registration of the shares of Class A Common Stock being offered in the Secondary Offering, including with regard to compliance with state securities or “blue sky” laws. The selling stockholders will bear all commissions and discounts, if any, attributable to their sale of their shares of Class A Common Stock.

 

The Company had formerly engaged Dalmore Group, LLC, member FINRA/SIPC (“Dalmore”), as broker-dealer of record, to perform broker-dealer, administrative and compliance related functions in connection with the Offering, but not for underwriting or placement agent services. Prior to the termination of Dalmore’s agreement with the Company, Dalmore became entitled to a 1% commission on sales that had been made in this Offering, a one-time advance payment for out-of-pocket expenses equal to $5,000, a consulting fee of $20,000, and $11,750 for fees payable to FINRA. On or around June 1, 2022, our broker-dealer agreement with Dalmore was terminated. In addition to the out-of-pocket expenses, consulting fees and FINRA fees indicated above, we and the selling stockholders are required to pay Dalmore total commissions of $1,420.86. For additional information regarding the methods of sale, refer to the section entitled “Plan of Distribution” in this Offering Circular.

 

The Offering will terminate on the earlier of: (i) such time as our board of directors decides that it is in our best interest to terminate the Offering; (ii) such time as $74,857,914.00 of our Class A Common Stock is sold subsequent to the date of this Offering Circular; or (iii) February 17, 2025. This Offering does not have a minimum offering amount. The Company will not utilize a third-party escrow account for this Offering. All funds tendered by investors will be held in a segregated account until investor subscriptions are accepted by the Company. Once investor subscriptions are accepted by the Company, funds will be deposited into an account controlled by the Company. In the event we terminate the Offering before the maximum offering amount is sold, we will close on all funds received and accepted up to that time and promptly issue all purchased and unissued Class A Common Stock. If an investor’s subscription is rejected, the investor’s payment (or portion thereof if partially rejected) will be returned within 30 days without interest.

 

We may hold a series of closings at which we and the selling stockholders receive the funds from the segregated investment account and issue the shares to investors. We may undertake one or more closings on a rolling basis. After each closing, funds tendered by investors will be available to us and the selling stockholders for securities sold by us and the selling stockholders, respectively, and we and the selling stockholders will have access to these funds even if they do not cover the expenses of the Offering. We expect to hold closings on at least a monthly basis.

 

As of the date of this Offering Circular, $142,086 had been raised from the Offering, including $42,626 sold by selling stockholders.

 

Other Recent Developments

 

Since December 2021, we have granted options to certain employees and other participants in our Stock Incentive Plan to purchase a total of 610,348 shares of Class A Common Stock at an exercise price of $2.00 per share, and an option to purchase 575,374 shares at an exercise price of $4.25 per share. The options have ten-year terms. The options generally vest in equal monthly installments over four years.

 

From January 2022 to June 10, 2022, the number of our employees decreased from 12 full-time and 2 part-time employees to 8 full-time and 2 part-time employees, respectively. In April 2022, a number of employees agreed to reductions in their monthly salaries. In aggregate, total monthly salaries were reduced by on average 40%. During the same period, one employee was granted 8,374 shares of restricted Class A Common Stock in exchange for services.

 

Since our inception and as of June 10, 2022, we had raised approximately $4.9 million  from issuances of SAFEs, common stock and preferred stock in offerings that occurred prior to the commencement of the Offering.

 

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Impact of COVID-19 Pandemic

 

The current global pandemic of a novel strain of coronavirus, or COVID-19, and the global measures taken to combat it, may have an adverse effect on our business. Public health authorities and governments at local, national and international levels have announced various measures to respond to the pandemic. Some measures that directly or indirectly impact our business include voluntary or mandatory quarantines, restrictions on travel and limiting gatherings of people in public places.

 

We believe that we have fully complied with all state and local requirements relating to COVID-19. We have undertaken various measures in an effort to mitigate the spread of COVID-19, including encouraging employees to work remotely if possible. We also have enacted business continuity plans, which may make maintaining our normal level of corporate operations, quality controls and internal controls difficult. Moreover, the COVID-19 pandemic may cause temporary or long-term disruptions in our supply chains and/or delays in the delivery of our inventory. Further, the COVID-19 pandemic and mitigation efforts may also adversely affect our customers’ financial condition, resulting in reduced spending for the products we sell.

 

As events are rapidly changing, we do not know how long the COVID-19 pandemic and the measures that have been introduced to respond to it will disrupt our operations or the full extent of that disruption. Further, once we are able to restart normal business hours and operations doing so may take time and will involve costs and uncertainty. We also cannot predict how long the effects of the COVID-19 pandemic and the efforts to contain it will continue to impact our business after the pandemic is under control. Governments could take additional restrictive measures to combat the pandemic that could further impact our business or the economy in the geographies in which we operate. It is also possible that the impact of the pandemic and response on our suppliers, customers and markets will persist for some time after governments ease their restrictions. These measures have negatively impacted, and may continue to impact, our business and financial condition as the responses to control COVID-19 continue.

 

The extent to which the pandemic may impact our results will depend on future developments, which are highly uncertain and cannot be predicted as of the date of this Offering Circular, including new information that may emerge concerning the severity of the pandemic and steps taken to contain the pandemic or treat its impact, among others. Nevertheless, the pandemic and the current financial, economic and capital markets environment, and future developments in the global supply chain and other areas present material uncertainty and risk with respect to our performance, financial condition, results of operations and cash flows. See also “Risk Factors” above.

 

Principal Factors Affecting Our Financial Performance

 

Our operating results are primarily affected by the following factors:

 

our ability to acquire new customers or retain existing customers;

 

our ability to offer competitive product pricing;

 

our ability to broaden product offerings;

 

industry demand and competition;

 

our ability to leverage technology and use and develop efficient processes;

 

our ability to attract and retain talented employees; and

 

market conditions and our market position.

 

Emerging Growth Company

 

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

 

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

 

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

 

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

 

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

 

In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.

 

We will remain an emerging growth company for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our total annual gross revenues exceed $1.07 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.

 

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Operating Results

 

For the fiscal years ended December 31, 2021 and 2020, we had no revenue. Net loss for the year 2021 was $3,808,826 as compared to net loss for the year 2020 of $724,839. 

 

Comparison of Years Ended December 31, 2021 and 2020

 

    Year Ended
December 31,
    Change  
    2021     2020     $     %  
Revenues   $ -     $ -     $ -       -
Cost of revenues     -       -       -       -  
Gross profit     -       -       -       -  
Operating expenses                                
Selling, general and administrative   $ 1,004,072     $ 448,294     $ 555,778       124.0 %
Research and development     2,825,586       276,546       2,549,040       921.7  
Total operating expenses     3,829,658       724,839       3,104,819       428.3  
Total operating loss     (3,829,658 )     (724,839 )     3,104,819       428.3  
Other income - PPP loan forgiveness     20,832       -       20,832       100.0  
Net loss   $ (3,808,826 )   $ (724,839 )   $ 3,083,987       425.5 %

 

Operating Loss

 

Our total operating loss increased approximately $3.1 million, to approximately $3.8 million for the year ended December 31, 2021 from approximately $0.7 million for the year ended December 31, 2020, or 428.3%. This overall increase was comprised of an increase in selling, general and administrative expenses of approximately $0.6 million, or 124.0%, from approximately $0.4 million for the year ended December 31, 2020 to approximately $1.0 million for the year ended December 31, 2021, and an increase in research and development expenses of approximately $2.5 million, or 921.7%, from approximately $0.3 million for the year ended December 31, 2020 to approximately $2.8 million for the year ended December 31, 2021. The increase in selling, general and administrative expenses was primarily due to increased expenses for advertising, marketing and business development costs. The increase in research and development expenses was primarily due to increased expenses for payroll, options expense, personnel costs for engineering, research and product management, prototyping costs, and contract and professional services. For the year 2022, we estimate operating loss to be approximately $4,000,000; however, this estimate may vary substantially from actual results.

 

Liquidity and Capital Resources

 

As of December 31, 2021, we had cash and cash equivalents of $1,479,904 and an amount due from a stockholder of $67,000. Our total assets were $1,546,904 as of December 31, 2021.

 

To date, we have financed our operations primarily through proceeds from the sales of our securities.

 

For the fiscal year ended December 31, 2021, the following capital was raised by the Company:

 

April 2021: We conducted the final closing of a Regulation Crowdfunding offering, which raised a total of $1,199,984.

 

July 2021: We conducted the final closing of a Regulation Crowdfunding offering, which raised a total of $2,573,950.

 

On March 22, 2021, we closed the 2020-2021 Regulation D Offering with gross proceeds of approximately $114,091.

 

In March 2020 we inadvertently made an overpayment to our Chief Executive Officer, Archil Cheishvili, of $67,000. We and Mr. Cheishvili did not have knowledge of such overpayment until April 2021 and wished to rectify such overpayment by requiring Mr. Cheishvili to repay us the amount of the overpayment. In April 2021 we entered into a loan agreement with Mr. Cheishvili relating to the terms of the repayment by Mr. Cheishvili of the overpayment of $67,000. Principal and interest on the $67,000 overpayment loan accrue at a rate of 2% and are due on March 30, 2024, and may be prepaid in whole or in part without penalty.

 

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We believe that our current levels of cash, whether or not we receive any proceeds from our current Regulation A offering, will be sufficient to meet our anticipated cash needs for our operations for at least the next seven months, including our anticipated costs associated with becoming a public reporting company. We may, however, in the future require additional cash resources due to changing business conditions, implementation of our strategy to expand our business, or other investments or acquisitions we may decide to pursue. If our financial resources, including any proceeds that we may receive from our current Regulation A offering, are insufficient to satisfy our capital requirements and business growth goals, we may seek to sell additional equity or debt securities or obtain additional credit facilities. The sale of additional equity securities could result in dilution to our stockholders. The incurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and financial covenants that would restrict our operations. Financing may not be available in amounts or on terms acceptable to us, if at all. Any failure by us to raise additional funds on terms favorable to us, or at all, could limit our ability to expand our business operations and could harm our overall business prospects.

 

Capital Expenditures and Other Obligations

 

On May 21, 2020, we received a Paycheck Protection Program loan from TD Bank of $20,832 bearing interest of 1%. Principal and interest was required to be repaid on a monthly basis for the 2-year term of the loan. On April 26, 2021, the full amount of the loan was forgiven.

 

The Company does not currently have plans to make significant capital expenditures. The Company will continually assess whether such expenditures are warranted.

 

Summary of Cash Flow

 

The following table provides detailed information about our net cash flow for all financial statement periods presented in this Offering Circular:

 

    Year Ended  
    December 31,
2021
   December 31,
2020
 
Net cash provided by (used in) operating activities   $ (2,030,094 )   $ (762,877 )
Net cash provided by (used in) investing activities     -       -  
Net cash provided by (used in) financing activities     3,331,719       911,466  
Net increase (decrease) in cash and cash equivalents     1,301,625       148,589  
Cash and cash equivalents at beginning of period     178,279       29,694  
Cash and cash equivalent at end of period   $ 1,479,904     $ 178,279  

 

Net cash used in operating activities was approximately $2.0 million for the year ended December 31, 2021, as compared to net cash used in operating activities of approximately $0.7 million for the year ended December 31, 2020. Our increased operating expenses were the primary driver of the net cash used in operating activities for 2021 compared to 2020.

 

Net cash used in investing activities was $0 for the years ended December 31, 2021 and 2020 as there were no investing activities during 2021 and 2020.

 

Net cash provided by financing activities was approximately $3.3 million for the year ended December 31, 2021, as compared to net cash provided by financing activities of $0.9 million for the year ended December 31, 2020. The increase in net cash from financing activities in 2021 compared to 2020 was due to a significant increase in the issuance of securities in 2021 compared to 2020.

 

Changes to our Capitalization

 

On September 29, 2021, we amended our Certificate of Incorporation and filed a Certificate of Designations of Series A Preferred Stock. As a result of these filings, we are now authorized to issue two classes of common stock, called Class A Common Stock and Class B Common Stock, and six classes of preferred stock, consisting of six series of Series A Preferred Stock. Class A Common Stock is entitled to one vote per share on proposals requiring or requesting stockholder approval, and Class B Common Stock is entitled to ten votes on any such matter. Each share of Series A Preferred Stock has one vote on an as-converted basis on all matters for which the holders of common stock vote at an annual or special meeting of stockholders or act by written consent, and as otherwise required by law. The preferred stock also has certain conversion, protective and other terms and provisions. See “Securities Being Offered” for further information on our authorized capital stock. In addition, we authorized a 10-for-1 forward stock split of our issued and outstanding common stock, and increased the authorized number of shares under our Stock Incentive Plan from 1,000,000 to 15,000,000.

 

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Conversion of SAFEs

 

Since inception, the Company has raised $843,265 in exchange for securities called Simple Agreements for Future Equity (collectively, the “SAFEs”). For a detailed description of our current and former SAFEs, please see “Securities Being Offered – SAFEs”.

 

On December 16, 2021, our Chief Executive Officer exercised his powers as Designated Lead Investor to amend the conversion terms of SAFEs that were issued in exchange for proceeds of $625,390 to allow for their voluntary conversion by the Company for the amounts of shares of preferred stock that were issuable upon the occurrence of a “Qualified Equity Financing” in accordance with the original SAFE terms. The SAFEs were subsequently converted into 3,687,994 shares of Series A-2 Preferred Stock. For a description of the terms of our Series A Preferred Stock, please see “Securities Being Offered – Preferred Stock – Series A Preferred Stock”. These shares were granted for no consideration other than the original purchase amounts for the outstanding SAFE instruments. We granted these shares to the former SAFE holders pursuant to a private placement exemption from registration requirements. Unlike the shares being offered in this Offering, the preferred stock issued to our former SAFE holders will be legally restricted from trading until such time as these shares meet the requirements of one or more exemptions from the general restrictions on the resale of private placement-issued securities under U.S. securities laws. The shares issued to our SAFE holders may or may not dilute your investment, or affect your ability to buy or sell your shares or receive an acceptable price for the shares in this Offering. For further information, see “Risk Factors – You will experience immediate and substantial dilution as a result of this Offering.” and “Dilution”.

 

Regulation Crowdfunding Offerings and Regulation D Private Placement

 

April to July 2021 Regulation Crowdfunding Offering

 

From April 7, 2021 to July 7, 2021, we conducted an offering (the “April to July 2021 Offering”) of common stock (subsequently converted to Class A Common Stock) at a pre-stock split price per share of $11.06 under Regulation Crowdfunding through Netcapital Funding Portal Inc., or Netcapital, a FINRA/SEC-registered funding portal. Netcapital was entitled to receive cash compensation equal to 4.9% of the value of the securities sold through Regulation Crowdfunding, a listing fee of up to $5,000 and other fees and expenses. Initially, we planned to raise up to gross proceeds of $1,070,000; subsequently we amended the offering to permit sales of additional shares for maximum gross proceeds of $3,800,006. On July 17, 2021, we closed the April to July 2021 Offering after receiving approximate gross proceeds of $2,573,950.

 

July 2020 – April 2021 Side-by-Side Regulation D and Regulation Crowdfunding Offerings

 

On July 17, 2020, we launched side-by-side offerings of common stock (subsequently converted to Class A Common Stock) at a pre-stock split price of $3.11 per share under Regulation D through Livingston Securities, LLC, or Livingston, a registered broker-dealer and member of FINRA/SIPC (the “2020-2021 Regulation D Offering”), and Regulation Crowdfunding through Netcapital (the “2020-2021 Regulation Crowdfunding Offering”). Livingston was entitled to cash compensation equal to 4.9% of the value of the securities sold through Regulation D and other fees and expenses. Netcapital was entitled to receive cash compensation equal to 4.9% of the value of the securities sold through Regulation Crowdfunding, a listing fee of up to $5,000 and other fees and expenses. We planned to raise between $10,000 and $2,499,998 through these concurrent offerings. On March 22, 2021, we closed the 2020-2021 Regulation D Offering with gross proceeds of approximately $114,091. On April 1, 2021, we closed the 2020-2021 Regulation Crowdfunding Offering with gross proceeds of approximately $1,199,984.

 

In March 2020 we inadvertently made an overpayment to our Chief Executive Officer, Archil Cheishvili, of $67,000. We and Mr. Cheishvili did not have knowledge of such overpayment until April 2021 and wished to rectify such overpayment by requiring Mr. Cheishvili to repay us the amount of the overpayment. In April 2021 we entered into a loan agreement with Mr. Cheishvili relating to the terms of the repayment by Mr. Cheishvili of the overpayment of $67,000. Principal and interest on the $67,000 overpayment loan accrue at a rate of 2% and are due on March 30, 2024, and may be prepaid in whole or in part without penalty.

 

On May 21, 2020, we received a Paycheck Protection Program loan from TD Bank of $20,832 bearing interest of 1%. Principal and interest was required to be repaid on a monthly basis for the 2-year term of the loan. On April 26, 2021, the full amount of the loan was forgiven.


In May 2021, we bought back 125,000 pre-stock split shares of common stock from one of our engineers at the par value price per share for total consideration of $12.50. In June 2021, we bought back 116,800 pre-stock split shares of common stock from a former employee for par value price per share for total consideration of $11.68.

 

In August 2021, we agreed that a July 2018 agreement to grant 600,000 pre-stock split shares of common stock to a former employee was effectively null and void following a subsequent verbal agreement by the former employee to forfeit any claim to the shares. Under the terms of our amended and restated cancellation agreement, we agreed to pay the former employee par value price per share for total consideration of $60.00, and to terminate the former employee’s advisor agreement with the Company and certain obligations of the former employee to us under that agreement.

 

In November 2021, an employee agreed to amend the terms of his stock option agreements to change the total number of his option shares from 603,080 to 657,070; to change the exercise price from $0.311 per share to $1.106 per share, to reflect our determination of their fair value on their grant date; to change the maximum exercise term from three years to ten years, in accordance with our standard option terms; and to allow for the exercisability of his stock options for the portion of the ten-year term remaining if he leaves the Company. Also in November 2021, another employee agreed to amend the terms of his stock option agreement to change the total number of option shares from 629,760 to 676,990; and to change the exercise price from $0.311 per share to $1.106 per share, to reflect our determination of their fair value on their grant date.

 

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Plan of Operations

 

Product Development

 

We have three major product-development goals for the next 12 months:

 

Adding AI-powered and data-driven models on our AI marketplace. We plan to add around 10 new models per quarter to have a total of approximately 50 models on the platform by July 30, 2022.

 

Research and development of the GenesisAI platform/protocol. Our goal is to enhance the protocol so that our technology allows seamless interactions among distinct AI tools. We would like to make progress in allowing AI tools to work synergistically together, including exchanging data and services.

 

Researching how to create Artificial General Intelligence (AGI), or the hypothetical ability of an intelligent agent to understand or learn any intellectual task that a human being can. In other words, our AGI research efforts will focus on deploying expert AI models and how to connect them in a way that as a whole they are capable of doing almost everything that humans do (text analysis, speech understanding, image recognition, etc.).

 

Business Development Goals

 

Our primary business development goals for the next 12 months will be:

 

Increasing number of users. Our goal is to have five times the number of registered users on our platform within 12 months. We believe that the platform will require network effects resulting from having large numbers of users before it can be commercialized.

 

Signing partnership agreements with AI companies and individuals who are interested in deploying their solution on our platform.

 

Raising more capital so that we can accelerate our growth.

 

Achieving all of our goals will depend to a large extent on the amount of capital that we will raise within the next 12 months. Should we be unable to meet our capital-raising goal of approximately $52.4 million of additional capital from this Offering, or if the capital that we raise otherwise proves to be insufficient, we may be unable to meet some or all of our planned operations goals.

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

 

Critical Accounting Policies

 

The following discussion relates to critical accounting policies for our company. The preparation of financial statements in conformity with GAAP requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operation. Critical accounting policies are those that are most important to the portrayal of our financial condition and results of operations and require management’s difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments. We believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our financial statements:

 

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Fair Value of Financial Instruments

 

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants as of the measurement date. Applicable accounting guidance provides an established hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors that market participants would use in valuing the asset or liability. There are three levels of inputs that may be used to measure fair value:

 

  Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
     
  Level 2 - Include other inputs that are directly or indirectly observable in the marketplace.
     
  Level 3 - Unobservable inputs which are supported by little or no market activity.

 

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Fair-value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of the date of these financial statements. The respective carrying value of all financial instruments approximated their fair values. These financial instruments include SAFE notes (see Note 6). Fair values of these items have been determined to approximate their carrying values because the instruments have been outstanding for a very short time, and market circumstances have not changed materially since the instruments were originated.

 

Stock Based Compensation

 

The Company accounts for share-based compensation under the provisions of ASC 718, Compensation-Stock Compensation. Under the fair value recognition provisions, stock-based compensation expense is measured at the fair value of the consideration received, or the fair value of the equity instruments issued, or liabilities incurred, whichever is more reliably measured. Share-based compensation for all stock-based awards to employees and directors is recognized as an expense over the requisite service period, which is generally the vesting period.

 

The Company accounts for stock compensation arrangements with non-employees in accordance with Accounting Standard Update (ASU) 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which requires that such equity instruments are recorded at the value on the grant date.

 

Research and Development

 

The Company expenses research and development costs as they are incurred. Research and development costs consist primarily of payroll, options expense, personnel costs for engineering, research and product management, prototyping costs, and contract and professional services. Research and developments for the years ending December 31, 2021 and 2020 were $2,825,586 and $276,546, respectively.

 

Going Concern

 

The Company began operations in 2018 and incurred a loss for the period from inception through December 31, 2021. Since inception, the Company has relied on securing stockholder investments and contributions from the founders. As of December 31, 2021, the Company had limited working capital and will likely incur losses prior to generating positive working capital. These matters raise substantial doubt about the Company's ability to continue as a going concern. During the next 12 months, the Company intends to fund its operations with additional funding and funds from revenue producing activities, if and when such can be realized. If the Company cannot secure additional short-term capital, it may cease operations. The financial statements do not include any adjustments that might be necessary if the Company is not able to continue as a going concern.

 

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DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES

 

The following table sets forth the name and position of each of our current executive officers, directors and significant employees.(1)

 

 

Name

  Position   Age     Term of Office   Approximate hours per week for part-time employees
Archil Cheishvili   President, Chief Executive Officer, Director   28     July 2018 - present   N/A
Levan Silagadze   Director   30     October 2021 - present   N/A
Shota Shanidze   Director   31     October 2021 - present   N/A

 

(1)There are no arrangements or understandings between the persons described above and any other persons pursuant to which the person was or is to be selected to his office or position.

 

Each director is elected until a successor is duly elected and qualified.

