Form S-1/A Skylab USA, Inc.

Table of Contents

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM S-1/A

AMENDMENT NO. 1

 

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

 

SKYLAB USA, INC.

(Exact name of Registrant as specified in its charter)

 

FL		7371		46-5560986
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

 

10120 South Eastern Avenue, Suite 200 Henderson, Nevada, 89052

(address of principal executive offices)

Registrant's telephone number, including area code:  253.332.7362

Dean Grey 5600 Avenida Encinas Carlsbad, CA 92008

(Name and address of agent for service of process)

 

COPIES OF COMMUNICATIONS TO:

W. Scott Lawler, Esq.

Booth Udall Fuller, PLC

1255 W. Rio Salado Parkway, Suite 215

Tempe, Arizona 85281

480.830.2700

[email protected]

 

Approximate date of commencement of proposed sale to the public:

As soon as practicable after the effective date of this Registration Statement.

 

If any of the securities being registered on the Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box x

 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

 

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

 

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

 

If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box. o

 

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

 

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o	Smaller reporting company x
(Do not check if a smaller reporting company)
Emerging Growth x

  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act. o

 

 

 

CALCULATION OF REGISTRATION FEE

 

TITLE OF EACH CLASS OF SECURITIES TO BE REGISTRATION		AMOUNT TO BE REGISTERED(1)				PROPOSED MAXIMUM OFFERING PRICE PER SHARE				PROPOSED MAXIMUM AGGREGATE OFFERING PRICE(2)				AMOUNT OF REGISTERED FEE
Common Stock, par value $0.001			25,000,000			$				$	3,000,000			$	373.50 (3)

 

(1)

This registration statement covers the sale by us of up to an aggregate of 25,000,000 shares of our common stock. Pursuant to Rule 416 under the Securities Act of 1933, this registration statement also covers any additional securities that may be offered or issued in connection with any stock dividend, stock split, recapitalization or other similar transaction effected without the receipt of consideration that results in an increase in the number of the outstanding shares of our common stock.

 

(2)

Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(a) under the Securities Act.

 

(3)

Previously paid.

 

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY DETERMINE.

 

 

 

 

The information contained in this prospectus is not complete and may be changed. No securities may be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these shares, and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

 

SUBJECT TO COMPLETION

Dated September      , 2018

 

 

PROSPECTUS

SKYLAB USA, INC.

25,000,000

SHARES OF COMMON STOCK

INITIAL PUBLIC OFFERING

___________________

 

This prospectus relates to our offering of 25,000,000 new shares of our common stock at a fixed offering price of $__ per share. There is no minimum number of shares that must be sold by us for the offering to proceed, and we will retain the proceeds from the sale of any of the offered shares. We have not made any arrangements to place funds raised in this offering in an escrow, trust or similar account. Any investor who purchases shares in this offering will have no assurance that other purchasers will invest in this offering. Accordingly, if we file for bankruptcy protection or a petition for insolvency bankruptcy is filed by creditors against us, your funds will become part of the bankruptcy estate and administered according to the bankruptcy laws.

 

The offering is being conducted on a self-underwritten, best efforts basis, which means our officers and directors will attempt to sell the shares with no commission or other remuneration payable to them for any shares they may sell.

 

There is no established public market for our common stock, and the offering price has been arbitrarily determined. Our common stock is not currently listed or quoted on any quotation service. Although we intend to apply for quotation on the OTCBB or OTCQB through a market maker, there can be no assurance that our common stock will ever be quoted on any quotation service or that any market for our stock will ever develop.

 

This offering will be open until the earlier of: (i) the maximum amount of shares have been sold; or (ii) twelve (12) months from the date of effectiveness of this registration statement of which this prospectus forms a part.

 

		Offering Price				Underwriting Discounts and Commissions (1)				Proceeds to Company Assuming 100% Subscribed				Proceeds to Company Assuming 75% Subscribed				Proceeds to Company Assuming 50% Subscribed				Proceeds to Company Assuming 25% Subscribed
Per Share		$					0			$				$				$				$
Gross/Net Proceeds(2)							0			$	_________			$	_________			$	_________			$	_________

 

	(1)	There are no arrangements or plans to use underwriters or broker/dealers to offer our common stock. However, we reserve the right to utilize the services of licensed broker/dealers and compensate these broker/dealers with a commission not to exceed 10% of the proceeds raised.
	(2)	The Company has already paid all expenses associated with this offering and there will be no deduction from the Gross Proceeds. Therefore, the Gross Proceeds received will be the same at the Net Proceeds.

 

We are an “emerging growth company” as defined under the federal securities laws and, as such, may elect to comply with certain reduced public company reporting requirements. The purchase of the securities offered through this prospectus involves a high degree of risk. See section entitled “Risk Factors” starting on page 24.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

 

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. The prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

 

The Date of This Prospectus is: September     , 2018

 

 

 

Table of Contents

 

	Page
Summary	1
The Offering	23
Risk Factors	24
Forward-Looking Statements	33
Use of Proceeds	34
Determination of Offering Price	35
Dilution	35
Plan of Distribution	35
Description of Securities	37
Interest of Named Experts and Counsel	40
Description of Business	40
Description of Property	41
Legal Proceedings	42
Market for Common Equity and Related Stockholder Matters	42
Management Discussion and Analysis of Financial Condition and Results of Operations	44
Changes in and Disagreements with Accountants	48
Directors and Executive Officers	49
Executive Compensation	50
Security Ownership of Certain Beneficial Owners and Management	51
Disclosure of Commission Position on Indemnification for Securities Act Liabilities	51
Certain Relationships and Related Transactions	52
Available Information	52
Dealer Prospectus Delivery Obligation	52
Other Expenses of Issuance and Distribution	II-1
Indemnification of Directors and Officers	II-2
Recent Sales of Unregistered Securities	II-2
Table of Exhibits	II-2
Undertakings	II-2
Signatures	II-5
Index to Financial Statements	F-1

  

 

 

 

Prospectus Summary

 

This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our ordinary shares. You should read this entire prospectus carefully, especially “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes appearing elsewhere in this prospectus, before making an investment decision.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

We were incorporated under the name of Pandora Venture Capital Corporation (“Pandora”) on May 9, 2014. Pandora was subsidiary of WRIT Media Group, a publicly traded company trading under the symbol WRIT. Pandora Venture Capital Corporation, a Florida Corporation, changed its name to Skylab USA, Inc. (the “Company”) on July 28, 2017. The Company acquired Skylab Apps Inc. (“SAI” or “Skylab”), via a Share Exchange Agreement dated April 26, 2017. The terms of the Share Exchange Agreement stipulated that the shareholders of SAI would sell all of their outstanding common shares, equal to 31,708,829 shares, to Pandora in exchange for 95% of the common shares of Pandora and 100% of the preferred shares of Pandora. The acquisition of SAI was completed on or about March 29, 2018. SAI is incorporated was incorporated in the State of Delaware on September 14, 2015 and is registered in the State of California as a foreign stock company.

 

SAI was created for the purpose of developing a SASS white label platform for influencer and brands to train, track, reward and monetize their communities. The SASS model provides the platform licensing. The platform is driven by the Company’s proprietary Gamification Engine, which allows the client to customize the platform to fit the needs of its target community. The Gamification Engine/IP/technology is licensed to Skylab by Skynet Group, Inc., a Nevada corporation, which is a related party to Skylab due to the fact that Mr. Dean Grey is a member of the Board of Directors of each entity and Mr. Grey and Ms. Lorrie Edelblute are officers of each entity.

 

 

 

 

 

Through the platform’s Content Management System (CMS), the client can modify many features of the platform without the need to work with outside platform developers. We have a domestic and international client base, including Australia, Spain, and Brazil.

 

Social media engagement measures the public shares, likes and comments for an online business’ social media efforts. The public’s engagement, or interaction with the social media platform, has historically been a common metric for evaluating social media performance.

 

Skylab is focused on the trend that platforms are becoming the new websites for the world. Companies such as Wordpress, Squarespace and Wixs have made building websites easy. Skylab makes building social platforms easy.

 

Our focus is to provide a highly engaging, differentiated experience where the combination of challenge and progress drives our product. Our social media engagement platform is one of the fastest growing technologies that allow clients to customize and mold the platform to fit the needs of their target market or community. Our product allows the client to reach out to a target community and enhance the users experience by allowing the user to track use. This, in turn, trains the behavior of continued use of the platform and rewards the user with targeted information that is specific to the community.

 

Interactive social media platforms are large and growing quickly, driven by key technology and consumer trends. This demand creates the potential for leading applications to emerge from the category. The proliferation of mobile devices is dramatically expanding the social media audience and our platform is the leading competitor for targeted communities to connect, track, and be rewarded without the unwanted advertising and content that doesn’t fit within the community goals. What sets us apart from the larger social media groups is White Papers and Stats. This function demonstrates the impact and user engagement in the targeted community.

 

As of September 30, 2017, we had $220,221 in current assets and current liabilities in the amount of $1,405,986. Accordingly, we had a working capital deficit of $1,185,765. Our current working capital is not sufficient to enable us to implement our business plan as set forth in this prospectus. As such, our monthly burn rate for the next twelve months is estimated at $84,000. We will need to sell a minimum of 33.33% of the shares offered in this prospectus for net proceeds of $1,000,000 in order to meet our financial obligations. Our ability to remain in business with less than $1,000,000 in this offering is questionable

 

We are offering for sale to investors a maximum of 25,000,000 shares of our common stock at an offering price of $_______ per share. Our business plan is to use the proceeds of this offering for continued IT development, market expansion, and operating expenses. However, our management has retained discretion to use the proceeds of the offering for other uses. There is no minimum investment amount for a single investor. We are offering the shares on a “best efforts” basis and there can be no assurance that all or any of the shares offered will be subscribed. If less than the maximum proceeds are available to us, our development and prospects could be adversely affected. There is no minimum offering required for this offering to close. The proceeds of this offering will be immediately available to us for our general business purposes. The maximum offering amount is 25,000,000 shares for gross proceeds of $_________.

 

Our address is 10120 South Eastern Avenue, Suite 200, Henderson, Nevada, 89052. Our phone number is 253.332.7362. Our fiscal year end is December 31.

 

Industry Background and Our Opportunity

 

This industry develops and publishes Apps for smart phones, mobile devices and desktop computers. Apps are typically sold in a special "Platform Store" that can be accessed through the device. Platforms are created to make the users experience seamless on all devices. Our opportunity is to capture target communities and create a platform that allows each user to have a customized experience when using the Platform. We believe our clients are limitless and include every company looking to build a specialized community tailored to their industry. However, it doesn’t stop there. A target community can also include clubs, fitness, sports, hobbies, schools, and any organization that is looking to create a positive experience for its users.

 

 

 

 

 

MAJOR PRODUCTS

 

Lifestyle and social networking apps

 

Smartphone platform users spend the most time on social networking and messaging apps. The category includes popular apps such as Facebook, Twitter, Pinterest, WhatsApp and Viber. Over the past five years, this category has grown significantly and is expected to account for 34.4% of all time spent using smartphone apps. Social networking and messaging apps are popular because they allow for increased connectivity with friends and family. These apps also allow people to connect with friends and family that live far away, such as in other countries. Historically, connecting with people in other countries has been difficult due to the high cost of phone calls and possible additional costs for text messages. Since many social networking and messaging apps are free for consumers to download and use, the cost of connecting with people is significantly reduced. Social networking and messaging apps often generate revenue through advertisement, in-platform purchases and games.

 

Entertainment

 

Entertainment apps include television and film apps such as Netflix, YouTube and ringtones and wallpaper downloads. Additionally, this segment also includes music and video apps such as Pandora, Spotify, and other video creation applications. Entertainment apps have become more popular over the past five years, as consumers increasingly access the internet through mobile devices. Therefore, more television, film and other media are now consumed on the go. Despite increasing consumption of television, film and other media via smartphones, this segment faces heavy competition from online piracy. Rather than paying for a mobile application to watch videos or listen to music, consumers can download the content directly to their phones or stream the content from websites that do not require consumers to purchase a subscription to view videos. Despite these challenges, the entertainment apps segment is expected to account for 18.9% of all time users spend on smartphone applications.

 

Other

 

Other apps include those for shopping, news (2.2%), weather, health and fitness, travel and navigation, personal finance, business, security and sports. Over the period, time spent on retail applications has been increasing as more consumers use their smartphones to order goods such as food. Although shopping apps have increased as a percentage of time, other applications in this category have decreased as other segments have grown at a more rapid pace. Tools and productivity apps are generally organizational and administrative. This includes email, cloud storage, calendars, translators and notation tools. Many tools and productivity apps are provided as part of the smartphone operating system.

 

Games

 

Games account for 16.7% of time spent on mobile apps. Over the past five years, smartphone games have become increasingly popular, as they provide a convenient, casual and low-cost alternative to video game systems. Furthermore, rising smartphone penetration across the United States has allowed developers to market games to different demographics. This includes older generations and women, who typically represent a smaller proportion of the market for video games. According to research from Flurry, a mobile analytics company, games such as solitaire and social turn-based, brain and quiz games are most popular with women above the age of 20 while strategy, shooter, racing, poker and action role-playing games are most popular with men above the age of 20. Over the five years to 2016, games have declined a share of all time spent on smartphone apps due to fast growth in other categories. In addition to accounting for a significant portion of time, games also generate a large portion of revenue; however, the way consumers spend money on games has changed. Developers have created more freemium apps, in which consumers are provided basic functions for free but must pay to access advanced features or virtual goods. This allows developers to entice consumers before requesting they pay for additional features. Freemium games are expected to continue to grow over the next five years, as developers focus on encouraging consumers to download games and get a sample before requesting payments.