 

Except as noted above, there are no agreements or understandings for our executive officer and directors to resign at the request of another person and no officer or director is acting on behalf of nor will he act at the direction of any other person.

 

There are no family relationships between any director, executive officer, person nominated or chosen to become a director or executive officer or any significant employee.

 

Our directors and executive officer have not, during the past five years:

 

been convicted in a criminal proceeding (excluding traffic violations and other minor offences); or

 

had any petition under the federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing.

 

Archil Cheishvili – President, Chief Executive Officer, Director

 

All positions and offices held with the Company and date such position(s) was held with start and ending dates:

 

President, Chief Executive Officer and Director (July 2018 – present)

 

Principal occupation and employment responsibilities during at least the last five (5) years with start and ending dates:

 

Chief Executive Officer and President, GenesisAI Corporation, since March 2018. Mr. Cheishvili is responsible for setting the Company’s vision and strategy, hiring and managing people, overseeing daily operations, managing finances, fundraising, overall product development, and customer acquisition.

 

Chief Executive Officer and President, Palatine Analytics Corporation, a former partnership formed in June 2016 and incorporated in September 2017, from June 2016 to November 2019. Mr. Cheishvili was responsible for setting the company’s vision and strategy, hiring and managing people, overseeing daily operations, managing finances, fundraising, overall product development, and customer acquisition. Palatine Analytics develops AI-powered tools for the people analytics space.

 

Mr. Cheishvili graduated from Harvard University in 2016 with a Bachelor of Arts degree in Economics.

 

Levan Silagadze – Director

 

All positions and offices held with the Company and date such position(s) was held with start and ending dates:

 

Director (October 2021 – present)

 

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Principal occupation and employment responsibilities during at least the last five (5) years with start and ending dates:

 

Director, GenesisAI Corporation, since October 2021.

 

Chief Financial Officer, JSC Partnership Fund, an investment fund based in Georgia, since February 2019. Mr. Silagadze is responsible for monitoring financial covenants and budget forecasts.

 

Senior Financial Analyst, JSC D&B Georgia, doing business as Dunkin’ Georgia, an affiliate of Wissol Group, a company formed under the law of the country of Georgia, from September 2016 to October 2018. Mr. Silagadze was responsible for preparing financial statements. JSC D&B Georgia was organized for the purpose of establishing up to thirty-five (35) Dunkin’ Donuts-branded restaurants located in Georgia, in accordance with the terms of the Franchise Agreement between Dunkin’ Donuts Franchising LLC, a subsidiary of Dunkin Brands Group Inc., and JSC D&B Georgia.

 

Senior Financial Analyst, JSC WenGeorgia, doing business as Wendy’s Georgia, an affiliate of Wissol Group, a company formed under the law of the country of Georgia, from September 2016 to October 2018. Mr. Silagadze was responsible for preparing financial statements. JSC WenGeorgia was organized for the purpose of the establishment and operation of a chain of up to 22 Wendy’s-branded franchise restaurants throughout the country of Georgia.

 

Financial Analyst, Smart Retail JSC, an affiliate of Wissol Group, a company formed under the law of the country of Georgia, from September 2015 to September 2016. Mr. Silagadze was responsible for analyzing the company’s financial ratios and daily sales. JSC Smart Retail operates a supermarket chain in Georgia.

 

Mr. Silagadze received a Ph.D. in Economics from Tbilisi State University in 2018, an MBA in International Business from Cardiff Metropolitan University in 2014, and a Bachelor of Business Administration from Tbilisi State University in 2012. Mr. Silagadze holds the ACCA Credential ID F1, F2, F3 from the Association of Chartered Certified Accountants (ACCA).

 

Shota Shanidze – Director

 

All positions and offices held with the Company and date such position(s) was held with start and ending dates:

 

Director (October 2021 – present)

 

Principal occupation and employment responsibilities during at least the last five (5) years with start and ending dates:

 

Director, GenesisAI Corporation, since October 2021.

 

International Project Manager, Adorno, LLC, since June 2017. Mr. Shanidze is responsible for designing a network with a potential pool of investors and nurturing long-term relationships for the purpose of investment sales. Adorno is a private company established in partnership with senior management of Northbridge Communities, a United States-based seniors housing operator, for the purpose of building high-quality seniors housing communities in Russia and the Commonwealth of Independent States (CIS).

 

Senior Consultant, Armlender and Associates, Inc., from October 2013 to May 2016. Armlender and Associates is a consulting company focused on infrastructure consulting, project finance and Public Private Partnerships advisory in the CIS region. The company services global financial institutions, investment firms and companies operating in the field of energy, real estate and infrastructure.

 

Mr. Shanidze received a Master’s Degree in Government from Harvard University in 2018, a Bachelor’s Degree in International and Comparative Politics from The American University of Paris in 2013, and a Bachelor’s degree in International Business, Trade, and Tax Law from Caucasus University in 2007.

 

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COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

 

The following table sets forth the annual compensation of each of the three highest paid persons who were executive officers or directors during our last completed fiscal year:

 

Name  Capacities in Which Compensation Was Received  Cash Compensation
($)
   Other Compensation ($)   Total Compensation
($)
 
Archil Cheishvili  Chief Executive Officer  $350,000    -(1)  $350,000(1)
Levan Silagadze  Director  $2,500            -(2)  $2,500(1)
Shota Shanidze  Director  $2,500    -(2)  $2,500(1)
All directors (3 persons)     $355,000    -   $355,000(1)

 

(1) Mr. Cheishvili was entitled to an annual bonus in the amount of up to $200,000 under his employment agreement with the Company for 2021, but this amount, if any, has not yet been approved by the board of directors. The maximum amount of the 2021 Bonus will be awarded only if the Company (i) reaches a market valuation of $100,000,000, (ii) adds ten more artificial intelligence supplier partners, (iii) finishes a technology that will easily allow companies to deploy their artificial intelligence tools on the Company’s GenesisAI platform, and (iv) adds five more artificial intelligence models on the Company’s GenesisAI platform.

 

(2) Each of Mr. Silagadze and Mr. Shanidze were granted options to purchase 133,431 and 130,430 shares, respectively, of Class A Common Stock upon his appointment in October 2021. The options may be exercised at an exercise price equal to $2.00 per share. The options will vest and become exercisable in forty-eight (48) equal monthly installments over the first four years following the date of grant, subject to the respective director nominee continuing in service on our board of directors through each such vesting date. The term of each stock option is ten (10) years from the date of grant.

 

Employment Agreement

 

Archil Cheishvili

 

On April 6, 2021, we entered into an employment agreement, as amended on May 24, 2021, with Archil Cheishvili, our Chief Executive Officer, with an initial term commencing as of April 6, 2021 and ending on April 5, 2022, which will automatically renew for additional one (1) year periods unless either party provides written notice at least forty-five (45) days prior to the expiration of the initial term or any renewal period. Pursuant to the employment agreement, Mr. Cheishvili was entitled to an annual base salary of $200,000 and $350,000 during 2020 and 2021, respectively. Mr. Cheishvili was also entitled to a cash bonus for 2020 of $70,000 (which he waived in partial consideration for the cancellation and exchange of his Class A Common Stock for Class B Common Stock), and up to $200,000 for 2021 (the “2021 Bonus”). A bonus amount may also be awarded in subsequent years during Mr. Cheishvili’s employment term in a maximum amount to be determined by the Company’s board of directors in its sole discretion, based on the board’s evaluation of Mr. Cheishvili’s personal performance for the most recently completed fiscal year and the Company’s financial performance for the most recently completed fiscal year, with each metric measured and determined by the Board in its sole discretion. The maximum amount of the 2021 Bonus was to be awarded only if the Company (i) reaches a market valuation of $100,000,000, (ii) adds ten more artificial intelligence supplier partners, (iii) finishes a technology that will easily allow companies to deploy their artificial intelligence tools on the Company’s GenesisAI platform, and (iv) adds five more artificial intelligence models on the Company’s GenesisAI platform. The amount raised from the Regulation D offering that the Company launched in 2020 will not be used to pay the 2021 Bonus.

 

Either party may terminate the employment agreement at any time without cause and for any reason or for no particular reason, subject to 30 days’ advance written notice. If we terminate the employment agreement without cause, all compensation payable to Mr. Cheishvili under the employment agreement will cease as of the date of termination, and we will pay to Mr. Cheishvili the following sums: (i) any accrued but unpaid base salary and accrued but unused vacation and paid time off, which must be paid on the pay date immediately following the date of Mr. Cheishvili’s termination, (ii) reimbursement for unreimbursed business expenses properly incurred by Mr. Cheishvili, which will be subject to and paid in accordance with the Company’s expense reimbursement policy; and (iii) such employee benefits, if any, to which Mr. Cheishvili may be entitled under the Company’s employee benefit plans as of the date of Mr. Cheishvili’s termination; (iv) any outstanding equity awards subject to the terms of the Stock Incentive Plan and respective award agreements; and (v) equal installment payments payable in accordance with the Company’s normal payroll practices, but no less frequently than monthly, which are in the aggregate equal to the remaining portion of the base salary for the year of the employment term in which Mr. Cheishvili is terminated, which severance payments will begin within 30 days following the date of Mr. Cheishvili’s termination and continue until the 12-month anniversary of his date of termination. If the employment agreement is terminated by us for cause or the employment term is not renewed, then Mr. Cheishvili is only entitled to receive the compensation described in items (i)-(iii) above. If the employment agreement is terminated by Mr. Cheishvili or due to his death or disability, then Mr. Cheishvili (or his estate or representative as applicable) will be entitled to receive the compensation described in items (i)-(iv) above. Mr. Cheishvili’s employment agreement contains restrictive covenants prohibiting him from owning or operating a business that competes with our company or soliciting our customers or employees for two years following the termination of his employment.

 

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Independent Director Agreements

 

During the fiscal year ended December 31, 2021, we entered into independent director agreements with our non-executive directors Levan Silagadze and Shota Shanidze pursuant to their appointment to our Board of Directors in October 2021.

 

Under the independent director agreements, we agreed to pay each director an annual cash fee of $15,000 and an initial award of stock options. We were required to pay the annual cash compensation fee to each director nominee in twelve equal installments no later than the fifth business day of each calendar month commencing in the first month following the agreement’s effective date, October 12, 2021. In April 2022, each of our non-executive directors agreed to a reduced cash fee of $350 per month. We granted the options upon their appointment. The options may be exercised to purchase the number of shares of Class A Common Stock equal to 0.3% of our outstanding shares at an exercise price equal to $2.00 per share. The options will vest and become exercisable in forty-eight (48) equal monthly installments over the first four years following the date of grant, subject to the respective director nominee continuing in service on our board of directors through each such vesting date. The term of each stock option is ten (10) years from the date of grant. We will also reimburse each director nominee for pre-approved reasonable business-related expenses incurred in good faith in connection with the performance of the director nominee’s duties for us. As also required under the independent director agreements, we have separately entered into a standard indemnification agreement with each of our non-executive directors.

 

Stock Incentive Plan

 

In July 2018, we adopted the Stock Incentive Plan. On September 29, 2021, our board of directors and stockholders approved the amendment of the Plan to increase the maximum number of shares of Common Stock that may be issued from 1,000,000 to 15,000,000, and to change all references to “common stock” in the Plan to “Class A Common Stock”.

 

The following is a summary of certain significant features of the Plan. The information which follows is subject to, and qualified in its entirety by reference to, the Plan document itself, which is filed as an exhibit to the offering statement of which this Offering Circular forms a part.

 

Awards that may be granted include incentive stock options as described in section 422(b) of the Code, non-qualified stock options (i.e., options that are not incentive stock options) and awards of restricted stock. These awards offer our employees, consultants, advisors and outside directors the possibility of future value, depending on the long-term price appreciation of our Class A Common Stock and the award holder’s continuing service with our company or one or more of its subsidiaries.

 

All of the permissible types of awards under the Plan are described in more detail as follows:

 

Purposes of Plan: The purpose of the Plan is to advance the interests of the Company’s stockholders by enhancing the Company’s ability to attract, retain and motivate persons who are expected to make important contributions to the Company and by providing such persons with equity ownership opportunities and performance-based incentives that are intended to better align the interests of such persons with those of the Company’s stockholders.

 

Administration of the Plan: Administration of the Plan is entrusted to the board of directors. The Board shall have authority to grant Awards and to adopt, amend and repeal such administrative rules, guidelines and practices relating to the Plan as it shall deem advisable. The Board may construe and interpret the terms of the Plan and any Award agreements entered into under the Plan. The Board may correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award in the manner and to the extent it shall deem expedient to carry the Plan into effect and it shall be the sole and final judge of such expediency. All actions and decisions by the Board with respect to the Plan and any Awards shall be made in the Board’s discretion and shall be final and binding on all Participants and any other persons having or claiming any interest in the Plan or in any Award.

 

Eligible Recipients: Persons eligible to receive awards under the Plan will be all of the Company’s employees, officers and directors, as well as consultants and advisors to the Company.

 

Shares Available Under the Plan: The maximum number of shares of Class A Common Stock that may be delivered to participants under the Plan is 15,000,000, subject to adjustment for certain corporate changes affecting the shares, such as merger and acquisition. Shares subject to an award under the Plan for which the award is canceled, forfeited or expires again become available for grants under the Plan.

 

Stock Options

 

General. Subject to the provisions of the Plan, The Board may grant options to purchase Common Stock (each, an “Option”) and determine the number of shares of Class A Common Stock to be subject to each Option, the exercise price of each Option and the conditions and limitations applicable to the exercise of each Option, including conditions relating to applicable federal or state securities laws, as it considers necessary or advisable.

 

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Option Price. The exercise price for stock options will be determined at the time of grant. Normally, the exercise price will not be less than the fair market value on the date of grant, as determined in good faith by the Board. As a matter of tax law, the exercise price for any incentive stock option awarded may not be less than the fair market value of the shares on the date of grant; provided that if the Board approves the grant of an Option with an exercise price to be determined on a future date, the exercise price shall not be less than 100% of the Grant Date Fair Market Value on such future date.

 

Exercise of Options. Options may be exercised by delivery to the Company of a notice of exercise in a form of notice (which may be electronic) approved by the Company, together with payment in full (in the manner specified in Section 5(f)) of the exercise price for the number of shares for which the Option is exercised. Shares of Class A Common Stock subject to the Option will be delivered by the Company as soon as practicable following exercise.

 

Expiration or Termination. Options, if not previously exercised, will expire on the expiration date established by the compensation committee at the time of grant; provided that such term cannot exceed ten years and that such term of an incentive stock option granted to a holder of more than 10% of our voting stock cannot exceed five years. Options will terminate before their expiration date if the holder’s service with us terminates before the expiration date. The option may remain exercisable for specified periods after certain terminations of service, including terminations as a result of death, disability or retirement, with the precise period during which the option may be exercised to be established by the compensation committee and reflected in the grant evidencing the award.

 

Restricted Stock

 

General. The Board may grant Awards entitling Participants to acquire shares of Class A Common Stock (“Restricted Stock”), subject to the right of the Company to repurchase all or part of such shares at their issue price or other stated or formula price (or to require forfeiture of such shares if issued at no cost) from the Participant in the event that conditions specified by the Board in the applicable Award are not satisfied prior to the end of the applicable restriction period or periods established by the Board for such Award. The Board may also grant Awards entitling the Participant to receive shares of Common Stock or cash to be delivered at the time such Award vests (“Restricted Stock Units”) (Restricted Stock and Restricted Stock Units are each referred to herein as a “Restricted Stock Award”).

 

Dividend. Unless otherwise provided in the applicable Award agreement, any dividends (whether paid in cash, stock or property) declared and paid by the Company with respect to shares of Restricted Stock (“Accrued Dividends”) shall be paid to the Participant only if and when such shares become free from the restrictions on transferability and forfeitability that apply to such shares. Each payment of Accrued Dividends will be made no later than the end of the calendar year in which the dividends are paid to stockholders of that class of stock or, if later, the 15th day of the third month following the lapsing of the restrictions on transferability and the forfeitability provisions applicable to the underlying shares of Restricted Stock. The Award agreement for Restricted Stock Units may provide Participants with the right to receive an amount equal to any dividends or other distributions declared and paid on an equal number of outstanding shares of Common Stock.

 

Voting Rights. A Participant shall have no voting rights with respect to any Restricted Stock Units.

 

Stock Appreciation Rights: Stock appreciation rights, or SARs, which may be granted alone or in tandem with options, have an economic value similar to that of options. When a SAR for a particular number of shares is exercised, the holder receives a payment equal to the difference between the market price of the shares on the date of exercise and the exercise price of the shares under the SAR. Again, the exercise price for SARs normally is the market price of the shares on the date the SAR is granted. Under the Plan, holders of SARs may receive this payment — the appreciation value — either in cash or shares of Class A Common Stock valued at the fair market value on the date of exercise. The form of payment will be determined by us.

 

Stock Awards: Stock awards can also be granted under the Plan. The Board may grant other Awards of shares of Class A Common Stock, and other Awards that are valued in whole or in part by reference to, or are otherwise based on, shares of Class A Common Stock or other property.

 

Other Material Provisions:  In the event of various changes to the capitalization of our company, such as stock splits, stock dividends and similar re-capitalizations, an appropriate adjustment will be made by the Board to the number of shares covered by outstanding awards or to the exercise price of such awards. Except as otherwise determined by the Board at the date of grant, awards will not be transferable, other than by will or the laws of descent and distribution.

 

Except as set forth above, we do not have any ongoing plan or arrangement for the compensation of directors and executive officers.

 

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SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITYHOLDERS

 

The following table sets forth information regarding beneficial ownership of our voting stock as of the date of this Offering Circular (i) by each of our officers and directors who beneficially own more than 10% of any class of our voting stock; (ii) by all of our officers and directors as a group; and (iii) by each person who is known by us to beneficially own more than 10% of any class of our voting stock. Unless otherwise specified, the address of each of the persons set forth below is in care of the Company at 201 SE 2nd Ave., Miami, FL 33131.

 

Name and Address of Beneficial Owner  

 

Office, If Any

    Title of Class   Amount and Nature of Beneficial Ownership(1)   Amount and Nature of Beneficial Ownership Acquirable(2)   Percent of Class(3)  
Officers and Directors
Archil Cheishvili     CEO     Class B Common Stock   27,070,462 shares   -     100.0 %
All officers and directors as a group (3 persons)     -     Class A Common Stock   -   55,088 shares(2)     *  
-           Class B Common Stock   27,070,462 shares         100.0 %
10% Security Holders                            
Archil Cheishvili     CEO     Class B Common Stock   27,070,462 shares   -     100.0 %

 

 

  * Less than 1%.

 

(1) Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Each of the beneficial owners listed above has direct ownership of and sole voting power and investment power with respect to the shares of our common stock.

 

(2) Calculated in accordance with Rule 13d-3(d)(1) promulgated under the Exchange Act.

 

(3) A total of 44,508,967 shares of our common stock are considered to be outstanding as of the date of this Offering Circular, consisting of 27,070,462 shares of Class B Common Stock and 17,438,505 shares of Class A Common Stock. We also have a total of 3,687,994 shares of voting preferred stock outstanding. We therefore have a total of 48,196,961 shares of voting capital stock outstanding.

 

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INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS

 

The following includes a summary of transactions since the beginning of our 2020 fiscal year, or any currently proposed transaction, in which we were or are to be a participant and the amount involved exceeded or exceeds the lesser of $120,000 and one percent of the average of our total assets at year-end for the last two completed fiscal years, and in which any related person had or will have a direct or indirect material interest (other than compensation described under “Compensation of Directors and Executive Officers”). We believe the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described below were comparable to terms available or the amounts that would be paid or received, as applicable, in arm’s-length transactions.

 

On February 18, 2022, the SEC qualified our Form 1-A Regulation A Offering Statement under the Securities Act of 1933. Pursuant to this qualification, we and the selling stockholders commenced an offering of a maximum of 17,647,058 shares of Class A Common Stock under Regulation A on a delayed or continuous basis pursuant to Rule 251(d)(3) under the Securities Act. Subsequently, we commenced our portion of the offering for to 12,352,940 shares of our Class A Common Stock at a fixed price of $4.25 per share, subject to a maximum of 70% of gross proceeds on a pro rata basis with the selling stockholders (the “Primary Offering”). The selling stockholders also commenced their offering up to 5,294,118 shares of our Class A Common Stock at a price of $4.25 per share, subject to a maximum of 30% of gross proceeds on a pro rata basis with the Primary Offering (the “Secondary Offering”). Both the Primary Offering and Secondary Offering are being conducted as a single “Tier 2 Offering” under Regulation A (the “Offering”). The minimum per-investor investment in this Offering was originally $497.25, or 117 shares of Class A Common Stock. In order to enable more investors to invest, we are seeking to lower this minimum investment amount to $250.75, or 59 shares. The Primary Offering and Secondary Offering are occurring simultaneously. The Primary Offering is being conducted on a “best-efforts” basis, which means our directors and officers are using their commercially reasonable best efforts in an attempt to offer and sell the shares. Our directors and officers are not receiving any commission or any other remuneration for these sales. In offering the securities on our behalf, the directors and officers are relying on the safe harbor from broker-dealer registration set out in Rule 3a4-1 under the Exchange Act. The Secondary Offering is being conducted by the selling stockholders in coordination with us and our agents, and we will not receive any of the proceeds from the Secondary Offering. We will bear all costs, expenses and fees in connection with the qualification or registration of the shares of Class A Common Stock being offered in the Secondary Offering, including with regard to compliance with state securities or “blue sky” laws. The selling stockholders will bear all commissions and discounts, if any, attributable to their sale of their shares of Class A Common Stock.

 

The Company had formerly engaged Dalmore Group, LLC, member FINRA/SIPC (“Dalmore”), as broker-dealer of record, to perform broker-dealer, administrative and compliance related functions in connection with the Offering, but not for underwriting or placement agent services. Prior to the termination of Dalmore’s agreement with the Company, Dalmore became entitled to a 1% commission on sales that had been made in this Offering, a one-time advance payment for out-of-pocket expenses equal to $5,000, a consulting fee of $20,000, and $11,750 for fees payable to FINRA. On or around June 1, 2022, our broker-dealer agreement with Dalmore was terminated. In addition to the out-of-pocket expenses, consulting fees and FINRA fees indicated above, we and the selling stockholders are required to pay Dalmore total commissions of $1,420.86. For additional information regarding the methods of sale, refer to the section entitled “Plan of Distribution” in this Offering Circular.