 

 

 

 

MAJOR MARKETS

 

Consumers aged 30 to 49

 

Consumers aged 30 to 49 are estimated to represent 32.4% of industry revenue. This segment has been growing over the past five years as consumers in this age category have become technologically aware and smartphone penetration has increased rapidly. More games, tools and productivity apps are being developed to cater to this market, as they typically have significantly higher incomes than consumers in the 18 to 29 age bracket. Additionally, consumers in this age bracket are most likely to make purchases for children. Over the past five years, this segment has expanded as a proportion of revenue and is expected to continue doing so over the next five years.

 

Consumers aged 18 to 29

 

Consumers aged 18 to 29 are estimated to account for 42.4% of industry revenue. These consumers exhibit the highest level of smartphone penetration and have become increasingly reliant on using apps as part of everyday life over the past five years.

 

Consumers in this age range also use social networking sites like Facebook the most, which is the industry's largest product offering. Over the past five years, consumers aged 18 to 29 have remained the largest segment; however, the segment has shrunk as a proportion of revenue as smartphones have been increasingly adopted by older consumers. Consumers aged 18 to 29 are expected to remain the single largest portion of revenue over the next five years; however, the development of more apps aimed at older demographics will slowly eat into its share of industry revenue.

 

Consumers aged 50 and older

 

Consumers aged 50 and over account for the smallest proportion of revenue, with an estimated 25.2% of industry revenue. Consumers in this age bracket are the least likely to own a smartphone and download paid apps. They are also least likely to use social networking sites, the industry's largest product offering. Despite historically low usage, over the past five years this category has grown as a percentage of revenue as consumers aged 50 and over become increasingly comfortable with technology and increase their use of social networking

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Offering

 

Securities Being Offered		Up to 25,000,000 shares of our common stock.
Offering Price		The offering price of the common stock is $____ per share. There is no public market for our common stock. We cannot give any assurance that the shares offered will have a market value, or that they can be resold at the offered price if and when an active secondary market might develop, or that a public market for our securities may be sustained even if developed. The absence of a public market for our stock will make it difficult to sell your shares in our stock.   Upon the effectiveness of the registration statement of which this prospectus is a part, we intend to apply to FINRA for quotation on the OTC Bulletin Board and OTCQB, through a market maker that is a licensed broker dealer, to allow the trading of our common stock upon our becoming a reporting entity under the Securities Exchange Act of 1934. There is no guarantee, however, that our common stock will ever be quoted on the OTC Bulletin Board or OTCQB.
Minimum Number of Shares To Be Sold in This Offering		n/a
Maximum Number of Shares To Be Sold in This Offering		25,000,000
Securities Issued and to be Issued		25,006,269 shares of our common stock are issued and outstanding as of the date of this prospectus. Our sole officer and director, Dean Grey owns an aggregate of 42.48% of the outstanding shares of our Company and therefore has substantial control. Upon the completion of this offering, Mr. Grey will own an aggregate of approximately 26.55% of the issued and outstanding shares of our common stock if the maximum number of shares is sold.
Number of Shares Outstanding After the Offering If All the Shares Are Sold		40,006,269
Use of Proceeds		If we are successful at selling all the shares we are offering, our net proceeds from this offering will be approximately $_________. We intend to use these proceeds to meet operational needs and invest in addition to technology and marketing.
Offering Period		This offering will be open until the earlier of: (i) the maximum number of shares have been sold; (ii) twelve (12) months from the date of effectiveness of this registration statement of which this prospectus forms a part.

 

Summary Financial Information

 

Balance Sheet Data		As of June 30, 2018 (unaudited)				As of December 31, 2017 (audited)				As of December 31, 2016 (audited)
Cash		$	75,249			$	33,064			$	134,930
Total Current Assets		$	82,549			$	44,764			$	209,894
Total Liabilities		$	1,775,347			$	1,514,487			$	1,251844
Total Stockholders’ Equity (Deficit)		$	–			$	(1,074,468	)		$	(496,355	)

 

Statement of Operations		For the Year ended December 31, 2017 (audited)				For the Year ended December 31, 2016 (audited)
Revenue		$	562,368			$	733,200
Net Profit (Loss) for Reporting Period		$	(1,617,247	)		$	(22,667	)

 

 

 

 

Statement of Operations		For the six months ended June 30, 2018 (unaudited)				For the six months ended June 30, 2017 (unaudited)
Revenue		$	219,615			$	293,292
Net Profit (Loss) for Reporting Period		$	724,189			$	601,475

 

 

Risk Factors

 

In addition to the other information in this prospectus, the following risk factors should be considered carefully in evaluating our business before purchasing any of our shares of common stock. A purchase of our common stock is speculative in nature and involves a lot of risks. No purchase of our common stock should be made by any person who is not in a position to lose the entire amount of his or her investment.

 

Risks Associated with Our Financial Condition

 

Because of our history of net losses, there is an increased risk associated with an investment in our Company.

 

We have earned limited revenue since our inception, which makes it difficult to evaluate whether we will operate profitably. Revenues generated were $562,368 for the year ended December 31, 2017 and $733,200 for the year ended December 31, 2016. Operating expenses were $2,035,432 and $731,762 for the years ended December 31, 2017 and 2016, respectively. We have incurred a net loss of $1,617,247 and $22,667 for the years ended December 31, 2017 and 2016, respectively.

 

Revenues generated were $219,615 for the six-month period ended June 30, 2018 and $293,292 for the same period from the prior year. Operating expenses were $914,468 for the six-month period ended June 30, 2018 and $847,769 for the same period from the prior year. We have incurred a net loss of $677,229 for the six-month period ended June 30, 2018 and $601,475 for the same period from the prior year.

 

We have not attained sustained profitable operations since inception and are dependent upon obtaining financing or generating revenue from operations to continue operations for the next twelve months. As of June 30, 2018, we had cash in the amount of $75,249. Our future is dependent upon our ability to obtain financing or upon future profitable operations. We reserve the right to seek additional funds through private placements of our common stock and/or through debt financing. Our ability to raise additional financing is unknown. We do not have any formal commitments or arrangements for the advancement or loan of funds. As a result, there is an increased risk that you could lose the entire amount of your investment in our company.

 

Because we have a limited operating history, it is difficult to evaluate your investment in our stock.

 

Evaluation of our business will be difficult because we have a limited operating history. To date, revenues are not substantial enough to maintain us without additional capital injection if we determine to pursue a growth strategy before significant revenues are generated. We face a number of risks encountered by early-stage companies, including our need to develop infrastructure to support growth and expansion; our need to obtain long-term sources of financing; our need to establish our marketing, sales and support organizations; and our need to manage expanding operations. Our business strategy may not be successful, and we may not successfully address these risks. If we are unable to sustain profitable operations, investors may lose their entire investment in us.