 

The Offering will terminate on the earlier of: (i) such time as our board of directors decides that it is in our best interest to terminate the Offering; (ii) such time as $74,857,914.00 of our Class A Common Stock is sold subsequent to the date of this Offering Circular; or (iii) February 17, 2025. This Offering does not have a minimum offering amount. The Company will not utilize a third-party escrow account for this Offering. All funds tendered by investors will be held in a segregated account until investor subscriptions are accepted by the Company. Once investor subscriptions are accepted by the Company, funds will be deposited into an account controlled by the Company. In the event we terminate the Offering before the maximum offering amount is sold, we will close on all funds received and accepted up to that time and promptly issue all purchased and unissued Class A Common Stock. If an investor’s subscription is rejected, the investor’s payment (or portion thereof if partially rejected) will be returned within 30 days without interest.

 

We may hold a series of closings at which we and the selling stockholders receive the funds from the segregated investment account and issue the shares to investors. We may undertake one or more closings on a rolling basis. After each closing, funds tendered by investors will be available to us and the selling stockholders for securities sold by us and the selling stockholders, respectively, and we and the selling stockholders will have access to these funds even if they do not cover the expenses of the Offering. We expect to hold closings on at least a monthly basis.

 

The selling stockholders in the Secondary Offering portion of the Offering may make offers and sales of their shares of up to 30% of the gross proceeds from the Offering, or up to approximately $22.5 million, whichever is less, and may make offers and sales at the same time as the Company’s approximately $52.4 million remaining primary portion of the Offering on a 30%/70% pro rata basis with our primary sales.

 

Our chief executive officer, Mr. Archil Cheishvili, is selling the majority of the common stock that is being offered in the Secondary Offering. Mr. Cheishvili may sell up to 5,025,695 shares after the date of this Offering Circular, for gross proceeds of $21,359,212.25, which represents approximately 18.6% of his holdings of our common stock and approximately 11.3% of the total outstanding shares of our common stock prior to this Offering. Prior to the date of this Offering Circular, Mr. Cheishvili had sold 9,538 shares of common stock for gross proceeds of $40,536.50.

 

As of the date of this Offering Circular, approximately $142,086 had been raised from the Offering, including $42,626 sold by selling stockholders.

 

Since May 24, 2021, Davit Cheishvili, a sibling of Mr. Cheishvili, has been an employee of the Company. The employee currently receives $1,500 per month under the employee’s employment agreement and is eligible for a bonus of up to 15% of base salary every six months. During 2021, the employee received total compensation of $24,500.

 

In March 2020 we inadvertently made an overpayment to our Chief Executive Officer, Archil Cheishvili, of $67,000. We and Mr. Cheishvili did not have knowledge of such overpayment until April 2021 and wished to rectify such overpayment by requiring Mr. Cheishvili to repay us the amount of the overpayment. In April 2021 we entered into a loan agreement with Mr. Cheishvili relating to the terms of the repayment by Mr. Cheishvili of the overpayment of $67,000. Principal and interest on the $67,000 overpayment loan accrue at a rate of 2% and are due on March 30, 2024, and may be prepaid in whole or in part without penalty.

 

In April 2022, Mr. Cheishvili agreed to an amendment to his employment agreement which reduced his monthly salary to $15,208 per month. Prior to this amendment, from January to March 2022, Mr. Cheishvili received a monthly salary of $29,166.67 under his employment agreement. 

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SECURITIES BEING OFFERED

 

We are offering up to 12,329,538 shares of Class A Common Stock, and the selling stockholders are offering up to 5,284,088 shares of Class A Common Stock pursuant to this Offering Circular.

 

The following summary is a description of the material terms of our capital stock and is not complete. You should also refer to our Restated Certificate of Incorporation, our Certificate of Designations of Series A Preferred Stock, and our bylaws, which are included as exhibits to the Offering Statement of which this Offering Circular forms a part.

 

Capital Stock

 

Our authorized capital stock consists of 32,000,000 shares of Class B Common Stock, $0.0001 par value per share, 195,000,000 shares of Class A Common Stock, $0.0001 par value per share, and 50,000,000 shares of preferred stock, $0.0001 par value per share, of which 612,330 are designated as “Series A-1 Preferred Stock,” 3,688,700 are designated as “Series A-2 Preferred Stock,” 658,800 are designated as “Series A-3 Preferred Stock,” 204,280 are designated as “Series A-4 Preferred Stock,” 340,000 are designated as “Series A-5 Preferred Stock,” and 8,000,000 are designated as “Series A-6 Preferred Stock”. As of the date of this Offering Circular, we have 17,438,505 shares of Class A Common Stock outstanding, 27,070,462 shares of Class B Common Stock outstanding, and 3,687,994 shares of Series A-2 Preferred Stock outstanding, no other common stock outstanding, and no other preferred stock outstanding. The following is a summary of the rights of our capital stock as provided in our Restated Certificate of Incorporation, our Certificate of Designations of Series A Preferred Stock, and our bylaws. For more detailed information, please see our Restated Certificate of Incorporation, our Certificate of Designations, and our bylaws which have been filed as exhibits to the Offering Statement of which this Offering Circular is a part.

 

Common Stock

 

Each holder of shares of Class B Common Stock will be entitled to ten (10) votes for each share of Class B Common Stock held as of the applicable date on any matter that is submitted to a vote or for the consent of the stockholders of the Company. Each share of Class B Common Stock will be convertible, at the option of the holder thereof, at any time after the date of issuance of such share, at the office of the Company or any transfer agent for such stock, and without the payment of additional consideration by the holder thereof, into one fully paid and nonassessable share of Class A Common Stock. Each share of Class B Common Stock will automatically, without any further action, convert into one fully paid and nonassessable share of Class A Common Stock upon a transfer of such share, except that if a holder of Class B Common Stock transfers any shares of Class B Common Stock to another holder of Class B Common Stock, then such transfer will not cause the automatic conversion of the transferred shares of Class B Common Stock into Class A Common Stock.

 

Each holder of shares of Class A Common Stock will be entitled to one vote for each share of Class A Common Stock held as of the applicable date on any matter that is submitted to a vote or for the consent of the stockholders of the Company. The holders of shares of Class B Common Stock and Class A Common Stock will at all times vote together as one class on all matters except when otherwise required under the General Corporation Law of the State of Delaware or our Restated Certificate of Incorporation. Under our Restated Certificate of Incorporation and bylaws, any corporate action to be taken by vote of stockholders other than for election of directors will be authorized by the affirmative vote of the majority of votes cast. Directors are elected by a plurality of votes. Stockholders do not have cumulative voting rights.

 

Preferred Stock

 

Our board of directors has the authority, without further action by the stockholders, to issue up to 50,000,000 shares of preferred stock in one or more series and to fix the rights, powers, preferences, privileges and restrictions thereof. These rights, powers, preferences and privileges could include dividend rights, conversion rights, voting rights, redemption rights, liquidation preferences, sinking fund terms and the number of shares constituting any series or the designation of such series, any or all of which may be greater than the rights of Class A Common Stock or Class B Common Stock. The issuance of preferred stock could adversely affect the voting power of holders of Class A Common Stock and Class B Common Stock and the likelihood that such holders will receive dividend payments and payments upon liquidation. In addition, the issuance of preferred stock could have the effect of delaying, deferring or preventing a change in our control or other corporate action.

 

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Series A Preferred Stock

 

Our board of directors has used its authority to designate 612,330 shares of preferred stock as “Series A-1 Preferred Stock,” 3,688,700 shares of preferred stock as “Series A-2 Preferred Stock,” 658,800 shares of preferred stock as “Series A-3 Preferred Stock,” 204,280 shares of preferred stock as “Series A-4 Preferred Stock,” 340,000 shares of preferred stock as “Series A-5 Preferred Stock,” and 8,000,000 shares of preferred stock as “Series A-6 Preferred Stock,” with the rights and terms summarized below. We collectively refer to the Series A-1 Preferred Stock, Series A-2 Preferred Stock, Series A-3 Preferred Stock, Series A-4 Preferred Stock, Series A-5 Preferred Stock, and Series A-6 Preferred Stock as the “Series A Preferred Stock.” We created these six series of Series A Preferred Stock with varying original issue prices that correspond to the six different conversion prices of our outstanding SAFEs so that we could convert all of our outstanding SAFEs into Series A Preferred Stock with the appropriate original issue price as described below.

 

Rank

 

Each series of Series A Preferred Stock ranks senior to all Class A Common Stock and Class B Common Stock, junior to any other class or series of capital stock of the Company which specifically provides that it will rank senior in preference or priority to the Series A Preferred Stock, on parity with our other authorized classes of preferred stock, and on parity with any class or series of share capital hereafter created, the terms of which class or series are not expressly subordinated or senior to the Series A Preferred Stock, in each case as to distribution of any asset or property of the Company upon liquidation, dissolution or winding up of the Company, whether voluntary or involuntary.

 

Voting

 

Shares of Series A Preferred Stock each have one vote and vote together with the holders of common stock on an as-converted basis on all matters for which the holders of common stock vote at an annual or special meeting of stockholders or act by written consent, and as otherwise required by law.

 

Liquidation Rights

 

In the event of any voluntary or involuntary liquidation, dissolution or winding up of our company or a “deemed liquidation event” (as defined below), each holder of Series A Preferred Stock then outstanding will be entitled to be paid out of the cash and other assets of our company available for distribution to its stockholders, prior and in preference to all shares of our common stock, an amount in cash equal to the aggregate liquidation preference of all shares held by such holder. The shares have a liquidation preference of an amount per share equal to the greater of (a) the Original Issue Price (as defined below) for such share, or (b) such amount per share as would have been payable had all shares of its series of preferred stock been converted into common stock immediately prior to a liquidation, dissolution or winding up or a deemed liquidation event (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization) plus any accrued and unpaid dividends. If upon any liquidation the remaining assets available for distribution are insufficient to pay the holders of Series A Preferred Stock the full preferential amount to which they are entitled, the holders of Series A Preferred Stock will share ratably in any distribution of the remaining assets and funds in proportion to the respective full preferential amounts which would otherwise be payable, and our company will not make or agree to make any payments to the holders of common stock. A “deemed liquidation event” means, unless otherwise determined by the holders of at least a majority of each Series A Preferred Stock then outstanding (voting together as a single class on an as-converted basis), (a) a sale, lease or other transfer of all or substantially all of our assets to a non-affiliate of our company, or (b) a merger, acquisition, change of control, consolidation or other transactions or series of transactions in which our stockholders prior to such transaction or series of transactions do not retain a majority of the voting power of the surviving entity immediately following such transaction or series of transactions. The Original Issue Price is $2.00 for the Series A-1 Preferred Stock, $0.17 for the Series A-2 Preferred Stock, $0.17 for the Series A-3 Preferred Stock, $0.09 for the Series A-4 Preferred Stock, $0.10 for the Series A-5 Preferred Stock, and $0.01 for the Series A-6 Preferred Stock.

 

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Dividends

 

The Series A Preferred Stock is entitled to receive any dividends or other distributions paid on any shares of common stock. Dividends or distributions, if any, may be paid in respect of the Series A Preferred Stock at the sole discretion of the board.

 

Voluntary Conversion

 

Each share of Series A Preferred Stock is convertible, without any payment, into a number of fully paid and non-assessable shares of Class A Common Stock as is determined by dividing its Original Issue Price by the applicable conversion price, defined as initially equal to the Original Issue Price and subsequently adjusted to reflect the effect of stock splits and combinations, that is in effect at the time of conversion, rounded down to the nearest whole share.

 

Automatic Conversion

 

Upon (i) the closing of an initial public offering, (ii) the date that the Company or a successor to the Company becomes an issuer with a class of securities registered under Section 12 or subject to Section 15(d) of the Exchange Act, and is subject to the periodic and current reporting requirements of Section 13 or 15(d) of the Exchange Act, or (iii) the date and time, or the occurrence of an event, specified by vote or written consent of the holders of a majority of a class of Series A Preferred Stock at the time of such vote or consent, voting as a single class on an as-converted basis, or (iv) upon any acquisition, all outstanding shares of such class of Series A Preferred Stock will automatically be converted into shares of Class A Common Stock, at the applicable ratio described above for voluntary conversions, rounded down to the nearest whole share.

  

Stock Options

 

As of the date of this Offering Circular, we have outstanding options for the purchase of 7,593,330 shares of Class A Common Stock.

 

SAFEs

 

Since inception, the Company has raised $843,265 in exchange for securities called Simple Agreements for Future Equity (collectively, the “SAFEs”). The preferred stock issued or issuable to our former and current SAFE holders will be legally restricted from trading until such time as these shares meet the requirements of one or more exemptions from the general restrictions on the resale of private placement-issued securities under U.S. securities laws.

 

SAFEs – General

 

A SAFE is an agreement between an investor and a company in which an investor invests cash into a company and the company in turn issues a SAFE contract that will automatically convert into equity in the company if certain trigger events occur. SAFE instruments were developed for startup companies seeking substantial funds quickly. SAFEs like those we issued convert into equity upon the occurrence of agreed-upon events indicating that the company has reached sufficient maturity to be accurately valued. At that point the amount contributed by the investor will automatically convert into an amount of equity represented by the dollar amount contributed divided by the total valuation of the company, subject to a valuation cap or other special terms.

 

Our SAFEs are subject to a valuation cap. A valuation cap sets the maximum price that the SAFE instrument will convert into equity. To translate that into a share price, the valuation cap is divided by the actual valuation. If doing so results in a lower price per share, that price will apply, giving the SAFE holder shares at the valuation cap level rather than the actual valuation. For example, if the valuation cap is $1,000,000 and our actual valuation triggering the SAFE conversion is $10,000,000, the amount of shares received by the SAFE holder will be their total investment amount multiplied by 1/10 of the price per share paid by investors at the $10,000,000 valuation. In some cases, other special conversion terms will apply as discussed below with respect to our specific outstanding SAFEs.

 

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Unlike common or preferred stock, SAFEs do not represent a current equity stake and do not entitle investors to typical equity rights such as rights to dividends or voting on major corporate matters. Instead, the terms of the SAFE must be met in order for an investor to receive an equity stake with these kinds of rights. Also, unlike debt, SAFEs do not represent a right to interest payments or any current legal obligation by the SAFE issuer for the outstanding amount of a loan. If a SAFE issuer is dissolved or otherwise non-operative, SAFE holders typically have no rights to demand or receive any portion of any remaining assets, unlike debtholders and equity holders.

 

SAFEs – Specific Conversion Terms

 

The specific terms of our SAFEs, grouped with other SAFEs with the same conversion terms, follows immediately below.

 

In March 2020, the Company conducted a Regulation Crowdfunding offering in which it entered into approximately 1,063 SAFEs with investors for total gross proceeds of $625,390. These SAFEs had the following conversion terms: Upon an Equity Financing (defined for these SAFEs as a bona fide transaction or series of transactions with the principal purpose of raising capital, pursuant to which the Company issues and sells preferred stock at a fixed pre-money valuation) before the expiration or termination of these instruments, the Company must automatically issue to the SAFE investors either: (1) a number of shares of Standard Preferred Stock (defined as the shares of a series of preferred stock issued to the investors investing new money in the Company in connection with the initial closing of the Equity Financing) equal to the Purchase Price (defined as the aggregate amount received by the Company at any time) divided by the price per share of the Standard Preferred Stock (defined as the shares of a series of preferred stock issued to the investors investing new money in the Company in connection with the initial closing of the Equity Financing), if the pre-money valuation is less than or equal to the Valuation Cap (defined as $7,500,000); or (2) a number of shares of Safe Preferred Stock (defined as preferred stock with equal terms to the preferred stock issued to the new investors other than with respect to (i) the per-share liquidation preference and the conversion price for purposes of price-based anti-dilution protection, which must equal the Safe Price (defined as the price per share equal to the Valuation Cap divided by the Company Capitalization, which in turn was defined as all shares of capital stock (on an as-converted basis) issued and outstanding immediately prior to the Equity Financing, assuming exercise or conversion of all outstanding vested and unvested options, warrants and other convertible securities, but excluding (A) the SAFE instrument, (B) all other SAFEs, and (C) convertible promissory notes), and (ii) the basis for any dividend rights, which must be based on the Safe Price, equal to the Purchase Price divided by the Safe Price, if the pre-money valuation is greater than the Valuation Cap. Based on the price per share of our Series A-2 Preferred Stock of $0.17, our implied valuation of approximately $189 million, and the number of shares outstanding on the Effective Date of 44,236,880, the number of shares of Safe Preferred Stock that we were required to issue to comply with these SAFEs was 3,687,994. On December 16, 2021, our Chief Executive Officer exercised his powers as Designated Lead Investor to amend the conversion terms of these SAFEs to allow for their voluntary conversion by the Company for the amounts of shares of preferred stock that were issuable upon the occurrence of a “Qualified Equity Financing” in accordance with the original SAFE terms. The SAFEs were then convertible into 3,687,994 shares of Series A-2 Preferred Stock. As a result of these conversion terms, we converted the SAFEs and issued 3,687,994 shares of Series A-2 Preferred Stock to these former SAFE holders in December 2021.

 

Three SAFEs issued in September and October 2019 for $65,000 in total, including $49,000 in services and the remainder in cash, are convertible in accordance with their terms as follows: Upon a Qualified Equity Financing (defined for these SAFEs as a bona fide transaction or series of transactions with the principal purpose of raising capital of at least $1,000,000 or $2,000,000, depending on the SAFE, pursuant to which the Company issues and sells preferred stock at a fixed pre-money valuation) before the expiration or termination of these instruments, the Company must automatically issue to the SAFE investors either: (1) a number of shares of Standard Preferred Stock (defined as the shares of a series of preferred stock issued to the investors investing new money in the Company in connection with the initial closing of the Qualified Equity Financing) equal to the Purchase Price (defined as the aggregate amount received by the Company at any time) divided by the price per share of the Standard Preferred Stock (defined as the shares of a series of preferred stock issued to the investors investing new money in the Company in connection with the initial closing of the Qualified Equity Financing), if the pre-money valuation is less than or equal to the Valuation Cap (defined as $7,000,000); or (2) a number of shares of Safe Preferred Stock (defined as preferred stock with equal terms to the preferred stock issued to the new investors other than with respect to (i) the per-share liquidation preference and the conversion price for purposes of price-based anti-dilution protection, which must equal the Safe Price (defined as the price per share equal to the Valuation Cap divided by the Company Capitalization, which in turn was defined as all shares of capital stock (on an as-converted basis) issued and outstanding on the Effective Date (i.e., the execution date of each SAFE), assuming exercise or conversion of all outstanding vested and unvested options, warrants and other convertible securities, but excluding (A) the SAFE instrument, (B) all other SAFEs, and (C) convertible promissory notes), and (ii) the basis for any dividend rights, which must be based on the Safe Price, equal to the Purchase Price divided by the Safe Price, if the pre-money valuation is greater than the Valuation Cap. Based on the price per share of our Series A-3 Preferred Stock of $0.17, our current implied valuation of approximately $189 million, and the number of shares outstanding on the Effective Date of 40,102,300, the number of shares of Safe Preferred Stock that we are required to issue to comply with these SAFEs is 658,800.

 

47

 

 

Three SAFEs issued in June and August 2018 for $17,875 in total. These SAFEs have the following conversion terms: Upon a Qualified Equity Financing (defined for these SAFEs as a bona fide transaction or series of transactions with the principal purpose of raising capital of at least $300,000 (for the June SAFE) or $500,000 (for the August 2018 SAFEs), depending on the SAFE, pursuant to which the Company issues and sells preferred stock at a fixed pre-money valuation) before the expiration or termination of these instruments, the Company is required to automatically issue to these SAFE investors either: (1) a number of shares of Standard Preferred Stock (defined as the shares of a series of preferred stock issued to the investors investing new money in the Company in connection with the initial closing of the Qualified Equity Financing) equal to the Purchase Price (defined as the aggregate amount received by the Company at any time) divided by the price per share of the Standard Preferred Stock (defined as the shares of a series of preferred stock issued to the investors investing new money in the Company in connection with the initial closing of the Qualified Equity Financing), if the pre-money valuation is less than or equal to the Valuation Cap (defined as $3,500,000); or (2) a number of shares of Safe Preferred Stock (defined as preferred stock with equal terms to the preferred stock issued to the new investors other than with respect to (i) the per-share liquidation preference and the conversion price for purposes of price-based anti-dilution protection, which must equal the Safe Price (defined as the price per share equal to the Valuation Cap divided by the Company Capitalization, which in turn is defined as all shares of capital stock (on an as-converted basis) issued and outstanding on the Effective Date (i.e., the execution date of each SAFE), assuming exercise or conversion of all outstanding vested and unvested options, warrants and other convertible securities, but excluding (A) the SAFE instrument, (B) all other SAFEs, and (C) convertible promissory notes), and (ii) the basis for any dividend rights, which must be based on the Safe Price, equal to the Purchase Price divided by the Safe Price, if the pre-money valuation is greater than the Valuation Cap. Based on the price per share of our Series A-4 Preferred Stock of $0.09, our current implied valuation of approximately $189 million, and the number of shares outstanding on the Effective Date of 40,000,000, the number of shares of Safe Preferred Stock that we are required to issue to comply with these SAFEs is 204,280.

 

One SAFE issued in September 2018 for $35,000 is convertible in accordance with its terms as follows: Upon a Qualified Equity Financing (defined for this SAFE as a bona fide transaction or series of transactions with the principal purpose of raising capital of at least $500,000, pursuant to which the Company issues and sells preferred stock at a fixed pre-money valuation) before the expiration or termination of these instruments, the Company was required to automatically issue to this SAFE investor either: (1) a number of shares of Standard Preferred Stock (defined as the shares of a series of preferred stock issued to the investors investing new money in the Company in connection with the initial closing of the Qualified Equity Financing) equal to the Purchase Price (defined as the aggregate amount received by the Company at any time) divided by the price per share of the Standard Preferred Stock (defined as the shares of a series of preferred stock issued to the investors investing new money in the Company in connection with the initial closing of the Qualified Equity Financing), if the pre-money valuation is less than or equal to the Valuation Cap (defined as $3,500,000); or (2) a number of shares of Safe Preferred Stock (defined as preferred stock with equal terms to the preferred stock issued to the new investors other than with respect to (i) the per-share liquidation preference and the conversion price for purposes of price-based anti-dilution protection, which must equal the Safe Price (defined as the price per share equal to the Valuation Cap divided by the Company Capitalization, which in turn is defined as all shares of capital stock (on an as-converted basis) issued and outstanding on the Effective Date (i.e., the execution date of the SAFE), assuming exercise or conversion of all outstanding vested and unvested options, warrants and other convertible securities, but excluding (A) the SAFE instrument, (B) all other SAFEs, and (C) convertible promissory notes), and (ii) the basis for any dividend rights, which must be based on the Safe Price, equal to the Purchase Price divided by the Safe Price, if the pre-money valuation is greater than the Valuation Cap. Based on the price per share of our Series A-5 Preferred Stock of $0.10, our current implied valuation of approximately $189 million, and the number of shares outstanding on the Effective Date of 40,000,000, the number of shares of Safe Preferred Stock that we are required to issue to comply with this SAFE is 340,000 upon its conversion.