 

 

 

 

Because our offering will be conducted on a best efforts basis, there can be no assurance that we can raise the money we need.

 

The shares are being offered by us on a "best efforts" basis with no minimum and without benefit of a private placement agent. We can provide no assurance that this offering will be completely sold out. If less than the maximum proceeds are available, our business plans and prospects for the current fiscal year could be adversely affected.

 

In order to fund our operations for the next twelve months, we believe that we need approximately $1,000,000 in gross proceeds from this offering. We believe that $1,000,000 in gross proceeds will be sufficient to continue our current operations and business activities for the next twelve months. We believe that $3,000,000 from this offering would allow us to expand our business through additional technology, marketing and meeting our ongoing operational expenses. Our available funds combined with revenues will not fund our activities for the next twelve months. As of June 30, 2018, our current cash on hand is approximately $75,249. Our current monthly burn rate is approximately $40,000 per month. Based on our current burn rate, we will run out of funds in the next twelve months without additional capital and assuming revenues based on past performance during that period. If we fail to raise sufficient funds in this offering, investors may lose their entire cash investment.

 

Given that there is no minimum offering amount and we need to raise $1,000,000 to continue operations for the next twelve months, investors bear the complete risk of losing their entire investment if we are unable to raise enough proceeds from this offering to continue operations. If we are not able to raise more than $1,000,000, we will be limited in our ability to grow our business in technologies and reach additional clients. This will limit our ability to generate significant revenues and cause a delay becoming profitable. Moreover, the less money we are able to raise in this offering, the more the risk that you will lose your entire investment.

 

Our operation results may fluctuate from quarter to quarter, and therefore will be difficult to predict.

 

Our operating results fluctuate and will continue to fluctuate in the future. As a result, our past quarterly operating results are not necessarily indicators of future performance. Our quarterly operating results can, and will be, influenced by numerous factors. Many of these factors are unable to predict, and some are outside of our control, including:

 

·

our ability to grow our user base and user engagement;

·

our ability to attract and retain these users;

·

the occurrence of unplanned significant events, such as natural disasters;

·

the pricing of our products and services;

·

the development and introduction of new products or services or changes in features of existing products or services;

·

the impact of our competitors or competitive products and services they produce;

·

our ability to maintain or increase revenue;

·

our ability to maintain or improve gross margins and operating margins;

·

increases in research and development, marketing and sales and other operating expenses that we may incur to grow and expand our operations and to remain competitive;

·

stock-based compensation expenses;

·

expenses relating to the acquisition of businesses, talent, technologies or intellectual property, including potentially significant amortization costs;

·

system failures resulting in the inability for our users to access our products and services;

·

breaches of security or privacy, and the costs associated with correcting such breaches;

·

adverse litigation judgments, settlements or other litigation-related costs, and the fees associated with investigating and defending claims;

·

changes in the legislative or regulatory environment, including with respect to security, privacy or enforcement by government regulators, including fines, orders or consent decrees;

·

fluctuations in currency exchange rates and changes in the proportion of our revenue and expenses denominated in foreign currencies; and

·

changes in global business conditions.

 

 

 

 

 

We have a limited operating history and given the rapidly evolving markets in which we compete, our historical operating results may not be useful to you in predicting our future operating results. If our revenue growth rate slows in the future it will cause our operating results to fluctuate.

 

Risks Associated with Our Business Model

 

Because we may be unable fund the business, we could face significantly harm to our business plans, prospects, results of operations and financial condition.

 

Commercializing our platform depends on a number of factors, including but not limited to:

 

·

development of an adequate sales force and sales channels to market our product;

·

demonstration of efficiencies that will make our product attractively priced;

·

further product development; and

·

overall demand for application intelligence solutions.

 

We cannot assure investors that the strategies we intend to employ will enable us to support the development and distribution of our interactive platform. If we are unable to implement the necessary steps of our business plan, our prospects, results of operations and financial condition will suffer.

 

We will rely in part upon a sales team to distribute and sell our products, and we may be adversely affected if those parties do not actively promote our products or pursue customers who would have a potential demand for our products.

 

We estimate that a significant portion of our revenue will come from sales to partners including reps, distributors and resellers. These relationships may be subject to termination at any time.

 

We intend to continue to seek strategic relationships to distribute and sell our interactive software. We, however, may not be able to negotiate acceptable relationships in the future and cannot predict whether current or future relationships will be successful.

 

If the markets for interactive social media platforms do not experience significant growth or if our products do not achieve broad acceptance, we will not be able to achieve revenues.

 

We hope to achieve continued revenues from sales of websites and apps based on our platform and services. We cannot accurately predict, however, future growth rates or the size of the market for our industry in the United States and other markets we engage in. Demand for our applications may not occur as anticipated, or may decrease, either generally or in specific geographic markets, during particular time periods. The expansion of our interactive platform in the market depends on a number of factors, such as:

 

·

the cost, performance and appearance of our products and products offered by our competitors;

·

public perceptions regarding our products and the effectiveness and value of our products;

·

customer satisfaction with our products; and

·

marketing efforts and publicity regarding the needs for our product and the public demand for our product

  

Even if our product gains wide market acceptance, we may not adequately address market requirements and may not be able to expand market acceptance. If our products do not achieve wide market acceptance, we may not be able to achieve our anticipated level of growth, we may not achieve revenues and results of operations would suffer.

 

If we are unable to gauge trends and react to changing consumer preferences in a timely manner, our sales will decrease, and our business may fail.

 

We believe our success depends in substantial part on our ability to offer products that reflect current needs and anticipate, gauge and react to changing consumer demands in a timely manner. Our business is vulnerable to changes in consumer preferences. We will continue to modify and improve the function of our apps. However, if we misjudge consumer needs for our products, our ability to generate sales could be impaired resulting in the failure of our business. There are no assurances that our future products and will be successful, and in that regard, any unsuccessful products could also adversely affect our business.

 

 

 

 

 

In the event that we are unable to successfully compete in the Smartphone Platform Developer industry, we may not be able to achieve profitable operations.

 

We face substantial competition in the industry. Due to our small size, it can be assumed that many of our competitors have significantly greater financial, technical, marketing and other competitive resources. Accordingly, these competitors may have already begun to establish brand-recognition with consumers. We will attempt to compete against these competitors by developing features that exceed the features offered by competitors. However, we cannot assure you that our products will outperform competing products or those competitors will not develop new products that exceed what we provide. In addition, we may face competition based on price. If our competitors lower the prices on their products, then it may not be possible for us to market our products at prices that are economically viable. Increased competition could result in:

 

·

Lower than projected revenues;

·

Price reductions and lower profit margins; and

·

The inability to develop and maintain our products with features and usability sought by potential customers.