 

48

 

 

We issued a SAFE in August 2018 for $50,000, with the following conversion terms: Upon a Qualified Equity Financing (defined for this SAFE as a bona fide transaction or series of transactions with the principal purpose of raising capital of at least $300,000, pursuant to which the Company issues and sells preferred stock at a fixed pre-money valuation) before the expiration or termination of this instrument, the Company was required to automatically issue to the SAFE investor either: (1) a number of shares of Standard Preferred Stock (defined as the shares of a series of preferred stock issued to the investors investing new money in the Company in connection with the initial closing of the Qualified Equity Financing) equal to the Purchase Price (defined as the aggregate amount received by the Company at any time) divided by the price per share of the Standard Preferred Stock (defined as the shares of a series of preferred stock issued to the investors investing new money in the Company in connection with the initial closing of the Qualified Equity Financing), if the pre-money valuation was less than or equal to the Valuation Cap (defined as $250,000); or (2) a number of shares of Safe Preferred Stock (defined as preferred stock with equal terms to the preferred stock issued to the new investors other than with respect to (i) the per-share liquidation preference and the conversion price for purposes of price-based anti-dilution protection, which must equal the Safe Price (defined as the price per share equal to the Valuation Cap divided by the Company Capitalization, which in turn was defined as all shares of capital stock (on an as-converted basis) issued and outstanding on the Effective Date (i.e., the execution date of the SAFE), assuming exercise or conversion of all outstanding vested and unvested options, warrants and other convertible securities, but excluding (A) the SAFE instrument, (B) all other SAFEs, and (C) convertible promissory notes), and (ii) the basis for any dividend rights, which must be based on the Safe Price, equal to the Purchase Price divided by the Safe Price, if the pre-money valuation is greater than the Valuation Cap. Based on the price per share of our Series A-6 Preferred Stock of $0.01, our current implied valuation of approximately $189 million, and the number of shares outstanding on the Effective Date of 40,000,000, the number of shares of Safe Preferred Stock that we are required to issue to comply with this SAFE is 8,000,000 upon its conversion.

 

Indemnification of Officers and Directors

 

Delaware law authorizes corporations to limit or eliminate (with a few exceptions) the personal liability of directors to corporations and their stockholders for monetary damages for breaches of directors’ fiduciary duties as directors.  Our Restated Certificate of Incorporation and bylaws include provisions that eliminate, to the extent allowable under Delaware law, the personal liability of directors or officers for monetary damages for actions taken as a director or officer, as the case may be.  Our Restated Certificate of Incorporation and bylaws also provide that we must indemnify and advance reasonable expenses to our directors and officers to the fullest extent permitted by Delaware law. We currently hold directors’ and officers’ insurance covering certain liabilities that may be incurred by directors and officers in the performance of their duties.

 

The limitation of liability and indemnification provisions in our Restated Certificate of Incorporation and bylaws may discourage stockholders from bringing a lawsuit against our directors or officers for breach of their fiduciary duty.  These provisions may also have the effect of reducing the likelihood of derivative litigation against our directors and officers, even though such an action, if successful, might otherwise benefit us and our stockholders.  In addition, our stockholders may be adversely affected to the extent that, in a class action or direct suit, we pay the costs of settlement and damage awards against directors and officers pursuant to the indemnification provisions in our Restated Certificate of Incorporation and bylaws.

 

There is currently no pending litigation or proceeding involving any of our directors, officers or employees for whom indemnification is sought.

 

Transfer Agent

 

Colonial Stock Transfer Company, Inc., 66 Exchange Place, 1st floor, Salt Lake City, UT 84111, is the transfer agent for our common stock.

 

49

 

 

SELLING STOCKHOLDERS

 

Certain stockholders of the company intend to sell up to 5,284,088 shares of Class A Common Stock in this Offering at a price per share of $4.25 per share, for up to $22,457,374.20 in gross proceeds. The selling stockholders in this Offering may make offers and sales of their shares of up to 30% of the gross proceeds from this Offering, or up to $22.5 million, whichever is less. All gross proceeds will be split between the company and the selling stockholders collectively on a 70%/30% pro rata basis.

 

Each selling stockholder will participate in each closing based on its pro rata portion of the Secondary Offering, which means that at each closing, a selling stockholder will sell its pro rata portion of the shares that the selling stockholders are collectively offering (as set forth in the table below). For example, if the Company holds a closing for $1 million in gross proceeds, the Company will issue shares and receive gross proceeds of $700,000 while each of the selling stockholders will receive their pro rata portion of the remaining $300,000 in gross proceeds and will transfer their shares to investors in this Offering. The selling stockholders will not offer fractional shares and the shares represented by a selling stockholder’s pro rata portion will be determined by rounding down to the nearest whole share.

 

One of the selling stockholders will sell shares of Class A Common Stock by transferring shares of Class B Common Stock, which will automatically convert into Class A Common Stock upon such transfer. In addition, one of the selling stockholders will exercise options to purchase shares of Class A Common Stock and pay for their shares simultaneous to participating in any closing.

 

Each of the selling stockholders has entered into an irrevocable POA with the Company and an employee of the Company as attorney-in-fact, in which they direct the Company and either attorney-in-fact to take the actions necessary in connection with the offering and sale of their shares.  A form of the POA is filed as an exhibit to the Offering Statement of which this Offering Circular forms a part. 

 

The following table sets forth the names of the selling stockholders, the number of shares of Class A Common Stock that are beneficially owned as of the date of this Offering Circular, and the number of shares of Class A Common Stock being offered by the selling stockholders.

 

Name   Number of Shares of
Class A Common
Stock Beneficially
Owned
Before
Offering
    Amount of shares of Class A Common
Stock to be
Offered for the
Selling Stockholder’s
Account(1) 
    Amount of Shares of Class A
Common
Stock Beneficially Owned
After
Offering(1) 
    Stockholder’s
Pro Rata
Portion(2)
 
Archil Cheishvili     27,070,462 (3)     5,025,695       22,044,767       95.1 %
Mena Gadalla     319,942 (4)     164,335       155,607       3.1 %
Giorgi Basadzishvili     921,474       94,057       827,417       1.8 %
TOTAL                             100 %

 

*Less than 1%

 

(1) Assumes maximum number of shares are sold in this Offering and that all such shares are sold prior to any acquisition of beneficial ownership of shares of common stock.
(2) “Pro Rata Portion” represents that portion that a stockholder may sell in the Offering expressed as a percentage where the numerator is the amount offered by the stockholder divided by the total number of shares offered by all selling stockholders.
(3) Consists of Class B Common Stock owned by the selling stockholder, which will be converted into Class A Common Stock upon its sale or other transfer. See “Securities Being Offered”.
(4) Consists of (i) an option to purchase 108,889 shares of Class A Common Stock within 60 days of the date of this Offering Circular, (ii) an option to purchase 210,638 shares of Class A Common Stock within 60 days of the date of this Offering Circular, and (iii) an option to purchase 414 shares of Class A Common Stock within 60 days of the date of this Offering Circular.

 

The number and percentage of shares beneficially owned is determined in accordance with Rule 13d-3 of the Exchange Act, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rule, beneficial ownership includes any shares as to which the selling stockholder has sole or shared voting power or investment power and any shares which the selling stockholder has the right to acquire within 60 days.

 

50

 

 

LEGAL MATTERS

 

The validity of the securities offered hereby was passed upon for us by Bevilacqua PLLC.

  

EXPERTS

 

The financial statements for the years ended December 31, 2021 and 2020 included in this Offering Circular have been audited by Pinnacle Accountancy Group of Utah (a dba of Heaton & Company, PLLC), certified public accountants, an independent registered public accounting firm, as stated in their report appearing herein.  Such financial statements have been so included in reliance upon the report of such firm given upon its authority as an expert in accounting and auditing and are attached hereto as pages FS-1 through FS-16.

  

WHERE YOU CAN FIND MORE INFORMATION

 

We have filed with the SEC an offering statement on Form 1-A under the Securities Act with respect to the common stock offered by this Offering Circular. This offering circular does not contain all of the information included in the offering statement, portions of which are omitted as permitted by the rules and regulations of the SEC. For further information pertaining to us and the common stock to be sold in this Offering, you should refer to the offering statement and its exhibits. Whenever we make reference in this Offering Circular to any of our contracts, agreements or other documents, the references are not necessarily complete, and you should refer to the exhibits attached to the offering statement for copies of the actual contract, agreement or other document filed as an exhibit to the offering statement or such other document, each such statement being qualified in all respects by such reference.

 

We are subject to the informational requirements of Tier 2 of Regulation A and are required to file annual reports, semi-annual reports, current reports and other information with the SEC. You can read the offering statement and our filings with the SEC over the Internet at the SEC’s website at www.sec.gov.

 

51

 

 

Financial Statements

 

GenesisAI Corporation

 

Table of Contents

 

Audited Financial Statements

 

Fiscal Years Ended December 31, 2021 and 2020

 

Independent Accountant’s Audit Report   FS-2
     
Financial Statements and Supplementary Notes    
     
Balance Sheets as of December 31, 2021 and December 31, 2020   FS-4
     
Statements of Operations for the Years Ended December 31, 2021 and 2020   FS-5
     
Statement of Stockholders’ Equity for the Years Ended December 31, 2021 and 2020   FS-6
     
Statements of Cash Flows for the Years Ended December 31, 2021 and 2020   FS-7
     
Notes to the Financial Statements as of December 31, 2021 and December 31, 2020   FS-8

 

FS-1

 

 

INDEPENDENT AUDITOR’S REPORT

 

To the Board of Directors and Stockholders

 

GenesisAI Corporation

 

Opinion

 

We have audited the accompanying financial statements of GenesisAI Corporation (the Company) which comprises the balance sheets as of December 31, 2021 and 2020, and the related statements of operations, changes in stockholders’ equity, and cash flows for the years then ended and the related notes (collectively referred to as the financial statements).

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020 and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

 

Basis for Opinion

 

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

 

Substantial Doubt About the Company’s Ability to Continue as a Going Concern

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 5 to the financial statements, the Company has net losses and has not yet generated any revenues, which raises substantial doubt about its ability to continue as a going concern. Management’s evaluation of the events and conditions and management’s plans in regard to these matters are also described in Note 5. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to this matter.

 

Responsibilities of Management for the Financial Statements

 

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

 

Auditor’s Responsibilities for the Audit of the Financial Statements

 

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements, including omissions, are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

 

In performing an audit in accordance with generally accepted auditing standards, we:

 

Exercise professional judgment and maintain professional skepticism throughout the audit.
   
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
   
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, no such opinion is expressed.

 

FS-2

 

 

Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
   
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time.

 

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.

 

/s/ Pinnacle Accountancy Group of Utah  
Pinnacle Accountancy Group of Utah
Farmington, Utah

 

April 11, 2022

 

FS-3

 

 

GenesisAI Corporation

 

BALANCE SHEETS

December 31, 2021 and December 31, 2020

 

    Dec 30,
2021
    Dec 31,
2020
 
             
ASSETS            
             
Current Assets:            
Cash & cash equivalents     1,479,904       178,279  
Due from shareholders     67,000       67,000  
Total Current Assets     1,546,904       245,279  
                 
 Total Assets     1,546,904       245,279  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
                 
Liabilities:                
Accounts payable     1,531       190  
PPP Loans     -       20,832  
Total Liabilities     1,531       21,022  
                 
Stockholders' equity:                
Preferred stock, $0.0001 par value, 50,000,000 designated shares, 3,687,994 and 0 shares issued and outstanding as of December 31, 2021 and 2020, respectively     369       -  
 Common stock – Class A, $0.0001 par value, 195,000,000 shares authorized, 17,396,880 and 41,319,540 shares issued and outstanding as of December 31, 2021 and 2020, respectively     1,740       4,132  
Common stock – Class B, $0.0001 par value, 32,000,000 shares authorized, 27,080,000 and 0 shares issued and outstanding as of December 31, 2021 and 2020, respectively     2,708       -  
Additional paid-in capital     6,319,466       1,190,209  
Accumulated deficit     (4,778,910 )     (970,084 )
Total stockholders' equity     1,545,373       224,257  
                 
Total liabilities and stockholders' equity     1,546,904       245,279  

 

See accompanying notes to the financial statements.

 

FS-4

 

 

GenesisAI Corporation

 

STATEMENTS OF OPERATIONS

 

  2021     2020  
Revenue   -     -  
             
Gross profit   -     -  
             
Operating expenses:                
Selling, general & administrative costs     1,004,072       448,294  
Research & development     2,825,586       276,546  
Total operating expenses     3,829,658       724,839  
Total operating loss   $ (3,829,658 )   $ (724,839 )
Other Income:                
PPP loan forgiveness     20,832       -  
                 
Total other income     20,832       -  
                 
Tax provision     -       -  
                 
Net income (loss)     (3,808,826 )     (724,839 )
                 
Basic and diluted loss per share   $ (0.09 )   $ (0.02 )
Weighted Average Number of Shares Outstanding     43,891,537       40,071,025  

 

See accompanying notes to the financial statements.

 

FS-5

 

 

GenesisAI Corporation

 

STATEMENT OF STOCKHOLDERS’ EQUITY

 

For the Years Ended December 31, 2021 and 2020

 

    Preferred Stock     Class A
Common Stock
    Class B
Common Stock
    Additional
Paid-in
    Accumulated        
    Shares     Amount     Shares     Amount     Shares     Amount     Capital    

Deficit

    Total  
                                                       
Balance, December 31, 2019     -     $ -       40,102,300     $ 4,010       -     $ -     $ 278,865     $ (245,245 )   $ 37,630  
                                                                         
Sale of SAFEs     -       -       -       -       -       -       625,390       -       625,390  
Sale of common stock     -       -       1,217,240       122       -       -       285,954       -       286,076  
Net loss     -       -       -       -       -       -       -       (724,839 )     (724,839 )
                                                                         
Balance, December 31, 2020     -     $ -       41,319,540     $ 4,132       -     $ -     $ 1,190,209     $ (970,084 )   $ 224,257  
Conversion of SAFEs to preferred stock     3,687,994       369       -       -       -       -       (369 )     -       -  
Cancellation and conversion of common stock Class A to common stock Class B     -       -       (27,080,000 )     (2,708 )     27,080,000       2,708       -       -       -  
Cancellation of Class A common stock     -       -       (2,418,000 )     (242 )     -       -       242       -       -  
Sale of Class A common stock     -       -       5,335,340       534       -       -       3,331,185       -       3,331,719  
Issuance of Class A common stock for services     -       -       240,000       24       -       -       226,706       -       226,730  
Stock option expense     -       -       -       -       -       -       1,571,493       -       1,571,493  
Net loss     -       -       -       -       -       -       -       (3,808,826 )     (3,808,826 )
Balance, December 31, 2021     3,687,994     $ 369       17,396,880     $ 1,740       27,080,000     $ 2,708     $ 6,319,466     $ (4,778,910 )   $ 1,545,373  

 

See accompanying notes to the financial statements.

 

FS-6

 

 

GenesisAI Corporation

 

Statements of Cash Flows

 

    2021     2020  
Cash flows from operations            
Net loss   $ (3,808,826 )   $ (724,839 )
Adjustments to reconcile net loss to net cash used in operating activities Stock options     1,571,493       -  
Stock for services     226,730       -  
PPP loan forgiveness     (20,832 )     -  
Change in operating assets and liabilities:                
                 
Increase/Decrease in Accounts Payable/Receivable     1,341       (38,038 )
                 
Net cash provided by Operating Activities     (2,030,094 )     (762,877 )

Cash flows from financing activities

               
Proceeds from the issuance of SAFEs     -       525,390  
Proceeds from the issuance of Common Stock     3,331,719       286,076  
Net cash provided from financing activities     3,331,719       911,466  

Net increase (decrease) in cash and cash equivalents

    1,301,625       148,589  
Beginning of year - Cash     178,279       29,694  
End of year - Cash   $ 1,479,904     $ 178,279  

 

See accompanying notes to the financial statements.

 

FS-7

 

 

GenesisAI Corporation

Notes to the Financial Statements 

For the Years Ended
December 31, 2021 and December 31, 2020

 

NOTE 1 - NATURE OF OPERATIONS

GenesisAI Corporation ("GenesisAI", the "Company", or "we") was formed as a Delaware corporation on July 3, 2018. The Company's headquarters are in Florida.

The Company develops and markets an online marketplace for artificial intelligence solutions and products.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP").

Significant Risks and Uncertainties

The Company has a limited operating history. Its business and operations are subject to customary risks and uncertainties associated with dependence on key personnel, competition or change in consumer taste, and the need to obtain additional financing.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, and the reported amount of revenues and expenses during the reporting period. Actual results could materially differ from these estimates.

Significant estimates include the values of services provided in exchange for issuance of stock and accrued liabilities. It is reasonably possible that changes in estimates will occur in the near term.

Cash and Cash Equivalents

The Company considers all short term, highly liquid investments that are readily convertible, within three months of origination, to known amounts as cash equivalents.  As of December 31, 2021 and 2020, the Company had no cash equivalents.

The Company maintains its cash on deposit with a well-established and widely known bank, which management considers to be financially stable and credit worthy. Deposited cash balances are insured by the Federal Deposit Insurance Corporation ("FDIC") up to $250,000.

FS-8

 

 

Fair Value of Financial Instruments

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants as of the measurement date. Applicable accounting guidance provides an established hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company's assumptions about the factors that market participants would use in valuing the asset or liability. There are three levels of inputs that may be used to measure fair value:

Level 1- Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

 

Level 2 - Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

 

Level 3 - Unobservable inputs which are supported by little or no market activity.

 

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Fair-value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of the date of these financial statements. The respective carrying value of all financial instruments approximated their fair values. These financial instruments include SAFE notes (see Note 6). Fair values of these items have been determined to approximate their carrying values because the instruments have been outstanding for a very short time, and market circumstances have not changed materially since the instruments were originated.

 

Income Taxes

 

The Company applies ASC 740 "Income Taxes" ("ASC 740" ). Deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial statement reported amounts at each period end, based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established , when necessary, to reduce deferred tax assets to the amount expected to be realized. The provision for income taxes represents the tax expense for the period, if any, and the change during the period in deferred tax assets and liabilities. The Company has generated a net loss for the years ending December 31, 2021 and December 31, 2020 and has recorded no current income tax provision.

 

Stock Based Compensation

 

The Company accounts for share-based compensation under the provisions of ASC 718, Compensation-Stock Compensation. Under the fair value recognition provisions, stock-based compensation expense is measured at the fair value of the consideration received, or the fair value of the equity instruments issued, or liabilities incurred, whichever is more reliably measured. Share-based compensation for all stock-based awards to employees and directors is recognized as an expense over the requisite service period, which is generally the vesting period.

 

The Company accounts for stock compensation arrangements with non-employees in accordance with Accounting Standard Update (ASU) 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which requires that such equity instruments are recorded at the value on the grant date.

 

Advertising Expenses

 

The Company expenses advertising costs as they are incurred.

 

Selling, General & Administrative Costs

 

The primary components of sales, general & administrative costs are advertising, marketing & business development costs. The Company expenses advertising costs as they are incurred.

 

Research & Development

 

The Company expenses research and development costs as they are incurred. Research and development costs consist primarily of payroll, options expense, personnel costs for engineering, research and product management, prototyping costs, and contract and professional services.

 

Research and developments for the years ending December 31 2021 and 2020 were $2,825,586 and $276,546, respectively.

 

FS-9

 

 

Basic Loss per Share

 

Basic and diluted loss per share are computed based on the weighted-average common shares and common share equivalents outstanding during the period. Except with respect to certain voting, conversion and transfer rights and as otherwise expressly provided in the Company’s Articles of Incorporation or required by applicable law, shares of the Company’s Class A common stock and Class B common stock have the same rights and privileges and rank equally, share ratably and are identical in all respects as to all matters. Accordingly, basic and diluted net income (loss) per share are the same for both classes. Common share equivalents consist of stock options and restricted stock units. Common share equivalents were excluded from the computation of diluted earnings per share for the years ended December 31, 2021 and 2020, because their effect was anti-dilutive.

 

Weighted average shares of common stock outstanding used in the calculation of basic and diluted earnings per share were as follows:

 

    December 31,  
    2021     2020  
Net loss per share, basic and diluted     (0.09 )     (0.02 )
                 
Weighted average shares outstanding:                
 Class A common stock     35,953,017       40,071,025  
 Class B common stock     7,938,521       -  
Total weighted average shares outstanding     43,891,537       40,071,025  
                 
Antidilutive securities not included:                
Stock options     6,482,950       138,300  
Restricted stock grants     35,000       -  
Convertible preferred stock     -       -  
Total     6,517,950       138,300  

 

Organizational Costs

 

In accordance with FASB ASC 720, organizational costs, including accounting fees, legal fee, and costs of incorporation, are expensed as incurred.

 

NOTE 3 - CASH

 

Substantially all of the Company's cash is held in a large, widely recognized bank which is insured by the FDIC and which management considers financially stable and reliable. Cash balance was $1,479,904 and $178,279 as of December 31, 2021 and December 31, 2020, respectively.

 

NOTE 4 - STOCKHOLDERS’ EQUITY

 

Common Stock

 

In September 2021, the Company filed Amended and Restated Certificate of Incorporation, which, among other things, (a) authorizes 227,000,000 shares of Common Stock, $0.0001 par value per share, of which, (i) 195,000,000 shares shall be designated “Class A Common Stock,” $0.0001 par value per share, and (ii) 32,000,000 shares shall be designated as “Class B Common Stock,” $0.0001 par value per share, (b) authorize 50,000,000 shares of Preferred Stock, $0.0001 par value per share, and (c) effectuate a ten-for-one (10-for-1) forward split of the Company’s Common Stock. All shares amounts have been retroactively adjusted to show the forward split. The Company increased the authorized number of shares under their Stock Incentive Plan from 10,000,000 to 15,000,000.

 

Each holder of shares of Class B Common Stock shall be entitled to ten (10) votes for each share of Class B Common Stock held as of the applicable date on any matter that is submitted to a vote or for the consent of the stockholders of the Company. Each share of Class B Common Stock shall be convertible, at the option of the holder thereof, at any time after the date of issuance of such share, at the office of the Company or any transfer agent for such stock, and without the payment of additional consideration by the holder thereof, into one fully paid and nonassessable share of Class A Common Stock. Each share of Class B Common Stock shall automatically, without any further action, convert into one fully paid and nonassessable share of Class A Common Stock upon a transfer of such share, except that if a holder of Class B Common Stock transfers any shares of Class B Common Stock to another holder of Class B Common Stock, then such transfer will not cause the automatic conversion of the transferred shares of Class B Common Stock into Class A Common Stock.