  

Any one of these results could adversely affect our business, financial condition and results of operations. In addition, our competitors may develop competing products that achieve greater market acceptance. It is also possible that new competitors may emerge and acquire significant market share. Our inability to achieve sales and revenue due to competition will have an adverse effect on our business, financial condition and results of operations.

 

Our apps may contain bugs and experience security breaches, which could adversely affect our reputation and cause us to incur significant costs.

 

Bugs and security breaches may be found in our products. Any such defects could cause us to incur significant repair costs and divert the attention of our personnel from product development efforts, and cause significant customer relations and business reputation problems. Any such defects could force us to undertake a research and repair program, which could cause us to incur significant expenses and could harm our reputation and that of our apps. If we deliver products with defects, our credibility and the market acceptance and sales of our products could be harmed.

 

If we do not effectively implement measures to sell our products, we may not achieve sustained revenues and you will lose your entire investment.

 

Over the past five years, revenue volatility in the Smartphone Platform Developers industry has been very high. This is due to rapidly evolving technology and competition. Marketing and sales is the driving force behind branding applications and is dominated by the larger companies such as Facebook and Twitter. We must implement and execute solid sales and marketing staff to maintain revenue share in the marketplace.

 

If we are unable to successfully manage growth, our operations could be adversely affected.

 

Our progress is expected to require the full utilization of our management, financial and other resources, which to date has occurred with limited working capital. Our ability to manage growth effectively will depend on our ability to improve and expand operations, including our financial and management information systems, and to recruit, train and manage sales personnel. There can be no absolute assurance that management will be able to manage growth effectively.

 

If we do not properly manage the growth of our business, we may experience significant strains on our management and operations and disruptions in our business. Various risks arise when companies and industries grow quickly. If our business or industry grows too quickly, our ability to meet customer demand in a timely and efficient manner could be challenged. We may also experience development delays as we seek to meet increased demand for our products. Our failure to properly manage the growth that we, or our industry, might experience could negatively impact our ability to execute on our operating plan and, accordingly, could have an adverse impact on our business, our cash flow and results of operations, and our reputation with our current or potential customers.

 

 

 

 

If we fail to grow our user base, or if user engagement on our platform decline, our revenue, business and operating results may be harmed.

 

Our financial performance will continue to be determined by our success in growing the number of users and increasing their overall level of engagement on our platform. If people do not perceive our products and services to be useful, engaging and reliable, we will not be able to attract new users or increase the frequency engagement with our platform. There is no guarantee that we will not experience an erosion of our user base or engagement levels. A number of factors could potentially negatively affect user growth and engagement, including if:

 

·

users switch other products or services as an alternative to ours;

·

influential users, such as certain age demographics find that an alternative product or service is better suited for their needs;

·

we are unable to convince potential new users of the value and usefulness of our products and services;

·

there is a decrease in the perceived quality of the content generated by our users;

·

we fail to introduce new and improved products or services or if we introduce new products or services that are not favorably received;

·

Technical issues prevent us from delivering our products or services in a competent manner or otherwise affect the user experience;

 

If we are unable to increase our user growth or engagement, or if they decline, this could result in our products and services being less attractive to potential new users which would have a material and adverse impact on our business, financial condition and operating results.

 

If we are unable to hire and retain key personnel, we may not be able to implement our business plan.

 

Due to the technical nature of our business, having certain key personnel is essential to the development and marketing of the products we plan to sell and thus to the entire business itself. Consequently, the loss of any of those individuals may have a substantial effect on our future success or failure. We may have to recruit qualified personnel with competitive compensation packages, equity participation, and other benefits that may affect the working capital available for our operations. Management may have to seek to obtain outside independent professionals to assist them in assessing the merits and risks of any business proposals as well as assisting in the development and operation of many company projects. No assurance can be given that we will be able to obtain such needed assistance on terms acceptable to us. Our failure to attract additional qualified employees or to retain the services of key personnel could have a material adverse effect on our operating results and financial condition.

 

Our officers have no experience in managing a public company, which increases the risk that we will be unable to establish and maintain all required disclosure controls and procedures and internal controls over financial reporting and meet the public reporting and the financial requirements for our business.

 

Our management has a legal and fiduciary duty to establish and maintain disclosure controls and control procedures in compliance with the securities laws, including the requirements mandated by the Sarbanes-Oxley Act of 2002. Although our officers have substantial business experience, they have no experience in managing a public company. The standards that must be met for management to assess the internal control over financial reporting as effective are new and complex, and require significant documentation, testing and possible remediation to meet the detailed standards. Because our officers have no prior experience with the management of a public company, we may encounter problems or delays in completing activities necessary to make an assessment of our internal control over financial reporting, and disclosure controls and procedures. If we cannot assess our internal control over financial reporting as effective or provide adequate disclosure controls or implement sufficient control procedures, investor confidence and share value may be negatively impacted.

 

We will incur increased costs and our management will face increased demands as a result of operating as a public company.

 

As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. We estimate that we will incur no less than $50,000 in these expenses on an annual basis to exist as a public company. Those expenses will be higher if our business volume and activity increases. Those obligations could diminish our ability to fund our operations and may prevent us from meeting our normal business obligations.

 

In addition, our administrative staff will be required to perform additional tasks. For example, in anticipation of becoming a public company, we will need to adopt additional internal controls and disclosure controls and procedures and bear all of the internal and external costs of preparing and distributing periodic public reports in compliance with our obligations under applicable securities laws.

 

 

 

 

In addition, changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act, the Dodd-Frank Act and related regulations implemented by the Securities and Exchange Commission are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time-consuming. We are currently evaluating and monitoring developments with respect to new and proposed rules and cannot predict or estimate the amount of additional costs we may incur or the timing of such costs. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as regulatory and governing bodies provide new guidance. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management's time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice, regulatory authorities may initiate legal proceedings against us and our business may be harmed. We also expect that being a public company and these new rules and regulations will make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit committee and compensation committee, and attract and retain qualified executive officers.

 

The increased costs associated with operating as a public company may decrease our net income or increase our net loss, and may cause us to reduce costs in other areas of our business or increase the prices of our products or services to offset the effect of such increased costs. Additionally, if these requirements divert our management's attention from other business concerns, they could have a material adverse effect on our business, financial condition and results of operations.

 

Because we have two persons as our officers and directors that occupy all corporate positions, our internal controls may be inadequate and we may face negative consequences related to having them set their own salaries and making all of the decisions affecting our company.

 

Because we have only two officers, Dean Grey and Lorrie Edelblute, they might not be adequately able to administer our internal controls over disclosure or financial reporting. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Since we have only two officers and directors, the controls can easily be circumvented by our officers and directors, which could result in adverse consequences to us.