 

FS-10

 

 

Each holder of shares of Class A Common Stock shall be entitled to one vote for each share of Class A Common Stock held as of the applicable date on any matter that is submitted to a vote or for the consent of the stockholders of the Company. The holders of shares of Class B Common Stock and Class A Common Stock shall at all times vote together as one class on all matters except when otherwise required under the General Corporation Law of the State of Delaware or the Company’s Certificate of Incorporation. Under the Company’s certificate of incorporation and bylaws, any corporate action to be taken by vote of stockholders other than for election of directors shall be authorized by the affirmative vote of the majority of votes cast. Directors are elected by a plurality of votes. Stockholders do not have cumulative voting rights.

 

Preferred Stock

 

The Company’s board of directors has the authority, without further action by the stockholders, to issue up to 50,000,000 shares of preferred stock in one or more series and to fix the rights, powers, preferences, privileges and restrictions thereof. These rights, powers, preferences and privileges could include dividend rights, conversion rights, voting rights, redemption rights, liquidation preferences, sinking fund terms and the number of shares constituting any series or the designation of such series, any or all of which may be greater than the rights of Class A Common Stock or Class B Common Stock. The issuance of preferred stock could adversely affect the voting power of holders of Class A Common Stock and Class B Common Stock and the likelihood that such holders will receive dividend payments and payments upon liquidation. In addition, the issuance of preferred stock could have the effect of delaying, deferring or preventing a change in the Company’s control or other corporate action.

 

Series A Preferred Stock

 

The Company’s board of directors has used its authority to designate 612,330 shares of preferred stock as “Series A-1 Preferred Stock,” 3,688,700 shares of preferred stock as “Series A-2 Preferred Stock,” 658,800 shares of preferred stock as “Series A-3 Preferred Stock,” 204,280 shares of preferred stock as “Series A-4 Preferred Stock,” 340,000 shares of preferred stock as “Series A-5 Preferred Stock,” and 8,000,000 shares of preferred stock as “Series A-6 Preferred Stock,” with the rights and terms summarized below. The Company collectively refer to the Series A-1 Preferred Stock, Series A-2 Preferred Stock, Series A-3 Preferred Stock, Series A-4 Preferred Stock, Series A-5 Preferred Stock, and Series A-6 Preferred Stock as the “Series A Preferred Stock.” The Company created these six series of Series A Preferred Stock with varying original issue prices that correspond to the six different conversion prices of the Company’s outstanding SAFEs so that the Company could convert all of their outstanding SAFEs into Series A Preferred Stock with the appropriate original issue price as described below.

 

Series A Preferred Stock - Rank

 

Each series of Series A Preferred Stock ranks senior to all Class A Common Stock and Class B Common Stock, junior to any other class or series of capital stock of the Company which specifically provides that it will rank senior in preference or priority to the Series A Preferred Stock, on parity with the Company’s other authorized classes of preferred stock, and on parity with any class or series of share capital hereafter created, the terms of which class or series are not expressly subordinated or senior to the Series A Preferred Stock, in each case as to distribution of any asset or property of the Company upon liquidation, dissolution or winding up of the Company, whether voluntary or involuntary.

 

Series A Preferred Stock - Voting

 

Shares of Series A Preferred Stock each have one vote and vote together with the holders of Common Stock on an as-converted basis on all matters for which the holders of Common Stock vote at an annual or special meeting of stockholders or act by written consent, and as otherwise required by law.

 

Series A Preferred Stock - Liquidation Rights

 

In the event of any voluntary or involuntary liquidation, dissolution or winding up of our company or a “deemed liquidation event” (as defined below), each holder of Series A Preferred Stock then outstanding shall be entitled to be paid out of the cash and other assets of the Company available for distribution to its stockholders, prior and in preference to all shares of Common Stock, an amount in cash equal to the aggregate liquidation preference of all shares held by such holder. The shares have a liquidation preference of an amount per share equal to the greater of (a) the Original Issue Price (as defined below) for such share, or (b) such amount per share as would have been payable had all shares of its series of Preferred Stock been converted into Common Stock immediately prior to a liquidation , dissolution or winding up or a deemed liquidation event (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization) plus any accrued and unpaid dividends. If upon any liquidation the remaining assets available for distribution are insufficient to pay the holders of Series A Preferred Stock the full preferential amount to which they are entitled, the holders of Series A Preferred Stock shall share ratably in any distribution of the remaining assets and funds in proportion to the respective full preferential amounts which would otherwise be payable, and our company shall not make or agree to make any payments to the holders of Common Stock. A “deemed liquidation event” means, unless otherwise determined by the holders of at least a majority of each Series A Preferred Stock then outstanding (voting together as a single class on an as-converted basis), (a) a sale, lease or other transfer of all or substantially all of our assets to a non-affiliate of our company, or (b) a merger, acquisition, change of control, consolidation or other transactions or series of transactions in which the Company’s stockholders prior to such transaction or series of transactions do not retain a majority of the voting power of the surviving entity immediately following such transaction or series of transactions. The Original Issue Price is $2.00 for the Series A-1 Preferred Stock, $0.17 for the Series A-2 Preferred Stock, $0.17 for the Series A-3 Preferred Stock, $0.09 for the Series A-4 Preferred Stock, $0.10 for the Series A-5 Preferred Stock, and $0.01 for the Series A-6 Preferred Stock.

 

FS-11

 

 

Series A Preferred Stock - Dividends

 

The Series A Preferred Stock is entitled to receive any dividends or other distributions paid on any shares of common stock. Dividends or distributions, if any, may be paid in respect of the Series A Preferred Stock at the sole discretion of the Company’s board.

 

Voluntary Conversion

 

Each share of Series A Preferred Stock is convertible, without any payment, into a number of fully paid and non-assessable shares of Class A Common Stock as is determined by dividing its Original Issue Price by the applicable conversion price, defined as initially equal to the Original Issue Price and subsequently adjusted to reflect the effect of stock splits and combinations, that is in effect at the time of conversion, rounded down to the nearest whole share.

 

Automatic Conversion

 

Upon (i) the closing of an initial public offering, (ii) the date that the Company or a successor to the Company becomes an issuer with a class of securities registered under Section 12 or subject to Section 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and is subject to the periodic and current reporting requirements of Section 13 or 15(d) of the Exchange Act, or (iii) the date and time, or the occurrence of an event, specified by vote or written consent of the holders of a majority of a class of Series A Preferred Stock at the time of such vote or consent, voting as a single class on an as-converted basis, or (iv) upon any acquisition, all outstanding shares of such class of Series A Preferred Stock will automatically be converted into shares of Class A Common Stock, at the applicable ratio described above for voluntary conversions, rounded down to the nearest whole share.

 

Stock Issuances

 

GenesisAI’s president was entitled to an annual bonus in the amount of $70,000 under his employment agreement with the Company. He agreed to waive his bonus as partial consideration for the cancellation and exchange of 27,080,000 shares of his Class A Common Stock for the same number of shares of Class B Common Stock.

 

During the year ended December 31, 2021, the Company issued 5,335,340 of Class A common stock for total proceeds of $ 3,331,719 to investors via a Crowdfunding portal. During the year ended December 31, 2020, the Company issued 1,271,240 shares of common stock for total proceeds of $286,076 to investors via a Crowdfunding portal.

 

During the year ended December 31, 2021, the Company amended employment agreements with several employees which resulted in the cancellation of 2,418,000 shares of Class A common stock.

 

During the year ended December 31, 2021, the Company issued 240,000 restricted stock units (RSUs) of Class A common stock to an advisor for services. 180,000 of the RSUs vested immediately and the remaining 60,000 RSUs vest at a rate of 1/12 per month. As of December 31, 2021, 205,000 of the RSU’s have vested and $226,730 has been recorded as stock for services.

 

Activity related to our restricted stock units during the year ended December 31, 2021 was as follows:

 

    Number of Units     Weighted Average Grant Date Fair Value  
Total awards outstanding at December 31, 2020     -     $ -  
Units granted     240,000     $ 1.106  
Units Exercised/Released     (205,000 )   $ 1.106  
Units Cancelled/Forfeited     -     $ -  
Total awards outstanding at December 31, 2021     35,000     $ 1.106  

 

As of December 31, 2021, the remaining unrecognized expense related to the RSUs was $38,710.

 

FS-12

 

 

Stock Options

 

The Corporation adopted the 2018 Stock Incentive Plan (the "Plan"), pursuant to which the Corporation may grant incentive stock options, non-statutory stock options, and other stock awards for the purchase of an aggregate of 15,000,000 shares of Common Stock as of December 31, 2021.

 

On December 1, 2020, the Company granted 138,300 stock options under this plan to a consultant. The stock options had an exercise price of $0.311 and will expire after 10 years. The stock options vest over a four year period with 25% vesting and becoming exercisable on the one year anniversary of the grant date and the remaining stock options vesting at a rate of 1/36 on a monthly basis over the remaining three years.

 

During the year ended December 31, 2021, the Company granted a total of 6,344,650 stock options under the Plan to various consultants. The stock options had exercise prices between $1.106 and $2.00 and expire after 10 years. The vesting terms of the stock options are as follows:

 

· 355,530 stock options vest over a three-year period with 129,230 of the stock options becoming exercisable immediately and the remaining stock options will vest and become exercisable at a rate of 1/36 on a monthly basis over the three year term of the award.
· 676,990 stock options vested immediately on June 2, 2021 which was the grant date.
· 3,253,350 stock options vest and become exercisable at a rate of 1/36 on a monthly basis over the three year term of the award.
· 2,058,780 stock options vest and become exercisable at a rate of 1/48 on a monthly basis over the four year term of the award.

 

The fair value of options granted for the year ended December 31, 2021 was estimated on the date of grant using the Black-Scholes-Merton Model that uses assumptions noted in the following table.

 

     2021  
Expected term (in years)     10  
Expected stock price volatility     105.3 to 118.1
Risk-free interest rate       1.52 to 1.59
Expected dividend yield     0  

 

During the year ended December 31, 2021, the Company recorded a total of $1,571,517 in stock option expense related to the issuance and vesting of the stock options. The total remaining unrecognized stock option expense is $4,815,933.

 

Stock option transactions are as follows:

 

          Weighted     Weighted  
          Average     Average  
          Exercise     Remaining  
    Shares     Price     Term  
Outstanding at January 1, 2020     -     $ -       -  
Granted     138,300       0.31       10 yrs  
Exercised     -       -       -  
 Forfeited     -       -       -  
Outstanding at December 31, 2020     138,300     $ 0.31       10 yrs  
                         
Granted     6,344,650       1.14       10 yrs  
Exercised     -       -       -  
 Forfeited     -       -       -  
Outstanding at December 31, 2021     6,482,950     $ 1.13       9.68 yrs  
Exercisable at December 31, 2021     1,567,840     $ 1.09       9.68 yrs  

 

FS-13

 

 

SAFEs

 

Since inception and through December 31, 2020, the Company had raised $843,265 in exchange for several Simple Agreements for Future Equity (collectively, the "SAFEs") and these amounts have been recorded to additional paid-in capital. During the year ended December 31, 2021, $625,021 of the SAFEs were converted into 3,687,994 shares of preferred stock. As of December 31, 2021, the remaining amounts related to SAFEs was $217,875. On December 16, 2021, the Company’s Chief Executive Officer exercised his powers as Designated Lead Investor to amend the conversion terms of SAFEs that were issued in exchange for proceeds of $625,390 to allow for their voluntary conversion by the Company for the amounts of shares of preferred stock that were issuable upon the occurrence of a “Qualified Equity Financing” in accordance with the original SAFE terms. The converted SAFEs were then converted into 3,687,994 shares of Series A-2 Preferred Stock. These shares were granted for no consideration other than the original purchase amounts for the outstanding SAFE instruments. The Company granted these shares to the former SAFE holders pursuant to a private placement exemption from registration requirements

 

As of December 31, 2021, the remaining balance of SAFEs was $217,875. The terms of the remaining SAFEs are below.

 

An amount of $37,625 of the outstanding SAFEs will convert into a number of shares of Safe Preferred Stock equal to $37,625. If there is a Qualified Equity Financing (defined as more than $500,000 worth of shares being purchased) before the expiration or termination of this instrument, the Company will automatically issue to the Investor either: (1) a number of shares of Standard Preferred Stock equal to the Purchase Price divided by the price per share of the Standard Preferred Stock, if the pre-money valuation is less than or equal to the Valuation Cap; or (2) a number of shares of Safe Preferred Stock equal to the Purchase Price divided by the Safe Price, if the pre-money valuation is greater than the Valuation Cap (defined as $3,500,000).

 

An amount of $15,250 of the outstanding SAFEs from 2019 will convert upon the following terms: If there is a Qualified Equity Financing (defined as more than $300,000 worth of shares being purchased) before the expiration or termination of this instrument, the Company will automatically issue to the Investor either: (1) a number of shares of Standard Preferred Stock equal to the Purchase Price divided by the price per share of the Standard Preferred Stock, if the pre-money valuation is less than or equal to the Valuation Cap; or (2) a number of shares of Safe Preferred Stock equal to the Purchase Price divided by the Safe Price, if the pre-money valuation is greater than the Valuation Cap (defined as $3,500,000).

 

An amount of $50,000 of the outstanding SAFEs from 2019 will convert upon the following terms: If there is a Qualified Equity Financing (defined as more than $300,000 worth of shares being purchased) before the expiration or termination of this instrument, the Company will automatically issue to the Investor either: (1) a number of shares of Standard Preferred Stock equal to the Purchase Price divided by the price per share of the Standard Preferred Stock, if the pre-money valuation is less than or equal to the Valuation Cap; or (2) a number of shares of Safe Preferred Stock equal to the Purchase Price divided by the Safe Price, if the pre-money valuation is greater than the Valuation Cap (defined as $250,000 }.

 

In 2019, the Company has raised an additional $66,000 cash in exchange for several Simple Agreements for Future Equity (collectively, the "2019 SAFEs") that were worth $115,000; $49,000 of the SAFEs were issued in exchange for advisory services instead of cash. Upon a bona fide transaction or series of transactions with the principal purpose of raising capital, pursuant to which the Company issues and sells preferred stock at a fixed pre-money valuation (an "Equity Financing"), an amount of $115,000 of the outstanding SAFEs will convert into a number of shares of Safe Preferred Stock equal to $115,000. If there is a Qualified Equity Financing (defined as $1,000,000 for $40,000 of the 2019 SAFEs; $1,200,000 for $25,000 of the 2019 SAFEs, $2,000,000 for $50,000 of the 2019 SAFEs worth of shares being purchased) before the expiration or termination of this instrument, the Company will automatically issue to the Investor either : (1) a number of shares of Standard Preferred Stock equal to the Purchase Price divided by the price per share of the Standard Preferred Stock, if the pre-money valuation is less than or equal to the Valuation Cap; or (2) a number of shares of Safe Preferred Stock equal to the Purchase Price divided by the Safe Price, if the pre-money valuation is greater than the Valuation Cap (defined as $7,000,000).

 

FS-14

 

 

NOTE 5 - GOING CONCERN

 

These financial statements are prepared on a going concern basis. The Company began operations in 2018 and has incurred losses since Inception. Since Inception, the Company has relied on securing shareholder investments and contributions from the founders. As of December 31, 2021, the Company had not yet generated revenues and will likely continue to incur losses until it is able to begin generating revenues sufficient to cover its operating costs. These matters raise substantial doubt about the Company's ability to continue as a going concern. During the next 12 months, the Company intends to fund its operations with additional funding and funds from revenue producing activities, if and when such can be realized. If the Company cannot secure additional short-term capital, it may cease operations. The financial statements do not include any adjustments that might be necessary if the Company is not able to continue as a going concern.

 

NOTE 6 – RELATED PARTY TRANSACTIONS

 

In March 2020, the Company inadvertently made an overpayment to our CEO of $67,000. The Company and its CEO did not have knowledge of such overpayment until April 2021 and wished to rectify such overpayment by requiring the CEO to repay the Company the amount of the overpayment. In April 2021 we entered into a loan agreement with the CEO relating to the terms of the repayment by the CEO of the overpayment of $67,000. Principal and interest on the $67,000 overpayment loan accrue at a rate of 2% and are due on March 30, 2024, and may be prepaid in whole or in part without penalty.

 

GenesisAI’s president was entitled to an annual bonus in the amount of $70,000 under his employment agreement with the Company. He agreed to waive his bonus as partial consideration for the cancellation and exchange of 27,080,000 shares of his Class A Common Stock for the same number of shares of Class B Common Stock (See Note 4).

 

NOTE 7 – PPP LOAN

 

On May 21, 2020, the Company received a Paycheck Protection Program loan of $20,832 bearing interest of 1%. Principal and interest must be repaid on a monthly basis for the 2-year term of the loan. On April 26, 2021, the full amount of the loan was forgiven. The forgiveness has been recorded as other income.

 

NOTE 8 - INCOME TAXES

 

The Company follows the provisions of ASC 740, “Income Taxes.” This standard requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements. As a result of the implementation of this standard, the Company performed a review of its material tax positions in accordance with recognition and measurement standards established by ASC 740.

 

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry-forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

 

Deferred tax assets and the valuation account are as follows:

 

    December 31,
2021
    December 31,
2020
 
Deferred tax assets:            
NOL carryover   $ 630,319       203,718  
Valuation allowance     (630,319 )     (203,718 )
Net deferred tax asset   $ -       -  

 

FS-15

 

 

The income tax provision differs from the amount of income tax determined by applying the U.S. federal and state income tax rates of 21% to pretax income from continuing operations for the period ended December 31, 2021.

 

The components of income tax expense for the years ending December 31, 2021 and 2020 are as follows: 

 

    December 31,
2021
    December 31,
2020
 
             
Book loss   $ 799,853       152,217  
Stock-based compensation     (377,627 )     -  
Gain on forgiveness of PPP loan     4,375       -  
Change in NOL valuation allowance     (426,601 )     (152,217 )
    $    -       -  

 

The Company currently has no issues creating timing differences that would mandate deferred tax expense. Net operating losses would create possible tax assets in future years. Due to the uncertainty of the utilization of net operating loss carry forwards, a valuation allowance has been made to the extent of any tax benefit that net operating losses may generate. A provision for income taxes has not been made due to net operating loss carry-forwards of $3,001,519 as of December 31, 2021, which may be offset against future taxable income. No tax benefit has been reported in the financial statements.

 

The Company did not have any tax positions for which it is reasonably possible that the total amount of unrecognized tax benefits will significantly increase or decrease within the next 12 months.

 

The Company includes interest and penalties arising from the underpayment of income taxes in the consolidated statements of operations in the provision for income taxes. As of December 31, 2021, the Company had no accrued interest or penalties related to uncertain tax positions.

 

All tax years since inception remain subject to examination by major taxing jurisdictions.

 

NOTE 9 - SUBSEQUENT EVENTS

 

The Company has evaluated subsequent events from December 31, 2021, through April 11, 2022, the date when the financial statements were available to be issued and has determined the following items needed to be disclosed:

 

· The Company issued 889,538 stock options to and employee at an exercise price of $2.00. The stock options will expire after 10 years and began vesting on January 3, 2022 at a rate of 1/48 on a monthly basis over the four year term of the award.

 

FS-16

 

 

PART III – EXHIBITS

 

Exhibit Index

 

Exhibit No.   Description
1.1   Broker-Dealer Agreement, dated as of October 28, 2021, between GenesisAI Corporation and Dalmore Group, LLC (incorporated by reference to Exhibit 1.1 to the Offering Statement on Form 1-A filed on February 1, 2022)
2.1   Restated Certificate of Incorporation of GenesisAI Corporation (incorporated by reference to Exhibit 2.1 to the Offering Statement on Form 1-A filed on February 1, 2022)
2.2   Certificate of Designations of Series A Preferred Stock of GenesisAI Corporation (incorporated by reference to Exhibit 2.2 to the Offering Statement on Form 1-A filed on February 1, 2022)
2.3   Bylaws of GenesisAI Corporation (incorporated by reference to Exhibit 2.3 to the Offering Statement on Form 1-A filed on February 1, 2022)
3.1   Form of Irrevocable Power of Attorney (incorporated by reference to Exhibit 3.1 to the Offering Statement on Form 1-A filed on February 1, 2022)
4.1   Form of Subscription Agreement for Class A Common Stock
6.1   Employment Agreement, dated April 6, 2021, between GenesisAI Corporation and Archil Cheishvili (incorporated by reference to Exhibit 6.1 to the Offering Statement on Form 1-A filed on February 1, 2022)
6.2   Amendment to Employment Agreement, dated May 24, 2021, between GenesisAI Corporation and Archil Cheishvili (incorporated by reference to Exhibit 6.2 to the Offering Statement on Form 1-A filed on February 1, 2022)
6.3   Amendment to Employee Offer Letter, dated April 14, 2022, between GenesisAI Corporation and Archil Cheishvili
6.4   Form of Independent Director Agreement between GenesisAI Corporation and each independent director (incorporated by reference to Exhibit 6.3 to the Offering Statement on Form 1-A filed on February 1, 2022)
6.5   Form of Indemnification Agreement between GenesisAI Corporation and each independent director (incorporated by reference to Exhibit 6.4 to the Offering Statement on Form 1-A filed on February 1, 2022)
6.6   Cancellation and Exchange Agreement, dated September 21, 2021, between GenesisAI Corporation and Archil Cheishvili
10.1   Power of Attorney (included on the signature page of this Offering Statement)
11.1   Consent of Heaton & Company, PLLC (dba Pinnacle Accountancy Group of Utah)
11.2   Consent of Bevilacqua PLLC (included in Exhibit 12.1)
12.1   Opinion of Bevilacqua PLLC (incorporated by reference to Exhibit 12.1 to the Offering Statement on Form 1-A filed on February 1, 2022)
15.1   2018 Stock Incentive Plan of GenesisAI Corporation (incorporated by reference to Exhibit 15.1 to the Offering Statement on Form 1-A filed on February 1, 2022)
15.2   Amendment No. 1 to 2018 Stock Incentive Plan of GenesisAI Corporation (incorporated by reference to Exhibit 15.2 to the Offering Statement on Form 1-A filed on February 1, 2022)
15.3   Form of Stock Option Agreement (2018 Stock Incentive Plan of GenesisAI Corporation, as amended) (incorporated by reference to Exhibit 15.3 to the Offering Statement on Form 1-A filed on February 1, 2022)
15.4   Form of Restricted Stock Award Agreement (2018 Stock Incentive Plan of GenesisAI Corporation, as amended) (incorporated by reference to Exhibit 15.4 to the Offering Statement on Form 1-A filed on February 1, 2022)
99.1   Supplemental content on the GenesisAI Corporation website and investor deck as of March 17, 2022

 

III-1

 

SIGNATURES

 

Pursuant to the requirements of Regulation A, the issuer certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form 1-A and has duly caused this Offering statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Miami, State of Florida, on June 30, 2022.