 

In addition, they will have an overwhelming influence in determining the outcome of all corporate transactions or other matters, including setting their own salary and perquisites, using corporate assets and funds to the designs he feels best, and also the power to prevent or cause a change in control. As a result, our two officers and directors could establish a high salary in the future, which will drain our capital and prevent us from operating. You will not be able to control the decisions he makes and you may find them in conflict with your personal designs for this business.

 

Risks Related to Legal Uncertainty

 

Our inability to protect our brand name and proprietary rights in the United States and foreign countries could materially adversely affect our business prospects and competitive position.

 

Our success depends on our ability to obtain and maintain branding and other proprietary-right protection in the United States and other countries. If we are unable to obtain or maintain these protections, we may not be able to prevent third parties from using our proprietary rights.

 

If we are the subject of future state and federal level regulation imposed on companies that distribute apps, our business will likely be financially impacted.

 

In the course of our planned operations, we may become subject to state and federal regulation. Because of the sensitive nature of information consumers make available to apps and platform marketplaces, security and privacy issues related to third-party platform developers have become a central concern, spurring new regulation. As a result, policies that eliminate developers' access to private information have the potential to negatively affect industry revenue growth moving forward.

 

 

 

 

Our commercial success depends significantly on our ability to develop and commercialize our platform without infringing the intellectual property rights of third parties.

 

Our commercial success will depend, in part, on operating our business without infringing the trademarks or proprietary rights of third parties. Third parties that believe we are infringing on their rights could bring actions against us claiming damages and seeking to enjoin the development, marketing and distribution of our apps. If we become involved in any litigation, it could consume a substantial portion of our resources, regardless of the outcome of the litigation. If any of these actions are successful, we could be required to pay damages and/or to obtain a license to continue to develop or market our products, in which case we may be required to pay substantial royalties. However, any such license may not be available on terms acceptable to us or at all. Ultimately, we could be prevented from commercializing a product or forced to cease some aspect of our business operations as a result of patent infringement claims, which would harm our business.

 

RISKS RELATED TO AN EMERGING GROWTH COMPANY

 

We will face new challenges, increased costs and administrative responsibilities as a public company, particularly after we are no longer an “emerging growth company.”

 

Upon the effectiveness of this registration statement, we intend to file a Form 8-A registration statement, making us a fully reporting company and subject of the reporting requirements under Section 14 of the U.S. Securities Exchange Act of 1934. As a fully reporting company, we will need to comply with certain laws, regulations and requirements, including certain provisions of the Sarbanes-Oxley Act of 2002, or Sarbanes-Oxley, certain regulations of the Securities and Exchange Commission, or SEC, and certain of the OTCQB listing rules applicable to public companies, should we obtain a listing of our common stock on the OTCQB. Complying with these statutes, regulations and requirements will occupy a significant amount of the time of our board of directors and management and will significantly increase our costs and expenses.

 

We will need to:

 

institute a more comprehensive compliance framework;

 

update, evaluate and maintain a system of internal controls over financial reporting in compliance with the requirements of Section 404 of Sarbanes-Oxley and the related rules and regulations of the SEC;

 

prepare and distribute periodic public reports in compliance with our obligations under the federal securities laws;

 

revise our existing internal policies, such as those relating to disclosure controls and procedures and insider trading;

 

comply with SEC rules and guidelines including a requirement to provide our consolidated financial statements in interactive data format using eXtensible Business Reporting Language;

 

involve and retain to a greater degree outside counsel and independent accountants in the above activities; and

 

enhance our investor relations function.

 

However, for as long as we are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or JOBS Act, we are permitted to, and intend to, take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. We will remain an emerging growth company for up to five years, although we would cease to be an emerging growth company as of December 31 of a particular year (i) if we had gross revenue of $1 billion or more in such year, (ii) if the market value of our common stock that is held by non-affiliates exceeds $700 million as of June 30 in such year, (iii) if at any point in such year, we would have issued more than $1 billion of non-convertible debt during the three-year period prior thereto or (iv) on the date on which we are deemed a “large accelerated issuer” as defined under the federal securities laws. For so long as we remain an emerging growth company, we will not be required to:

 

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

 

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

 

submit certain executive compensation matters to shareholder advisory votes pursuant to the “say on frequency” and “say on pay” provisions (requiring a non-binding shareholder vote to approve compensation of certain executive officers) and the “say on golden parachute” provisions (requiring a non-binding shareholder vote to approve golden parachute arrangements for certain executive officers in connection with mergers and certain other business combinations) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010; and

 

include detailed compensation discussion and analysis in our filings under the Securities Exchange Act of 1934, as amended, or Exchange Act, and instead may provide a reduced level of disclosure concerning executive compensation.

 

 

 

 

Although we intend to rely on the exemptions provided in the JOBS Act, the exact implications of the JOBS Act for us are still subject to interpretations and guidance by the SEC and other regulatory agencies. In addition, as our business grows, we may no longer satisfy the conditions of an emerging growth company. We are currently evaluating and monitoring developments with respect to these new rules, and we cannot assure you that we will be able to take advantage of all of the benefits from the JOBS Act. In addition, we also expect that being a public company subject to these rules and regulations will make it more expensive for us to acquire and maintain adequate director and officer liability insurance. These factors could also make it more difficult for us to attract and retain qualified executive officers and members of our board of directors.

 

Failure to establish and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could have a material adverse effect on our business and share price.

 

As a publicly traded company, we will be required to document and test our internal control procedures in order to satisfy the requirements of Section 404(a) of Sarbanes-Oxley, which will require, beginning with the filing of our second annual report with the SEC, annual management assessments of the effectiveness of our internal control over financial reporting. However, as an emerging growth company, our independent registered public accounting firm will not be required to formally attest to the effectiveness of our internal control over financial reporting pursuant to Section 404(b) until the later of the year following our first annual report required to be filed with the SEC or the date we are no longer an emerging growth company. During the course of our testing, we may identify material weaknesses that we may not be able to remediate in time to meet our deadline for compliance with Section 404.

 

Testing and maintaining internal control can divert our management’s attention from other matters that are important to the operation of our business. We also expect the regulations to increase our legal and financial compliance costs, make it more difficult to attract and retain qualified executive officers and members of our board of directors, particularly to serve on our audit committee, and make some activities more difficult, time-consuming and costly. We may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404 and, when applicable to us, our independent registered public accounting firm may not be able or willing to issue an unqualified report on the effectiveness of our internal control over financial reporting. If we conclude that our internal control over financial reporting is not effective, it could have a material adverse effect on our financial condition, results of operations and market for our common stock, and could subject us to regulatory scrutiny.

 

Risks Related to This Offering

 

If a market for our common stock does not develop, shareholders may be unable to sell their shares.