 

  GenesisAI Corporation  
   
  By:  /s/ Archil Cheishvili
    Archil Cheishvili
    President, Chief Executive Officer, Principal Financial Officer, Principal Accounting Officer, and Director

 

This offering statement has been signed by the following persons, in the capacities, and on the dates indicated.

 

SIGNATURE   TITLE   DATE
         
/s/ Archil Cheishvili   President, Chief Executive Officer, Principal Financial Officer,   June 30, 2022
Archil Cheishvili   Principal Accounting Officer, and Director    
         
*   Director   June 30, 2022
Shota Shanidze      
         
*   Director     June 30, 2022
Levan Silagadze      

 

* By: /s/ Archil Cheishvili  
  Archil Cheishvili  
  Attorney-in-Fact  

 

 

III-2

 

 

Exhibit 4.1

 

SUBSCRIPTION AGREEMENT

 

THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. THIS INVESTMENT IS SUITABLE ONLY FOR PERSONS WHO CAN BEAR THE ECONOMIC RISK FOR AN INDEFINITE PERIOD OF TIME AND WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT. FURTHERMORE, INVESTORS MUST UNDERSTAND THAT SUCH INVESTMENT IS ILLIQUID AND IS EXPECTED TO CONTINUE TO BE ILLIQUID FOR AN INDEFINITE PERIOD OF TIME. NO PUBLIC MARKET EXISTS FOR THE SECURITIES, AND NO PUBLIC MARKET IS EXPECTED TO DEVELOP FOLLOWING THIS OFFERING.

 

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES OR BLUE SKY LAWS AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND STATE SECURITIES OR BLUE SKY LAWS. ALTHOUGH AN OFFERING STATEMENT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE “SEC”), THAT OFFERING STATEMENT DOES NOT INCLUDE THE SAME INFORMATION THAT WOULD BE INCLUDED IN A REGISTRATION STATEMENT UNDER THE SECURITIES ACT. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC, ANY STATE SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON THE MERITS OF THIS OFFERING OR THE ADEQUACY OR ACCURACY OF THE SUBSCRIPTION AGREEMENT OR ANY OTHER MATERIALS OR INFORMATION MADE AVAILABLE TO SUBSCRIBER IN CONNECTION WITH THIS OFFERING OVER THE WEB-BASED PLATFORM MAINTAINED BY OR FOR THE COMPANY (THE “PLATFORM”). ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

 

INVESTORS WHO ARE NOT “ACCREDITED INVESTORS” (AS THAT TERM IS DEFINED IN SECTION 501 OF REGULATION D PROMULGATED UNDER THE ACT) ARE SUBJECT TO LIMITATIONS ON THE AMOUNT THEY MAY INVEST, AS SET OUT IN SECTION 4. THE COMPANY IS RELYING ON THE REPRESENTATIONS AND WARRANTIES SET FORTH BY EACH SUBSCRIBER IN THIS SUBSCRIPTION AGREEMENT AND THE OTHER INFORMATION PROVIDED BY SUBSCRIBER IN CONNECTION WITH THIS OFFERING TO DETERMINE THE APPLICABILITY TO THIS OFFERING OF EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE ACT.

 

THE OFFERING MATERIALS MAY CONTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO, AMONG OTHER THINGS, THE COMPANY, ITS BUSINESS PLAN AND STRATEGY, AND ITS INDUSTRY. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON THE BELIEFS OF, ASSUMPTIONS MADE BY, AND INFORMATION CURRENTLY AVAILABLE TO THE COMPANY’S MANAGEMENT. WHEN USED IN THE OFFERING MATERIALS, THE WORDS “ESTIMATE,” “PROJECT,” “BELIEVE,” “ANTICIPATE,” “INTEND,” “EXPECT” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS, WHICH CONSTITUTE FORWARD LOOKING STATEMENTS. THESE STATEMENTS REFLECT MANAGEMENT’S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE THE COMPANY’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN THE FORWARD- LOOKING STATEMENTS. INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE ON WHICH THEY ARE MADE. THE COMPANY DOES NOT UNDERTAKE ANY OBLIGATION TO REVISE OR UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER SUCH DATE OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.

 

THE COMPANY MAY NOT BE OFFERING THE SECURITIES IN EVERY STATE. THE OFFERING MATERIALS DO NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY STATE OR JURISDICTION IN WHICH THE SECURITIES ARE NOT BEING OFFERED.

 

THE COMPANY RESERVES THE RIGHT IN ITS SOLE DISCRETION AND FOR ANY REASON WHATSOEVER TO MODIFY, AMEND AND/OR WITHDRAW ALL OR A PORTION OF THE OFFERING AND/OR ACCEPT OR REJECT IN WHOLE OR IN PART ANY PROSPECTIVE INVESTMENT IN THE SECURITIES OR TO ALLOT TO ANY PROSPECTIVE INVESTOR LESS THAN THE AMOUNT OF SECURITIES SUCH INVESTOR DESIRES TO PURCHASE. EXCEPT AS OTHERWISE INDICATED, THE OFFERING MATERIALS SPEAK AS OF THEIR DATE. NEITHER THE DELIVERY NOR THE PURCHASE OF THE SECURITIES SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THAT DATE.

 

 

 

 

TO: GenesisAI Corporation  
  201 SE 2nd Ave.  
  Miami, Florida 33131  

 

Ladies and Gentlemen:

 

1. Subscription.

 

(a) The undersigned (“Subscriber”) hereby irrevocably subscribes for and agrees to purchase the Class A Common Stock, par value $0.0001 (the “Securities”), of GenesisAI Corporation, a Delaware corporation (the “Company”), at a purchase price of $4.25 per share of the Securities (the “Per Security Price”), upon the terms and conditions set forth herein. The minimum subscription per Subscriber is 59 shares of the Securities. The rights of the Securities are as set forth in the Restated Certificate of Incorporation included as an exhibit to the Offering Statement of the Company filed with the SEC (the “Offering Statement”).

 

(b) Subscriber understands that the Securities are being offered pursuant to an offering circular dated [   ], 2022 (the “Offering Circular”) filed with the SEC as part of the Offering Statement. By executing this Subscription Agreement, Subscriber acknowledges that Subscriber has received this Subscription Agreement, copies of the Offering Circular and Offering Statement including exhibits thereto and any other information required by the Subscriber to make an investment decision.

 

(c) The Subscriber’s subscription may be accepted or rejected in whole or in part, at any time prior to a Closing Date (as hereinafter defined), by the Company at its sole discretion. In addition, the Company, at its sole discretion, may allocate to Subscriber only a portion of the number of Securities Subscriber has subscribed for. The Company will notify Subscriber whether this subscription is accepted (whether in whole or in part) or rejected. If Subscriber’s subscription is rejected, Subscriber’s payment (or portion thereof if partially rejected) will be returned to Subscriber within 30 days of such rejection without interest and all of Subscriber’s obligations hereunder shall terminate.

 

(d) The aggregate number of Securities sold shall not exceed 17,613,626 shares issued for cash consideration (the “Maximum Offering”). The Company may accept subscriptions until February 17, 2023, unless otherwise extended by the Company in its sole discretion in accordance with applicable SEC regulations for such other period required to sell the Maximum Offering (the “Termination Date”). The Company may elect at any time to close all or any portion of this offering, on various dates at or prior to the Termination Date (each a “Closing Date”).

 

(e) In the event of rejection of this subscription in its entirety, or in the event the sale of the Securities (or any portion thereof) is not consummated for any reason, this Subscription Agreement shall have no force or effect, except for Section 5 hereof, which shall remain in force and effect.

 

(f) The terms of this Subscription Agreement shall be binding upon Subscriber and its transferees, heirs, successors and assigns (collectively, “Transferees”); provided that for any such transfer to be deemed effective, the Transferee shall have executed and delivered to the Company in advance an instrument in a form acceptable to the Company in its sole discretion, pursuant to which the proposed Transferee shall acknowledge, agree, and be bound by the representations and warranties of Subscriber and terms of this Subscription Agreement. The Company shall not record any transfer of Securities on its books unless and until such Transferee shall have complied with the terms of this Section 1(g).

 

2. Purchase Procedure.

 

(a) Payment. The purchase price for the Securities shall be paid simultaneously with the execution and delivery to the Company of the signature page of this Subscription Agreement. Subscriber shall deliver a signed copy of this Subscription Agreement, along with payment for the aggregate purchase price of the Securities by ACH electronic transfer or wire transfer to an account designated by the Company, by credit or debit card, or by any combination of such methods, subject to the Company’s right to reject payments made by wire transfer in the Company’s sole discretion.

 

(b) No Escrow. Payment for the Securities shall be received by the Company into a segregated account from the undersigned by transfer of immediately available funds, credit or debit card, or other means approved by the Company at least two days prior to the applicable Closing Date, in the amount as set forth on the signature page hereto. Funds will be immediately available to the Company upon acceptance of the subscription. The undersigned shall receive notice and evidence of the digital entry of the number of the Securities owned by undersigned reflected on the books and records of the Company and verified by Colonial Stock Transfer Company, Inc. (the “Transfer Agent”), which books and records shall bear a notation that the Securities were sold in reliance upon Regulation A.

 

2

 

 

3. Representations and Warranties of the Company.

 

The Company represents and warrants to Subscriber that the following representations and warranties are true and complete in all material respects as of the date of each Closing Date, except as otherwise indicated. For purposes of this Agreement, an individual shall be deemed to have “knowledge” of a particular fact or other matter if such individual is actually aware of such fact. The Company will be deemed to have “knowledge” of a particular fact or other matter if one of the Company’s current officers has, or at any time had, actual knowledge of such fact or other matter.

 

(a) Organization and standing. The Company is a corporation duly formed, validly existing and in good standing under the laws of the State of Delaware. The Company has all requisite power and authority to own and operate its properties and assets, to execute and deliver this Subscription Agreement, and any other agreements or instruments required hereunder. The Company is duly qualified and is authorized to do business and is in good standing as a foreign corporation in all jurisdictions in which the nature of its activities and of its properties (both owned and leased) makes such qualification necessary, except for those jurisdictions in which failure to do so would not have a material adverse effect on the Company or its business.

 

(b) Issuance of the Securities. The issuance, sale and delivery of the Securities in accordance with this Subscription Agreement has been duly authorized by all necessary corporate action on the part of the Company. The Securities, when so issued, sold and delivered against payment therefor in accordance with the provisions of this Subscription Agreement, will be duly and validly issued, fully paid and non-assessable.

 

(c) Authority for Agreement. The execution and delivery by the Company of this Subscription Agreement and the consummation of the transactions contemplated hereby (including the issuance, sale and delivery of the Securities) are within the Company’s powers and have been duly authorized by all necessary corporate action on the part of the Company. Upon full execution hereof, this Subscription Agreement shall constitute a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies and (iii) with respect to provisions relating to indemnification and contribution, as limited by considerations of public policy and by federal or state securities laws.

 

(d) No filings. Assuming the accuracy of the Subscriber’s representations and warranties set forth in Section 4 hereof, no order, license, consent, authorization or approval of, or exemption by, or action by or in respect of, or notice to, or filing or registration with, any governmental body, agency or official is required by or with respect to the Company in connection with the execution, delivery and performance by the Company of this Subscription Agreement except (i) for such filings as may be required under Regulation A or under any applicable state securities laws, (ii) for such other filings and approvals as have been made or obtained, or (iii) where the failure to obtain any such order, license, consent, authorization, approval or exemption or give any such notice or make any filing or registration would not have a material adverse effect on the ability of the Company to perform its obligations hereunder.

 

(e) Capitalization. The authorized and outstanding securities of the Company immediately prior to the initial investment in the Securities is as set forth under “Securities Being Offered” in the Offering Circular. Except as set forth in the Offering Circular, as of the date of the Offering Circular, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), or agreements of any kind (oral or written) for the purchase or acquisition from the Company of any of its securities.

 

(f) Financial statements. Complete copies of the Company’s financial statements of the Company (the “Financial Statements) have been made available to the Subscriber and appear in the Offering Circular. The Financial Statements are based on the books and records of the Company and fairly present in all material respects the financial condition of the Company as of the respective dates that they was prepared. Pinnacle Accountancy Group of Utah, which has audited or reviewed the Financial Statements, is an independent accounting firm within the rules and regulations adopted by the SEC.

 

(g) Proceeds. The Company shall use the proceeds from the issuance and sale of the Securities as set forth in “Use of Proceeds” in the Offering Circular.

 

(h) Litigation. Except as set forth in the Offering Circular, there is no pending action, suit, proceeding, arbitration, mediation, complaint, claim, charge or investigation before any court, arbitrator, mediator or governmental body, or to the Company’s knowledge, currently threatened in writing (a) against the Company or (b) against any consultant, officer, manager, director or key employee of the Company arising out of his or her consulting, employment or board relationship with the Company or that could otherwise materially impact the Company.

 

3

 

 

4. Representations and Warranties of Subscriber. By executing this Subscription Agreement, Subscriber (and, if Subscriber is purchasing the Securities subscribed for hereby in a fiduciary capacity, the person or persons for whom Subscriber is so purchasing) represents and warrants, which representations and warranties are true and complete in all material respects as of such Subscriber’s respective Closing Date(s):

 

(a) Requisite Power and Authority. Such Subscriber has all necessary power and authority under all applicable provisions of law to execute and deliver this Subscription Agreement, and other agreements required hereunder and to carry out their provisions. All action on Subscriber’s part required for the lawful execution and delivery of this Subscription Agreement and other agreements required hereunder have been or will be effectively taken prior to the Closing Date. Upon their execution and delivery, this Subscription Agreement and other agreements required hereunder will be valid and binding obligations of Subscriber, enforceable in accordance with their terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors’ rights and (b) as limited by general principles of equity that restrict the availability of equitable remedies.

 

(b) Investment Representations. Subscriber understands that the Securities have not been registered under the Securities Act of 1933, as amended (the “Securities Act”). Subscriber also understands that the Securities are being offered and sold pursuant to an exemption from registration contained in the Securities Act based in part upon Subscriber’s representations contained in this Subscription Agreement.

 

(c) Illiquidity and Continued Economic Risk. Subscriber acknowledges and agrees that there is no ready public market for the Securities and that there is no guarantee that a market for their resale will ever exist. Subscriber must bear the economic risk of this investment indefinitely and the Company has no obligation to list the Securities on any market or take any steps (including registration under the Securities Act or the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) with respect to facilitating trading or resale of the Securities. Subscriber acknowledges that Subscriber is able to bear the economic risk of losing Subscriber’s entire investment in the Securities. Subscriber also understands that an investment in the Company involves significant risks and has taken full cognizance of and understands all of the risk factors relating to the purchase of Securities.

 

(d) Accredited Investor Status or Investment Limits. Subscriber represents that either:

 

(i) Subscriber is an “accredited investor” within the meaning of Rule 501 of Regulation D under the Securities Act. Subscriber represents and warrants that the information set forth in response to question (c) on the signature page hereto concerning Subscriber is true and correct; or

 

(ii) The purchase price set out in paragraph (b) of the signature page to this Subscription Agreement, together with any other amounts previously used to purchase Securities in this offering, does not exceed 10% of the greater of the Subscriber’s annual income or net worth.

 

Subscriber represents that to the extent it has any questions with respect to its status as an accredited investor, or the application of the investment limits, it has sought professional advice.

 

(e) Shareholder information. Within five days after receipt of a request from the Company, the Subscriber hereby agrees to provide such information with respect to its status as a shareholder (or potential shareholder) and to execute and deliver such documents as may reasonably be necessary to comply with any and all laws and regulations to which the Company is or may become subject. Subscriber further agrees that in the event it transfers any Securities, it will require the transferee of such Securities to agree to provide such information to the Company as a condition of such transfer.

 

(f) Company Information. Subscriber has had such opportunity as it deems necessary (which opportunity may have presented through online chat or commentary functions) to discuss the Company’s business, management and financial affairs with managers, officers and management of the Company and has had the opportunity to review the Company’s operations and facilities. Subscriber has also had the opportunity to ask questions of and receive answers from the Company and its management regarding the terms and conditions of this investment. Subscriber acknowledges that except as set forth herein, no representations or warranties have been made to Subscriber, or to Subscriber’s advisors or representative, by the Company or others with respect to the business or prospects of the Company or its financial condition.

 

4

 

 

(g) Valuation. The Subscriber acknowledges that the price of the Securities was set by the Company on the basis of the Company’s internal valuation and no warranties are made as to value. The Subscriber further acknowledges that future offerings of Securities may be made at lower valuations, with the result that the Subscriber’s investment will bear a lower valuation.

 

(h) Domicile. Subscriber maintains Subscriber’s domicile (and is not a transient or temporary resident) at the address shown on the signature page.

 

(i) No Brokerage Fees. There are no claims for brokerage commission, finders’ fees or similar compensation in connection with the transactions contemplated by this Subscription Agreement or related documents based on any arrangement or agreement binding upon Subscriber.

 

(j) Foreign Investors. If Subscriber is not a United States person (as defined by Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended), Subscriber hereby represents that it has satisfied itself as to the full observance of the laws of its jurisdiction in connection with any invitation to subscribe for the Securities or any use of this Subscription Agreement, including (i) the legal requirements within its jurisdiction for the purchase of the Securities, (ii) any foreign exchange restrictions applicable to such purchase, (iii) any governmental or other consents that may need to be obtained, and (iv) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale, or transfer of the Securities. Subscriber’s subscription and payment for and continued beneficial ownership of the Securities will not violate any applicable securities or other laws of the Subscriber’s jurisdiction.

 

5. Survival of Representations and Indemnity. The representations, warranties and covenants made by the Subscriber shall survive the Termination Date of this Agreement. The Subscriber agrees to indemnify and hold harmless the Company and its respective officers, directors and affiliates, and each other person, if any, who controls the Company within the meaning of Section 15 of the Securities Act against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all reasonable attorneys’ fees, including attorneys’ fees on appeal) and expenses reasonably incurred in investigating, preparing or defending against any false representation or warranty or breach of failure by the Subscriber to comply with any covenant or agreement made by the Subscriber herein or in any other document furnished by the Subscriber to any of the foregoing in connection with this transaction.

 

6. Governing Law; Jurisdiction. This Subscription Agreement shall be governed and construed in accordance with the laws of the State of Delaware.

 

EACH OF THE SUBSCRIBER AND THE COMPANY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION LOCATED WITHIN THE STATE OF DELAWARE AND NO OTHER PLACE AND IRREVOCABLY AGREES THAT ALL ACTIONS OR PROCEEDINGS RELATING TO THIS SUBSCRIPTION AGREEMENT NOT ARISING UNDER THE FEDERAL SECURITIES LAWS MAY BE LITIGATED IN SUCH COURTS. EACH OF SUBSCRIBER AND THE COMPANY ACCEPTS FOR ITSELF AND HIMSELF AND IN CONNECTION WITH ITS AND HIS RESPECTIVE PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS SUBSCRIPTION AGREEMENT NOT ARISING UNDER THE FEDERAL SECURITIES LAWS. EACH OF SUBSCRIBER AND THE COMPANY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN THE MANNER AND IN THE ADDRESS SPECIFIED IN SECTION 7 OF THIS AGREEMENT AND PROVIDED WITH THE EXECUTION OF THIS AGREEMENT. NOTWITHSTANDING THE FOREGOING, THIS FORUM SELECTION CLAUSE WILL NOT APPLY TO ANY ACTION ANY ACTION ASSERTING CLAIMS UNDER THE SECURITIES ACT OF 1933 OR SECURITIES EXCHANGE ACT OF 1934.

 

7. Notices. Notice, requests, demands and other communications relating to this Subscription Agreement and the transactions contemplated herein shall be in writing and shall be deemed to have been duly given if and when (a) delivered personally, on the date of such delivery; or (b) mailed by registered or certified mail, postage prepaid, return receipt requested, in the third day after the posting thereof; or (c) emailed, telecopied or cabled, on the date of such delivery to the address of the respective parties as follows:

 

If to the Company, to:

 

Attn: Chief Executive Officer

GenesisAI Corporation

201 SE 2nd Ave.

Miami, Florida 33131

 

5

 

 

with a required copy to:

 

Louis A. Bevilacqua, Esq.

Bevilacqua PLLC

1050 Connecticut Avenue, NW, Suite 500

Washington, DC 20036

 

If to a Subscriber, to Subscriber’s address as provided with the execution of this Agreement or to such other address as may be specified by written notice from time to time by the party entitled to receive such notice. Any notices, requests, demands or other communications by telecopy or cable shall be confirmed by letter given in accordance with (a) or (b) above.

 

8. Miscellaneous.

 

(a) All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural, as the identity of the person or persons or entity or entities may require.

 

(b) This Subscription Agreement is not transferable or assignable by Subscriber.

 

(c) The representations, warranties and agreements contained herein shall be deemed to be made by and be binding upon Subscriber and its heirs, executors, administrators and successors and shall inure to the benefit of the Company and its successors and assigns.

 

(d) None of the provisions of this Subscription Agreement may be waived, changed or terminated orally or otherwise, except as specifically set forth herein or except by a writing signed by the Company and Subscriber.

 

(e) In the event any part of this Subscription Agreement is found to be void or unenforceable, the remaining provisions are intended to be separable and binding with the same effect as if the void or unenforceable part were never the subject of agreement.

 

(f) The invalidity, illegality or unenforceability of one or more of the provisions of this Subscription Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Subscription Agreement in such jurisdiction or the validity, legality or enforceability of this Subscription Agreement, including any such provision, in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law.

 

(g) This Subscription Agreement supersedes all prior discussions and agreements between the parties with respect to the subject matter hereof and contains the sole and entire agreement between the parties hereto with respect to the subject matter hereof.

 

(h) The terms and provisions of this Subscription Agreement are intended solely for the benefit of each party hereto and their respective successors and assigns, and it is not the intention of the parties to confer, and no provision hereof shall confer, third-party beneficiary rights upon any other person.

 

(i) The headings used in this Subscription Agreement have been inserted for convenience of reference only and do not define or limit the provisions hereof.

 

(j) This Subscription Agreement may be executed in any number of counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.

 

(k) If any recapitalization or other transaction affecting the stock of the Company is effected, then any new, substituted or additional securities or other property which is distributed with respect to the Securities shall be immediately subject to this Subscription Agreement, to the same extent that the Securities, immediately prior thereto, shall have been covered by this Subscription Agreement.