 

Prior to this offering, there has been no public market for our securities and there can be no assurance that an active trading market for the securities offered herein will develop after this offering, or, if developed, be sustained. We anticipate that, upon completion of this offering, the common stock will be eligible for quotation on the OTC Bulletin Board and OTCQB. If for any reason, however, our securities are not eligible for initial or continued quotation on the OTC Bulletin Board, OTCQB or a public trading market does not develop, purchasers of the common stock may have difficulty selling their securities should they desire to do so and purchasers of our common stock may lose their entire investment if they are unable to sell our securities.

 

Our common stock price may be volatile and could fluctuate widely in price, which could result in substantial losses for investors.

 

The market price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control, including:

 

·

innovations or new products and services by us or our competitors;

·

government regulation of our products and services;

·

the establishment of partnerships with other companies;

·

intellectual property disputes;

·

additions or departures of key personnel;

·

sales of our common stock;

·

our ability to integrate operations, technology, products and services;

·

our ability to execute our business plan;

·

operating results below expectations;

·

loss of any strategic relationship;

·

industry developments;

·

economic and other external factors; and

·

period-to-period fluctuations in our financial results.

 

 

 

 

 

You should consider any one of these factors to be material. Our stock price may fluctuate widely as a result of any of the above.

 

In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock.

 

Our management will have broad discretion over the use of the proceeds we receive in this offering and might not apply the proceeds in ways that increase the value of your investment.

 

The offering has no escrow, and investor funds may be used on receipt. There is no escrow of any funds received by us in this offering, and any funds received may be used by us for any corporate purpose as the funds are received.

 

We intend to use the money raised in this offering as detailed in “Use of Proceeds” section of this prospectus. However, our management has the discretion to use the money as it sees fit, and may diverge from using the proceeds of this offering as explained herein. The use of proceeds may not be used to increase the value of your investment.

 

Because FINRA sales practice requirements may limit a stockholder’s ability to buy and sell our stock, investors may not be able to sell their stock should they desire to do so.

 

In addition to the "penny stock" rules described below, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may have the effect of reducing the level of trading activity in our common stock. As a result, fewer broker-dealers may be willing to make a market in our common stock, reducing a stockholder's ability to resell shares of our common stock.

 

Because state securities laws may limit secondary trading, investors may be restricted as to the states in which they can sell the shares offered by this prospectus.

 

If you purchase shares of our common stock sold in this offering, you may not be able to resell the shares in any state unless and until the shares of our common stock are qualified for secondary trading under the applicable securities laws of such state or there is confirmation that an exemption, such as listing in certain recognized securities manuals, is available for secondary trading in such state. There can be no assurance that we will be successful in registering or qualifying our common stock for secondary trading, or identifying an available exemption for secondary trading in our common stock in every state. If we fail to register or qualify, or to obtain or verify an exemption for the secondary trading of, our common stock in any particular state, the shares of common stock could not be offered or sold to, or purchased by, a resident of that state. In the event that a significant number of states refuse to permit secondary trading in our common stock, the market for the common stock will be limited which could drive down the market price of our common stock and reduce the liquidity of the shares of our common stock and a stockholder's ability to resell shares of our common stock at all or at current market prices, which could increase a stockholder's risk of losing some or all of his investment.

 

Because we do not expect to pay dividends for the foreseeable future, investors seeking cash dividends should not purchase our common stock.

 

We have never declared or paid any cash dividends on our common stock. We currently intend to retain future earnings, if any, to finance the expansion of our business. As a result, we do not anticipate paying any cash dividends in the foreseeable future. Our payment of any future dividends will be at the discretion of our board of directors after taking into account various factors, including but not limited to our financial condition, operating results, cash needs, growth plans and the terms of any credit agreements that we may be a party to at the time. Accordingly, investors must rely on sales of their own common stock after price appreciation, which may never occur, as the only way to realize their investment. Investors seeking cash dividends should not purchase our common stock.

 

 

 

 

Because we will be subject to the “Penny Stock” rules, the level of trading activity in our stock may be reduced.

 

Broker-dealer practices in connection with transactions in “penny stocks” are regulated by penny stock rules adopted by the Securities and Exchange Commission. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on some national securities exchanges or quoted on Nasdaq). The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and, if the broker-dealer is the sole market maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market, and monthly account statements showing the market value of each penny stock held in the customer’s account. In addition, broker-dealers who sell these securities to persons other than established customers and “accredited investors” must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. Consequently, these requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security subject to the penny stock rules, and investors in our common stock may find it difficult to sell their shares.

  

If our shares are quoted on the OTC Bulletin Board or OTCQB, we will be required to remain current in our filings with the SEC and meet other obligations, the failure of which could risk us to removal from the quotation service.

 

There is no guarantee that our common stock will ever be quoted on the OTC Bulletin Board or OTCQB. However, in the event that our shares are quoted on the OTC Bulletin Board or OTCQB, we will be required to remain current in our filings with the SEC and, for eligibility on the OTCQB, we must maintain a stock price above $0.01 per share and pay annual dues. In the event that we become delinquent in these requirements, we may be relegated to an inferior quotation service or quotation of our common stock could be terminated. If our shares are not eligible for quotation on the OTC Bulletin Board or OTCQB, investors in our common stock may find it difficult to sell their shares.

 

Because purchasers in this offering will experience immediate and substantial dilution in the net tangible book value of their common stock, you may experience difficulty recovering the value of your investment.

 

Purchasers of our securities in this offering will experience immediate and substantial dilution in the net tangible book value of their common stock from the initial public offering price. Dilution in net tangible book value per share represents the difference between the amount per share paid by purchasers of shares of our common stock in this offering and the pro forma net tangible book value per share of our common stock immediately following this offering. The dilution experienced by investors in this offering will result in a net tangible book value per share that is less than the offering price of $________ per share. Such dilution may depress the value of the company’s common stock and make it more difficult to recover the value of your investment in a timely manner should you chose sell your shares.

 

If we undertake future offerings of our common stock, purchasers in this offering will experience dilution of their ownership percentage.

 

Generally, existing shareholders will experience dilution of their ownership percentage in the company if and when additional shares of common stock are offered and sold. In the future, we may be required to seek additional equity funding in the form of private or public offerings of our common stock. In the event that we undertake subsequent offerings of common stock, your ownership percentage, voting power as a common shareholder, and earnings per share, if any, will be proportionately diluted. This may, in turn, result in a substantial decrease in the per-share value of your common stock.

 

Forward-Looking Statements

 

This prospectus contains forward-looking statements that involve risks and uncertainties. We use words such as anticipate, believe, plan, expect, future, intend and similar expressions to identify such forward-looking statements. The actual results could differ materially from our forward-looking statements. Our actual results are most likely to differ materially from those anticipated in these forward-looking statements for many reasons, including the risks faced by us described in this Risk Factors section and elsewhere in this prospectus.