 

(l) No failure or delay by any party in exercising any right, power or privilege under this Subscription Agreement shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

 

9. Subscription Procedure. Each Subscriber, by providing his or her name and subscription amount and clicking “accept” and/or checking the appropriate box on the Platform (“Online Acceptance”), confirms such Subscriber’s investment through the Platform and confirms such Subscriber’s electronic signature to this Subscription Agreement. Subscriber agrees that his or her electronic signature as provided through Online Acceptance is the legal equivalent of his or her manual signature on this Subscription Agreement and Online Acceptance establishes such Subscriber’s acceptance of the terms and conditions of this Subscription Agreement.

 

[Signature page follows]

 

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GenesisAI Corporation

 

SUBSCRIPTION AGREEMENT SIGNATURE PAGE

 

The undersigned, desiring to purchase Common Shares of GenesisAI Corporation by executing this signature page, hereby executes, adopts and agrees to all terms, conditions and representations of the Subscription Agreement.

 

(a) EITHER (i) The undersigned is an accredited investor (as that term is defined in Regulation D under the Securities Act because the undersigned meets the criteria set forth in the following paragraph(s) of Appendix A attached hereto:

 

OR (ii) The amount set forth in paragraph (b) above (together with any previous investments in the Securities pursuant to this offering) does not exceed 10% of the greater of the undersigned’s net worth or annual income for all investments in this offering.

 

(b) The Securities being subscribed for will be owned by, and should be recorded on the Company’s books as follows:

 

Full legal name of Subscriber (including middle name(s), for individuals):

Number of securities: Common Shares

Aggregate Subscription Price: $0.00 USD

(Name of Subscriber) By:

(Authorized Signature)

TYPE OF OWNERSHIP:

If the Subscriber is individual: If the Subscriber is not an individual:

Individual

Joint Tenant

(Official Capacity or Title, if the Subscriber is not an individual)

Tenants in Common

Community Property

 

(Name of individual whose signature appears above if different than the name of the Subscriber printed above.)

If interests are to be jointly held:

Name(s) of the Subscriber's partner owner(s):

 

(Subscriber’s Residential Address, including Province/State and Postal/Zip Code)

 

Taxpayer Identification Number

Social Security Number(s) of the Subscriber's partner owner(s):

Check this box is the securities will be held in a custodial account:

Type of account:

(Telephone Number) EIN of account:

(Offline Investor)

(E-Mail Address)

Address of account provider:

 

The Subscriber does or does not consent to receive SMS communications.

 

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ACCEPTANCE

 

The Corporation hereby accepts the subscription as set forth above on the terms and conditions contained in this Subscription Agreement.

 

Dated as of

 

By: GenesisAI Corporation

 

Authorized Signing Officer

 

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U.S. ACCREDITED INVESTOR/QUALIFIED PURCHASER CERTIFICATE

 

The Investor hereby represents and warrants that that the Investor is an Accredited Investor, as defined by Rule 501 of Regulation D under the Securities Act of 1933, and Investor meets at least one (1) of the following criteria (initial all that apply) or that Investor is an unaccredited investor and meets the criteria for "qualified purchaser" within the meaning of Regulation A to invest in the Securities (initial as applicable):

 

1. A bank, as defined in Section 3(a)(2) of the U.S. Securities Act, whether acting in its individual or fiduciary capacity; or
 2. A savings and loan association or other institution as defined in Section 3(a)(5)(A) of the U.S. Securities Act, whether acting in its individual or fiduciary capacity; or
3. A broker or dealer registered pursuant to Section 15 of the United States Securities Exchange Act of 1934, as amended; or
4. An investment adviser registered pursuant to Section 203 of the Investment Advisers Act of 1940 or registered pursuant to the laws of a state; or
5. An investment adviser relying on the exemption from registering with the Commission under Section 203(l) or (m) of the Investment Advisers Act of 1940; or
6. An insurance company as defined in Section 2(a)(13) of the U.S. Securities Act; or
7. An investment company registered under the United States Investment Company Act of 1940, as amended; or
8. A business development company as defined in Section 2(a)(48) of the United States Investment Company Act of 1940, as amended; or
9. A small business investment company licensed by the U.S. Small Business Administration under Section 301 (c) or

(d) of the United States Small Business Investment Act of 1958, as amended; or

10. A rural business investment company as defined in Section 384A of the Consolidated Farm and Rural Development Act; or
11. A plan established and maintained by a state, its political subdivisions or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, with total assets in excess of U.S. $5,000,000; or
12. An employee benefit plan within the meaning of the United States Employee Retirement Income Security Act of 1974, as amended, in which the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company or registered investment adviser, or an employee benefit plan with total assets in excess of U.S. $5,000,000 or, if a self directed plan, with investment decisions made solely by persons who are U.S. Accredited Investors; or
13. A private business development company as defined in Section 202(a)(22) of the United States Investment Advisers Act of 1940, as amended; or
14. An organization described in Section 501(c)(3) of the United States Internal Revenue Code of 1976, as amended, a corporation, a Massachusetts or similar business trust, partnership, or a limited liability company, not formed for the specific purpose of acquiring the Shares, with total assets in excess of U.S. $5,000,000; or
15. A trust, with total assets in excess of U.S. $5,000,000, not formed for the specific purpose of acquiring the Shares, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) under the U.S. Securities Act;
16. Any director or executive officer of the Company; or
17. Any natural person whose individual net worth, or joint net worth with that person’s spouse or spousal equivalent, exceeds U.S. $1,000,000 (for purposes of calculating net worth: (i) a person’s primary residence shall not be included as an asset, (ii) indebtedness that is secured by the person’s primary residence, up to the estimated fair market value of the primary residence at the time of the sale of the Shares, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of sale of the Shares exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability) and (iii) indebtedness that is secured by the person’s primary residence in excess of the estimated fair market value of the primary residence at the time of sale of the Shares shall be included as a liability); or
18. A natural person who had an individual income in excess of U.S. $200,000 in each of the two most recent years or joint income with that person’s spouse or spousal equivalent in excess of U.S. $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year; or
19. An entity in which all of the equity owners are U.S. Accredited Investors;
20. An entity, of a type not listed in categories 1-15 or 19 above, not formed for the specific purpose of acquiring the securities offered, owning investments in excess of U.S. $5,000,000; or
21. A natural person holding in good standing one or more professional certifications or designations or credentials from an accredited educational institution that the Commission has designated as qualifying an individual for accredited investor status. In determining whether to designate a professional certification or designation or credential from an accredited educational institution for purposes of this category, the Commission will consider, among others, the following attributes:

(i) The certification, designation, or credential arises out of an examination or series of examinations administered by a self-regulatory organization or other industry body or is issued by an accredited educational institution;

(ii) The examination or series of examinations is designed to reliably and validly demonstrate an individual’s comprehension and sophistication in the areas of securities and investing;

(iii) Persons obtaining such certification, designation, or credential can reasonably be expected to have sufficient knowledge and experience in financial and business matters to evaluate the merits and risks of a prospective investment; and

(iv) An indication that an individual holds the certification or designation is either made publicly available by the relevant self-regulatory organization or other industry body or is otherwise independently verifiable; or

 

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22. A natural person who is a “knowledgeable employee,” as defined in rule 3c-5(a)(4) under the Investment Company Act of 1940 (17 CFR 270.3c-5(a)(4)), of the issuer of the securities being offered or sold where the issuer would be an investment company, as defined in Section 3 of such Act, but for the exclusion provided by either Section 3(c)(1) or Section 3(c)(7) of such Act; or
23. A “family office,” as defined in Rule 202(a)(11)(G)-1 under the Investment Advisers Act of 1940 (17 CFR 275.202(a) (11)(G)-1):

(i) With assets under management in excess of US$5,000,000,

(ii) That is not formed for the specific purpose of acquiring the securities offered, and

(iii) Whose prospective investment is directed by a person who has such knowledge and experience in financial and business matters that such family office is capable of evaluating the merits and risks of the prospective investment;

24. A “family client,” as defined in rule 202(a)(11)(G)-1 under the Investment Advisers Act of 1940 (17 CFR 275.202(a) (11)(G)-1)), of a family office meeting the requirements in category 23 above and whose prospective investment in the issuer is directed by such family office;
25. The Investor is not an Accredited Investor.

 

Attestation of Accredited Investor or Qualified Purchaser Status.

Investor understands that Investor must be either an “accredited investor” within the meaning of Rule 501(a) under the Securities Act, or a “qualified purchaser” within the meaning of Regulation A to invest in the Securities. Please select the applicable box(es) below.

 

Accredited Investor Status. I represent and warrant that Investor is an “accredited investor,” within the meaning of Rule 501(a) under the Securities Act.

 

Qualified Purchaser Status. I represent and warrant that Investor is a “qualified purchaser,” as defined in Regulation A, based on the fact that either:

 

Investor is a natural person, and Investor is not investing more than 10% of the greater of Investor's net worth or annual income (with net worth and annual income determined as provided in Rule 501 under the Securities Act) for all investments in this offering; or

Investor is not a natural person, and Investor is not investing more than 10% of the greater of Investor's revenue or net assets, as calculated for Investor's most recently completed fiscal year end, for all investments in this offering.

 

Further Representations.

 

Investor understands that the Corporation will be relying on the accuracy and completeness of Investor's responses to the foregoing questions, and Investor represents and warrants to the Corporation as follows:

 

i.The answers to the above questions are complete and correct and may be relied upon by the Corporation, whether or not the offering in which Investor proposes to participate is exempt from registration under the Securities Act and the securities laws of certain states;
ii.Investor will notify the Corporation immediately of any material change in any statement made herein occurring prior to the closing of any purchase by Investor of the Securities; and
iii.Investor or, in the case of an entity, its management, has sufficient knowledge and experience in financial, investment and business matters to evaluate the merits and risks of the prospective investment, and Investor is able to bear the economic risk of the investment in the Securities and currently could afford a complete loss of such investment.

 

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DATED:

 

INVESTOR: (Print Full Name of Entity or Individual)
   
  By:
   
 

(Signature)

 

Name:

   
 

(If signing on behalf of entity)

 

Title:

   
  (If signing on behalf of entity)

 

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APPENDIX B

 

CANADIAN ACCREDITED INVESTOR CERTIFICATE

 

TO: GenesisAI Corporation (the "Corporation")

 

The Subscriber hereby represents, warrants and certifies to the Corporation that the undersigned is an “Accredited Investor” as defined in Section 1.1 of National Instrument 45-106. The Subscriber has indicated below the criteria which the Subscriber satisfies in order to qualify as an “Accredited Investor”.

 

The Subscriber understands that the Corporation and its counsel are relying upon this information in determining to sell securities to the undersigned in a manner exempt from the prospectus and registration requirements of applicable securities laws.

 

The categories listed herein contain certain specifically defined terms. If you are unsure as to the meanings of those terms, or are unsure as to the applicability of any category below, please contact your legal advisor before completing this certificate.

 

In connection with the purchase by the undersigned Subscriber of the Purchased Securities, the Subscriber hereby represents, warrants, covenants and certifies to the Corporation (and acknowledges that the Corporation and its counsel are relying thereon) that:

 

a.the Subscriber is, and at the Closing Time, will be, an “accredited investor” within the meaning of NI 45-106 or Section

73.3 of the Securities Act (Ontario), as applicable, on the basis that the undersigned fits within one of the categories of an “accredited investor” reproduced below beside which the undersigned has indicated the undersigned belongs to such category;

 

b.the Subscriber was not created or is not used, solely to purchase or hold securities as an accredited investor as described in paragraph (m) below; and

 

c.upon execution of this Appendix B by the Subscriber, including, if applicable, Appendix 1 to this Appendix B, this Appendix B shall be incorporated into and form a part of the Subscription Agreement.

 

(PLEASE CHECK THE BOX OF THE APPLICABLE CATEGORY OF ACCREDITED INVESTOR)

 

(a) a Canadian financial institution, or a Schedule III bank;
(b) the Business Development Bank of Canada incorporated under the Business Development Bank of Canada Act (Canada);

(c) a subsidiary of any Person referred to in paragraphs (a) or (b), if the Person owns all of the voting securities of the subsidiary, except the voting securities required by law to be owned by directors of that subsidiary;

(d) a Person registered under the securities legislation of a jurisdiction of Canada as an adviser or dealer, other than a Person registered solely as a limited market dealer under one or both of the Securities Act (Ontario) or the Securities Act (Newfoundland and Labrador);

(e) an individual registered under the securities legislation of a jurisdiction of Canada as a representative of a Person referred to in paragraph (d);

(e.1) an individual formerly registered under the securities legislation of a jurisdiction of Canada, other than an individual formerly registered solely as a representative of a limited market dealer under one or both of the Securities Act (Ontario) or the Securities Act (Newfoundland and Labrador);

(f) the Government of Canada or a jurisdiction of Canada, or any crown corporation, agency or wholly owned entity of the Government of Canada or a jurisdiction of Canada;

(g) a municipality, public board or commission in Canada and a metropolitan community, school board, the Comité de gestion de la taxe scolaire de l’île de Montréal or an intermunicipal management board in Québec;

(h) any national, federal, state, provincial, territorial or municipal government of or in any foreign jurisdiction, or any agency of that government;

(i) a pension fund that is regulated by either the Office of the Superintendent of Financial Institutions (Canada) or a pension commission or similar regulatory authority of a jurisdiction of Canada;

(j) an individual who, either alone or with a spouse, beneficially owns financial assets having an aggregate realizable value that before taxes, but net of any related liabilities, exceeds CDN$1,000,000;

(j.1) an individual who beneficially owns financial assets having an aggregate realizable value that, before taxes but net of any related liabilities, exceeds $5,000,000;

(k) an individual whose net income before taxes exceeded CDN$200,000 in each of the two most recent calendar years or whose net income before taxes combined with that of a spouse exceeded CDN$300,000 in each of the two most recent calendar years and who, in either case, reasonably expects to exceed that net income level in the current calendar year;

(l) an individual who, either alone or with a spouse, has net assets of at least CDN$5,000,000;

 

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(m) a Person, other than an individual or investment fund, that has net assets of at least CDN$5,000,000 as shown on its most recently prepared financial statements and that has not been created or used solely to purchase or hold securities as an accredited investor;

(n) an investment fund that distributes or has distributed its securities only to (i) a Person that is or was an accredited investor at the time of the distribution, (ii) a Person that acquires or acquired securities in the circumstances referred to in sections 2.10 (Minimum amount investment) and 2.19 (Additional investment in investment funds) of NI 45-106, or (iii) a Person described in paragraph (i) or (ii) that acquires or acquired securities under section 2.18 (Investment fund reinvestment) of NI 45-106;

(o) an investment fund that distributes or has distributed securities under a prospectus in a jurisdiction of Canada for which the regulator or, in Québec, the securities regulatory authority, has issued a receipt;

(p) a trust company or trust corporation registered or authorized to carry on business under the Trust and Loan Companies Act (Canada) or under comparable legislation in a jurisdiction of Canada or a foreign jurisdiction, acting on behalf of a fully managed account managed by the trust company or trust corporation, as the case may be;

(q) a Person acting on behalf of a fully managed account managed by that Person, if that Person (i) is registered or authorized to carry on business as an adviser or the equivalent under the securities legislation of a jurisdiction of Canada or a foreign jurisdiction, and (ii) in Ontario, is purchasing a security that is not a security of an investment fund;

(r) a registered charity under the Income Tax Act (Canada) that, in regard to the trade, has obtained advice from an eligibility adviser or an adviser registered under the securities legislation of the jurisdiction of the registered charity to give advice on the securities being traded;

(s) an entity organized in a foreign jurisdiction that is analogous to any of the entities referred to in paragraphs (a) to (d) or paragraph (i) in form and function;

(t) a Person in respect of which all of the owners of interests, direct, indirect or beneficial, except the voting securities required by law to be owned by directors, are Persons that are accredited investors;

(u) an investment fund that is advised by a Person registered as an adviser or a Person that is exempt from registration as an adviser;

(v) a Person that is recognized or designated by the securities regulatory authority or, except in Ontario and Québec, the regulator as (i) an accredited investor, or (ii) an exempt purchaser in Alberta or Ontario; or

(w) a trust established by an accredited investor for the benefit of the accredited investor’s family members of which a majority of the trustees are accredited investors and all of the beneficiaries are the accredited investor’s spouse, a former spouse of the accredited investor or a parent, grandparent, brother, sister, child or grandchild of that accredited investor, of that accredited investor’s spouse or of that accredited investor’s former spouse.

 

(Appendix B and signature page continues on next page)

 

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The statements made in this Form are true and accurate as of the date hereof.

 

DATED:

 

SUBSCRIBER: (Print Full Name of Entity or Individual)
   
  By:
   
 

(Signature)

 

Name:

   
 

(If signing on behalf of entity)

 

Title:

   
  (If signing on behalf of entity)

 

Definitions for Canadian Accredited Investor Certificate

 

As used in the Canadian Accredited Investor Certificate, the following terms have the meanings set out below:

 

a.Canadian financial institution” means (i) an association governed by the Cooperative Credit Associations Act (Canada) or a central cooperative credit society for which an order has been made under section 473(1) of that Act, or (ii) a bank, loan corporation, trust company, trust corporation, insurance company, treasury branch, credit union, caisse populaire, financial services cooperative, or league that, in each case, is authorized by an enactment of Canada or a jurisdiction of Canada to carry on business in Canada or a jurisdiction of Canada;
b.entity” means a company, syndicate, partnership, trust or unincorporated organization;
c.financial assets” means cash, securities, or any a contract of insurance, a deposit or an evidence of a deposit that is not a security for the purposes of securities legislation;
d.fully managed account” means an account of a client for which a Person makes the investment decisions if that Person has full discretion to trade in securities for the account without requiring the client’s express consent to a transaction;

e.investment fund” means a mutual fund or a non-redeemable investment fund, and, for greater certainty in Ontario, includes an employee venture capital corporation that does not have a restricted constitution, and is registered under Part 2 of the Employee Investment Act (British Columbia), R.S.B.C. 1996 c. 112, and whose business objective is making multiple investments and a venture capital corporation registered under Part 1 of the Small Business Venture Capital Act (British Columbia), R.S.B.C. 1996 c. 429 whose business objective is making multiple investments;
f.mutual fund” means an issuer whose primary purpose is to invest money provided by its security holders and whose securities entitle the holder

to receive on demand, or within a specified period after demand, an amount computed by reference to the value of a proportionate interest in the whole or in part of the net assets, including a separate fund or trust account, of the issuer;

g.non-redeemable investment fund” means an issuer,
A.whose primary purpose is to invest money provided by its securityholders,
B.that does not invest,
i.for the purpose of exercising or seeking to exercise control of an issuer, other than an issuer that is a mutual fund or a non-redeemable investment fund, or
ii.for the purpose of being actively involved in the management of any issuer in which it invests, other than an issuer that is a mutual fund or a non-redeemable investment fund, and

C.that is not a mutual fund;
h.related liabilities” means liabilities incurred or assumed for the purpose of financing the acquisition or ownership of financial assets and liabilities that are secured by financial assets;
i.Schedule III bank” means an authorized foreign bank named in Schedule III of the Bank Act (Canada);
j.spouse” means an individual who (i) is married to another individual and is not living separate and apart within the meaning of the Divorce Act (Canada), from the other individual, (ii) is living with another individual in a marriage-like relationship, including a marriage-like relationship between individuals of the same gender, or (iii) in Alberta, is an individual referred to in paragraph (i) or (ii), or is an adult interdependent partner within the meaning of the Adult Interdependent Relationships Act (Alberta); and
k.subsidiary” means an issuer that is controlled directly or indirectly by another issuer and includes a subsidiary of that subsidiary.

 

In NI 45-106 a Person or company is an affiliate of another Person or company if one of them is a subsidiary of the other, or if each of them is controlled by the same Person.

In NI 45-106 a Person (first Person) is considered to control another Person (second Person) if (a) the first Person, directly or indirectly, beneficially owns or exercises control or direction over securities of the second Person carrying votes which, if exercised, would entitle the first Person to elect a majority of the directors of the second Person, unless that first Person holds the voting securities only to secure an obligation, (b) the second Person is a partnership, other than a limited partnership, and the first Person holds more than 50% of the interests of the partnership, or (c) the second Person is a limited partnership and the general partner of the limited partnership is the first Person.

 

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RISK ACKNOWLEDGEMENT FORM (FORM 45-106F9)

 

Form for Individual Accredited Investors

 

WARNING! This investment is risky. Do not invest unless you can afford to lose all the money you pay for this investment.

 

Section 1 – TO BE COMPLETED BY THE ISSUER OR SELLING SECURITY HOLDER
1. About your investment
Type of Securities: Class A Common Stock, par value $0.0001 Issuer: GenesisAI Corporation (the “Corporation”)
Purchased from: The Corporation  
Sections 2 to 4 – TO BE COMPLETED BY THE PURCHASER
2. Risk acknowledgement
This investment is risky. Initial that you understand that: Your Initials
Risk of loss – You could lose your entire investment of $  
Liquidity risk – You may not be able to sell your investment quickly – or at all.  
Lack of information – You may receive little or no information about your investment.  
Lack of advice – You will not receive advice from the salesperson about whether this investment is suitable for you unless the salesperson is registered. The salesperson is the person who meets with, or provides information to, you about making this investment. To check whether the salesperson is registered, go to www.aretheyregistered.ca.  
3. Accredited investor status
You must meet at least one of the following criteria to be able to make this investment. Initial the statement that applies to you. (You may initial more than one statement.) The person identified in section 6 is responsible for ensuring that you meet the definition of accredited investor. That person, or the salesperson identified in section 5, can help you if you have questions about whether you meet these criteria.

Your Initials

· Your net income before taxes was more than $200,000 in each of the 2 most recent calendar years, and you expect it to be more than $200,000 in the current calendar year. (You can find your net income before taxes on your personal income tax return.)  
· Your net income before taxes combined with your spouse’s was more than $300,000 in each of the 2 most recent calendar years, and you expect your combined net income before taxes to be more than $300,000 in the current calendar year.  
· Either alone or with your spouse, you own more than $1 million in cash and securities, after subtracting any debt related to the cash and securities.  
· Either alone or with your spouse, you have net assets worth more than $5 million. (Your net assets are your total assets (including real estate) minus your total debt.)  
     

 

 

4. Your name and signature
By signing this form, you confirm that you have read this form and you understand the risks of making this investment as identified in this form.
First and Last Name (please print):

 

Signature:

Date:
Section 5 – TO BE COMPLETED BY THE SALESPERSON
5. Salesperson information
[Instruction: The salesperson is the person who meets with, or provides information to, the purchaser with respect to making this investment. That could include a representative of the issuer or selling security holder, a registrant or a person who is exempt from the registration requirement.]
First and Last Name of Salesperson (please print):
Telephone: Email:
Name of Firm (if registered):
Section 6 – TO BE COMPLETED BY THE ISSUER OR SELLING SECURITY HOLDER
6. For more information about this investment

For more information about this investment / the Issuer:

Company Name: GenesisAI Corporation

Contact:

Email:

Telephone:

For more information about prospectus exemptions, contact your local securities regulator. You can find contact information at www.securities-administrators.ca.

 

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APPENDIX C INTERNATIONAL INVESTOR CERTIFICATE

 

FOR SUBSCRIBERS RESIDENT OUTSIDE OF CANADA AND THE UNITED STATES

 

TO: GenesisAI Corporation (the “Corporation”)

 

The undersigned (the “Subscriber”) represents covenants and certifies to the Corporation that:

 

i.the Subscriber (and if the Subscriber is acting as agent for a disclosed principal, such disclosed principal) is not resident in Canada or the United States or subject to applicable securities laws of Canada or the United States;
ii.the issuance of the securities in the capital of the Corporation under this agreement (the “Securities” ) by the Corporation to the Subscriber (or its disclosed principal, if any) may be effected by the Corporation without the necessity of the filing of any document with or obtaining any approval from or effecting any registration with any governmental entity or similar regulatory authority having jurisdiction over the Subscriber (or its disclosed principal, if any);
iii.the Subscriber is knowledgeable of, or has been independently advised as to, the applicable securities laws of the jurisdiction which would apply to this subscription, if there are any;
iv.the issuance of the Securities to the Subscriber (and if the Subscriber is acting as agent for a disclosed principal, such disclosed principal) complies with the requirements of all applicable laws in the jurisdiction of its residence;
v.the applicable securities laws do not require the Corporation to register the Securities, file a prospectus or similar document, or make any filings or disclosures or seek any approvals of any kind whatsoever from any regulatory authority of any kind whatsoever in the international jurisdiction;
vi.the purchase of the Securities by the Subscriber, and (if applicable) each disclosed beneficial subscriber, does not require the Corporation to become subject to regulation in the Subscriber’s or disclosed beneficial subscriber's jurisdiction, nor does it require the Corporation to attorn to the jurisdiction of any governmental authority or regulator in such jurisdiction or require any translation of documents by the Corporation;
vii.the Subscriber will not sell, transfer or dispose of the Securities except in accordance with all applicable laws, including applicable securities laws of Canada and the United States, and the Subscriber acknowledges that the Corporation shall have no obligation to register any such purported sale, transfer or disposition which violates applicable Canadian or United States securities laws; and
viii.the Subscriber will provide such evidence of compliance with all such matters as the Corporation or its counsel may request.

 

The Subscriber acknowledges that the Corporation is relying on this certificate to determine the Subscriber’s suitability as a purchaser of securities of the Corporation. The Subscriber agrees that the representations, covenants and certifications contained to this certificate shall survive any issuance of Securities and warrants of the Corporation to the Subscriber.

 

The statements made in this Form are true and accurate as of the date hereof.

 

DATED:

 

SUBSCRIBER: (Print Full Name of Entity or Individual)
   
  By:
   
 

(Signature)

 
Name:

   
  (If signing on behalf of entity)

Title:
   
  (If signing on behalf of entity)

 

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Appendix D

 

AML Certificate

 

By executing this document, the client certifies the following:

 

If an entity ("Entity"):

 

1.I am the of the Entity, and as such have knowledge of the matters certified to herein;

2. the Entity has not taken any steps to terminate its existence, to amalgamate, to continue into any other jurisdiction or to change its existence in any way and no proceedings have been commenced or threatened, or actions taken, or resolutions passed that could result in the Entity ceasing to exist;

3. the Entity is not insolvent and no acts or proceedings have been taken by or against the Entity or are pending in connection with the Entity, and the Entity is not in the course of, and has not received any notice or other communications, in each case, in respect of, any amalgamation, dissolution, liquidation, insolvency, bankruptcy or reorganization involving the Entity, or for the appointment of a receiver, administrator, administrative receiver, trustee or similar officer with respect to all or any of its assets or revenues or of any proceedings to cancel its certificate of incorporation or similar constating document or to otherwise terminate its existence or of any situation which, unless remedied, would result in such cancellation or termination;

4. the Entity has not failed to file such returns, pay such taxes, or take such steps as may constitute grounds for the cancellation or forfeiture of its certificate of incorporation or similar constating document;

5. if required, the documents uploaded to the DealMaker portal are true certified copies of the deed of trust, articles of incorporation or organization, bylaws and other constating documents of the Entity including copies of corporate resolutions or by-laws relating to the power to bind the Entity;

6.The Client is the following type of Entity:
7.The names and personal addresses as applicable for the entity in Appendix D-1 are accurate.

 

All subscribers:

 

Dealmaker Account number: (Offline Investor)

 

If I elect to submit my investment funds by an electronic payment option offered by DealMaker, I hereby agree to be bound by DealMaker's Electronic Payment Terms and Conditions (the “Electronic Payment Terms”). I acknowledge that the Electronic Payment Terms are subject to change from time to time without notice.

 

Notwithstanding anything to the contrary, an electronic payment made hereunder will constitute unconditional acceptance of the Electronic Payment Terms, and by use of the credit card or ACH/EFT payment option hereunder, I: (1) authorize the automatic processing of a charge to my credit card account or debit my bank account for any and all balances due and payable under this agreement; (2) acknowledge that there may be fees payable for processing my payment; (3) acknowledge and agree that I will not initiate a chargeback or reversal of funds on account of any issues that arise pursuant to this investment and I may be liable for any and all damages that could ensue as a result of any such chargebacks or reversals initiated by myself.

 

DATED:

 

SUBSCRIBER: (Print Full Name of Subscriber)
   
  By:
   
  (Signature)
   
 

Name of Signing Officer (if Entity):

 

Title of Signing Officer (if Entity):

 

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Appendix D-1 - Subscriber Information

 

For the Subscriber and Joint Holder (if applicable)

 

Name Address Date of Birth (if an Individual) Taxpayer Identification Number
       
       

 

For a Corporation or entity other than a Trust (Insert names and addresses below or attach a list)

 

1.One Current control person of the Organization:

 

Name Address Date of Birth Taxpayer Identification Number
       
   
2.Unless the entity is an Estate or Sole Proprietorship, list the Beneficial owners of, or those exercising direct or indirect control or direction over, more than 25% of the voting rights attached to the outstanding voting securities or the Organization:

 

Name Address Date of Birth Taxpayer Identification Number
       
       
       

 

For a Trust (Insert names and addresses or attach a list)

 

3.Current trustees of the Organization:

 

Name Address Date of Birth Taxpayer Identification Number
       
       
       

 

 

18

 

 

Exhibit 6.3

 

AMENDMENT TO

EMPLOYEE OFFER LETTER

 

AMENDMENT TO EMPLOYEE OFFER LETTER, dated as of April 14th, 2022 (this “Amendment”), by and between Archil Cheishvili (“Employee”) and GenesisAI Corporation, a Delaware corporation (the “Company”).

 

RECITALS

 

A. The Company and Employee previously entered into that certain Employee Offer Letter (the “Employee Offer Letter”).

 

B. The parties hereto desire to amend the Employee Offer Letter as set forth herein.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the mutual promises herein contained, the parties hereto, intending to be legally bound, hereby agree as follows:

 

1. DEFINITIONS. All capitalized words and phrases used herein without definition shall have the meanings ascribed to them in the Employee Offer Letter.

 

2. AMENDMENTS.

 

The employee's base salary is amended to $14,583 per month

 

3. EFFECT OF AMENDMENT. This Amendment shall take effect upon execution by both parties hereto and approval by the Board of Directors of the Company. Except as amended as set forth above, the Employee Offer Letter shall continue in full force and effect. In the event of a conflict between the provisions of this Amendment and the Employee Offer Letter, this Amendment shall prevail and govern.

 

4. COUNTERPARTS. This Amendment may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party, it being understood that all parties need not sign the same counterpart.

 

5. GOVERNING LAW. The validity, construction and effect of this Amendment will be governed by the laws of the State of Delaware without giving effect to that state’s conflict of laws rules. Any Dispute will be resolved in a forum located in the State of Delaware. The provisions of this Section 5 shall survive the entry of any judgment, and will not merge, or be deemed to have merged, into any judgment.

 

[Signature page follows]

 

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the dates set forth underneath their signatures below.

 

  GenesisAI Corporation
     
  /s/ Archil Cheishvili
  By: Archil Cheishvili
  Title: Chief Executive Officer

 

  Address:
    201 SE 2nd Ave
    Miami, Florida, 33131
     

 

  Archil Cheishvili
     
 

/s/ Archil Cheishvili

 

Archil Cheishvili

 

  Address:
    201 SE 2nd ave
    Miami, Florida, 33131
     

 

 

 

 

 

Exhibit 6.6

 

CANCELLATION AND EXCHANGE AGREEMENT

 

THIS CANCELLATION AND EXCHANGE AGREEMENT (this “Agreement”) is made and entered into as of September 29, 2021 (the “Effective Date”), by and among GenesisAI Corporation, a Delaware corporation (the “Company”), and the undersigned stockholder (the “Stockholder” and, together with the Company, the “Parties”).

 

RECITALS

 

A. The Company has determined that it is in the best interests of its stockholders to amend and restate its certificate of incorporation (as so amended and restated, the “Amended and Restated Charter”) in order to provide for, among other things, the effectuation of a ten-for-one (10-for-1) forward split of the Company’s Common Stock (the “Forward Split”) and the authorization of (a) 227,000,000 shares of Common Stock, $0.0001 par value per share, of which, (i) 195,000,000 shares shall be designated “Class A Common Stock,” $0.0001 par value per share (“Class A Common Stock”), and (ii) 32,000,000 shares shall be designated as “Class B Common Stock,” $0.0001 par value per share (“Class B Common Stock” and together with the Class A Common Stock, the “Common Shares”; that all Common Shares that are outstanding on the date of the filing of the Amended and Restated Charter shall automatically become and be converted into shares of Class A Common Stock of the Company; that each holder of shares of Class A Common Stock shall be entitled to one (1) vote for each share of Class A Common Stock held as of the applicable date on any matter that is submitted to a vote or for the consent of the stockholders of the Company; and that each holder of shares of Class B Common Stock shall be entitled to ten (10) votes for each share of Class B Common Stock held as of the applicable date on any matter that is submitted to a vote or for the consent of the stockholders of the Company.

 

B. Following the filing of the Amended and Restated Charter with the Secretary of State of Delaware, the Parties desire to cancel the 27,080,000 shares of Class A Common Stock that are held by the Stockholder pursuant to the filing of the Amended and Restated Charter, which will, among other things, effect the Forward Split and the automatic conversion of Stockholder’s Common Stock into Class A Common Stock (the “Cancelled Shares”); and in consideration therefor as well as the further consideration enumerated in Section (1) below, the Company desires to issue to the Stockholder the same number of shares of Class B Common Stock as the number of shares of Class A Common Stock held by the Stockholder (the “Cancellation Consideration”). A copy of the proposed Amended and Restated Charter containing the relative rights, preferences and limitations of the Cancellation Consideration has been delivered to the Stockholder.

 

C. The Stockholder desires to accept such Cancellation Consideration in exchange for the Common Shares.

 

AGREEMENT

 

NOW THEREFORE, in consideration of the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the undersigned do hereby agree as follows:

 

1. The Stockholder hereby agrees to surrender the Cancelled Shares to the Company free and clear of all claims, charges, liens, contracts, rights, options, security interests, mortgages, encumbrances and restrictions of every kind and nature (collectively, “Claims”). Further, pursuant to Section 4.2 of the Employment Agreement by and among the parties, dated April 6, 2021, as amended on May 24, 2021, the Stockholder is entitled to an annual bonus of $70,000 (the “Bonus”). The Stockholder now desires to give up the right to the Bonus as further consideration for the Cancellation Consideration. Therefore, the Company has agreed to an exchange of the Stockholder’s forfeiture of the Cancelled Shares and Bonus for the Cancellation Consideration. As a result of such cancellation of the Cancelled Shares and forfeiture of the Bonus and in exchange thereof for the Cancellation Consideration, the Stockholder acknowledges and agrees that the Cancelled Shares shall no longer be outstanding and the Stockholder shall have no claim to the Bonus, and the Stockholder shall have no further rights with respect to (a) any of such Cancelled Shares, (b) the equity ownership in the Company represented thereby, (c) the acquisition of any additional equity interest in the Company as the result of previously holding the Cancelled Shares, or (d) the Bonus.

 

 

 

 

2. The Stockholder hereby represents and warrants that the Stockholder owns the Cancelled Shares beneficially and of record, free and clear of all Claims. The Stockholder has never transferred or agreed to transfer the Cancelled Shares, other than pursuant to this Agreement. There is no restriction affecting the ability of the Stockholder to transfer the legal and beneficial title and ownership of the Cancelled Shares to the Company for cancellation. Neither the execution and delivery of this Agreement, the consummation of the transactions contemplated hereby, nor the performance of this Agreement in compliance with its terms and conditions by the Stockholder will conflict with or result in any violation of any agreement, judgment, decree, order, statute or regulation applicable to the Stockholder, or any breach of any agreement to which the Stockholder is a party, or constitute a default thereunder, or result in the creation of any Claim of any kind or nature on, or with respect to the Stockholder or the Stockholder’s assets, including, without limitation, the Stockholder’s equity interests in the Company.

 

3. The Cancellation Consideration is being acquired by the Stockholder for his, her or its account, for investment purposes and not with a view to the sale or distribution of all or any part of the Cancellation Consideration, nor with any present intention to sell or in any way distribute the same, as those terms are used in the Securities Act of 1933, as amended (the “Act”), and the rules and regulations promulgated thereunder. The Stockholder has sufficient knowledge and experience in financial matters so as to be capable of evaluating the merits and risks of acquiring the Cancellation Consideration hereunder. The Stockholder has reviewed copies of such documents and other information as the Stockholder has deemed necessary in order to make an informed investment decision with respect to its acquisition of the Cancellation Consideration. The Stockholder understands that the Cancellation Consideration may not be sold, transferred or otherwise disposed of without registration under the Act or the availability of an exemption therefrom, and that in the absence of an effective registration statement covering the Cancellation Consideration or an available exemption from registration under the Act, the Cancellation Consideration must be held indefinitely. Further, the Stockholder understands and has the financial capability of assuming the economic risk of an investment in the Cancellation Consideration for an indefinite period of time. The Stockholder has been advised by the Company that the Stockholder will not be able to dispose of the Cancellation Consideration, or any interest therein, without first complying with the relevant provisions of the Act and any applicable state securities laws. The Stockholder understands that the provisions of Rule 144 promulgated under the Act, permitting the routine sales of the securities of certain issuers subject to the terms and conditions thereof, are not currently, and may not hereafter be, available with respect to the Cancellation Consideration. The Stockholder acknowledges that the Company is under no obligation to register the Cancellation Consideration or to furnish any information or take any other action to assist the undersigned in complying with the terms and conditions of any exemption which might be available under the Act or any state securities laws with respect to sales of the Cancellation Consideration in the future. The Stockholder is an “Accredited Investor” as defined in rule 501(a) of Regulation D of the Act.

 

4. At the request of the Company and without further consideration, the Stockholder will execute and deliver such other instruments of sale, transfer, conveyance, assignment and confirmation as may be reasonably requested in order to effectively transfer, convey and assign to the Company for cancellation the Cancelled Shares.

 

5. This Agreement is a binding agreement and constitutes the entire agreement between the Parties with respect to the subject matter hereof.

 

6. This Agreement is binding upon and inures to the benefit of the successors and assigns of the Parties hereto.

 

7. This Agreement shall be governed by and construed under the laws of the State of Delaware without regard to principles of conflicts of law.

 

8. This Agreement may be executed in identical counterparts. Each counterpart hereof shall be deemed to be an original instrument, but all counterparts hereof taken together shall constitute a single document. Facsimile, emailed PDFs and electronic signatures shall be deemed originals.

 

9. The Parties hereto agree to use their reasonable best efforts to cooperate with one another to discharge their respective obligations under this Agreement and to satisfy the intents and purposes of this Agreement.

 

[Signature page follows]

 

2

 

 

IN WITNESS WHEREOF, the Parties have executed this Cancellation and Exchange Agreement as of the date first above written.

 

  COMPANY:
     
  GenesisAI Corporation
     
  By: /s/ Archil Cheishvili
  Name:  Archil Cheishvili
  Title: Chief Executive Officer

 

  STOCKHOLDER:
     
  Archil Cheishvili
  Print Name Above
     
  /s/ Archil Cheishvili
  Sign Above

 

  If signer is an entity, specify name and title of authorized signer below:
           
  Name:  
  Title:  
     
  Number of Common Shares: 27,080,000

 

 

3

 

Exhibit 11.1

 

EXHIBIT

AUDITOR’S CONSENT

 

Consent of Independent Registered Public Accounting Firm

 

We hereby consent to the use in this Offering Circular on Form 1-A of GenesisAI Corporation of our report dated April 11, 2022, related to the financial statements of GenesisAI Corporation as of December 31, 2021 and 2020 and for the years then ended.

 

We also consent to the reference to us under the caption “Experts” in this Offering Circular. 

 

Yours truly,

 

/s/ Pinnacle Accountancy Group of Utah

 

Pinnacle Accountancy Group of Utah

(a dba of Heaton & Company, PLLC)

Farmington, Utah

June 30, 2022

Exhibit 99.1

 

Supplemental content from the website, deck, etc

 

THE GLOBAL AI MARKETPLACE

 

Our web-platform allows companies to deploy their AI tools while giving everyone the chance to access high quality AI products.

 

OUR MISSION IS TO BUILD ARTIFICIAL GENERAL INTELLIGENCE

 

We believe we have the most practical approach: creating a platform that potentially will connect 1000s of expert AI tools together.

 

Our web-platform allows companies to deploy their AI tools while giving everyone the chance to access high quality AI products.

 

Founded by Harvard alumni and backed by MIT professors, GenesisAI is the future of AI!

 

AI IS THE FUTURE

AI is projected to contribute up-to $15 Trillion to the world economy.

 

MOST VALUABLE TECH

If we achieve our vision, we believe GenesisAI has the potential to become one of the most valuable technologies of all time.

 

ELITE TEAM

Founded by Harvard alumni. Backed by MIT and Harvard professors.

 

REAL TIMEPROBLEM

 

THE MAJOR OBSTACLE FOR AI INNOVATION: NARROW SCOPED AIS

AI is transforming the world; however, major obstacles inhibit AI development. Currently, the scope of individual AI models is very narrow because they can only perform tasks they are specifically designed for.

 

For example, an AI model trained on beating a world chess champion will have a hard time beating a 6-year-old in poker.

 

THE LIMITING IMPACT OF AI

Slower AI development is delaying its expected 15T contribution to the global economy.

 

AI MODELS AREN’T ADAPTABLE

With restricted interactions, AI models always start from scratch slowing down the entire process.

 

MAJORSOLUTION

LAYING THE FOUNDATION OF AGI

GenesisAI’s web-platform enables AIs to work synergistically, combining their narrow specialties into a ‘global brain’ with broader capabilities.

 

 

 

WHAT IS THE PLAN?

 

We aim to do this by bringing together 1000s of expert AI tools onto a single platform.

 

THE MOST PRACTICAL APPROACH TO BUILDING AGI:

 

GENESISAI MARKETPLACE

 

We believe that creating a platform that will connect 1000s of expert AI tools with each other is the most practical approach for Artificial General Intelligence development.

 

With the GenesisAI marketplace, we are gathering numerous expert AI tools and interconnecting them. We believe that, as a whole, this AI ecosystem will be able to do pretty much anything.

 

COMPLEX INTERACTIONS GIVE BIRTH TO NEW TOOLS

 

INCREASING QUALITY OF MODELS

 

We believe that we can increase the quality of each model by allowing them to communicate – by exchanging data, trading services and learning from each other.

 

Our goal is to eventually create a meta model that will delegate tasks based on each AI’s expertise so that the ecosystem is able to do a variety of tasks.

 

ABOUT

 

MARKET

 

This technology is already dominating the internet and soon it will dominate the world. The AI sector is estimated to potentially contribute trillions of dollars to the world economy.

 

$15.7 TRILLION BY 2030 SOURCE - https://www.pwc.com/gx/en/issues/data-and- analytics/publications/artificial-intelligence-study.html

 

The AI sector is estimated to potentially contribute $15.7 trillion to the world economy by 2030.

 

2

 

 

$2.8 TRILLION BY 2030 SOURCE AI is growing rapidly and its market size is projected to reach $2.8 trillion by 2030. https://www.transparencymarketresearch.com/pressrelease/artificial- intelligence-market.htm#

 

1400+ registered companies and users at the GenesisAI platform

 

Beta platform up and running with over 35 expert AI models deployed ~$5M raised from 4,400 investors

 

We are attempting to build AGI by gathering and interconnecting potentially 1000s of expert AI tools on our web-platform.

 

CROWDSOURCE EXPERT AI TOOLS

 

Companies deploy their AI tools on our platform which helps them monetize their technology. We have over 15 agreements with AI suppliers. They bring technology. We bring users.

 

OVER 35 EXPERT AI TOOLS DEPLOYED

 

Currently, most of our AI tools are for retail investors: regular people who are interested in using AI for investing and trading purposes. Our tools analyze text, speech, and other complex and unstructured data to provide insights about markets.

 

ALLOW AI MODELS TO GROW SYNERGISTICALLY

 

We are researching how to create Artificial General Intelligence (AGI), or the hypothetical ability of an intelligent agent to understand or learn any intellectual task that a human being can.. To achieve this, the GenesisAI platform has been designed to enable the interaction of multiple expert AI tools that can easily be plugged in with each other.

 

BUSINESS MODEL

 

We are going to charge users monthly subscription fees for access to all models on our platform. This will be done in a similar way to how movie-hosting websites charge subscription fees for users to watch any of the available movies.

 

Additionally, and similar to our business model, these websites pay movie studios to host movies on their platforms.

 

3

 

 

For transactions that occur directly between buyers and sellers (e.g. a seller completes a task as requested from the buyer) there will be a transaction fee of 30%.

 

HOW WE’RE DIFFERENT ANYONE CAN BENEFIT FROM OUR TECH!

 

GenesisAI is built for everyone! Most of the competitors’ tools have been built exclusively for software engineers.

 

We found that most people want to use AI models, but they do not want to learn the computer science behind it.

 

THE ONLY COMPANY THAT HAS A PRACTICAL APPROACH TOWARDS BUILDING AGI BASED ON OUR BELIEF

 

Many companies working on creating AGI are trying to build a super-computer that will be extremely similar to humans. We believe this approach is very unrealistic, and very unlikely to work.

 

We believe we have a better and more practical approach towards building AGI: gathering and interconnecting potentially 1000s of expert AI tools with each