 

 

 

 

Use of Proceeds

 

The net proceeds to us from the sale of up to 25,000,000 shares of common stock offered at a public offering price of $_____ per share will vary depending upon the total number of shares sold. The following table summarizes, in order of priority the anticipated application of the proceeds we will receive from this offering if the maximum number of shares is sold:

 

		Amount Assuming Maximum Offering				Percent of Maximum
GROSS OFFERING		$	–				100%
Commissions		$	–				0%
Offering Expenses		$	–				0%
Net Proceeds		$	–				100%
USE OF NET PROCEEDS			–
IT Development		$	–				33.33%
Market Expansion		$	–				33.33%
Operations		$	–				33.33%
TOTAL APPLICATION OF NET PROCEEDS		$	–				100.0%

 

Commissions: Shares will be offered and sold by us without special compensation or other remuneration for such efforts. We do not plan to enter into agreements with finders or securities broker-dealers whereby the finders or broker-dealers would be involved in the sale of the Shares to the investors. Shares will be sold directly by us, and no fee or commission will be paid. However, we reserve the right to utilize the services of licensed broker/dealers and compensate these broker/dealers with a commission not to exceed 10% of the proceeds raised.

 

IT Development: We intend to use approximately $_________, or one-third (1/3) of the net proceeds of this offering to further develop influencer software and add new features. In addition, we will increase the stability, speed, security and scalability of our software.

 

Market Expansion: We intend to use approximately $_________, or one-third (1/3) of the net proceeds of this offering to launch the influencer software and open a minimum of 3 new international markets. This will require the expansion of our sale and marketing team. We will hire additional sales personnel and increase the number of our marketing team.

 

Operations: We intend to use approximately $_________, or one-third (1/3) of the net proceeds of this offering to compensate C-Level staff who will act as the support system to our sales and marketing team in addition to performing administrative functions. A portion of the proceeds will also be used to legal/accounting fees and pay for patents needed to protect our proprietary products.

 

In the event that less than the maximum number of shares is sold we anticipate application of the proceeds we will receive from this offering, in order of priority, will be as follows:

 

			Amount Assuming 75% of Offering			Percent				Amount Assuming 50% of Offering				Percent					Amount Assuming 25% of Offering				Percent
GROSS OFFERING		$	–				100%			$	–				100%			$	–				100%
Commission		$	–				–			$	–				–			$	–				-
Offering Expenses		$	–				0%			$	–				0%			$	–				0%
Net Proceeds		$	–				100%			$	–				100%			$	–				100%
USE OF NET PROCEEDS
IT Development		$	–				33.33%			$	–				33.33%			$	–				33.33%
Market Expansion		$	–				33.33%			$	–				33.33%			$	–				33.33%
Operations		$	–				33.33%			$	–				33.33%			$	–				33.33%
TOTAL APPLICATION OF NET PROCEEDS		$	–				100.0%			$	–				100.0%			$	–				100.0%

 

 

 

 

Determination of Offering Price

 

The $__ per share offering price of our common stock was arbitrarily chosen by management. There is no relationship between this price and our assets, earnings, book value or any other objective criteria of value.

 

Dilution

 

Our net tangible book value as of June 30, 2018 was approximately $_________ or $_________ per share of common stock. Net tangible book value per share is determined by dividing our total tangible assets, less total liabilities, by the number of share of our common stock outstanding as of ______________ ______, 20______. Dilution with respect to net tangible book value per share represents the difference between the amount per share paid by purchasers of shares of common stock in this offering and the net tangible book value per share of our common stock immediately after this offering.

 

After giving effect to the assumed sale of shares of common stock in this offering at an assumed public offering price of $ per share of common stock our adjusted net tangible book value as of ______________ ______, 20______would have been approximately $______ or $_______ per share. This represents an immediate increase in net tangible book value of $ per share to existing stockholders and immediate dilution of $ per share to investors purchasing our securities in this offering at the public offering price. The following table illustrates this dilution on a per share basis:

 

Assumed public offering price per share of common stock		$
Net tangible book value per share as of ______________ ______, 20______		$
Increase in net tangible book value per share attributable to this offering		$
As adjusted net tangible book value per share as of _______ __, 20__, after giving effect to this offer		$
Dilution per share to new investors purchasing our common stock in this offering.		$

 

A $__________ increase or decrease in the assumed public offering price of $ per share of common stock would increase or decrease our adjusted net tangible book value per share after this offering by approximately $________ and decrease or increase dilution per share to new investors by approximately $ .

 

The information discussed above is illustrative only and will adjust based on the actual offering price and other terms of this offering determined at pricing.

 

The information above is based on 25,169,683 shares of our common stock outstanding as of August 31, 2018.

 

Plan of Distribution, Terms of The Offering

 

There Is No Current Market for Our Shares of Common Stock

 

There is currently no market for our shares. We cannot give you any assurance that the shares you purchase will ever have a market or that if a market for our shares ever develops, that you will be able to sell your shares. In addition, even if a public market for our shares develops, there is no assurance that a secondary public market will be sustained.

 

The shares you purchase are not traded or listed on any exchange. After the effective date of the registration statement of which this prospectus forms a part, we intend to have a market maker file an application with the Financial Industry Regulatory Authority to have our common stock quoted on the OTC Bulletin Board and the OTCQB. We currently have no market maker who is willing to list quotations for our stock. Further, even assuming we do locate such a market maker, it could take several months before the market maker’s listing application for our shares is approved.

 

The OTC Bulletin Board is maintained by the Financial Industry Regulatory Authority. The OTCQB is maintained by OTC Market Group, Inc. The securities traded on the Bulletin Board or the OTCQB are not listed or traded on the floor of an organized national or regional stock exchange. Instead, these securities transactions are conducted through a telephone and computer network connecting dealers in stocks. Over-the-counter stocks are traditionally smaller companies that do not meet the financial and other listing requirements of a regional or national stock exchange.

  

 

 

 

 

Even if our shares are quoted on the OTC Bulletin Board or the OTCQB, a purchaser of our shares may not be able to resell the shares. Broker-dealers may be discouraged from effecting transactions in our shares because they will be considered penny stocks and will be subject to the penny stock rules. Rules 15g-1 through 15g-9 promulgated under the Securities Exchange Act of 1934, as amended, impose sales practice and disclosure requirements on FINRA brokers-dealers who make a market in a "penny stock." A penny stock generally includes any non-NASDAQ equity security that has a market price of less than $5.00 per share. Under the penny stock regulations, a broker-dealer selling penny stock to anyone other than an established customer or "accredited investor" (generally, an individual with net worth in excess of $1,000,000 or an annual income exceeding $200,000, or $300,000 together with his or her spouse) must make a special suitability determination for the purchaser and must receive the purchaser's written consent to the transaction prior to sale, unless the broker-dealer or the transactions is otherwise exempt. In addition, the penny stock regulations require the broker-dealer to deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the Commission relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt. A broker-dealer is also required to disclose commissions payable to the broker-dealer and the registered representative and current quotations for the securities. Finally, a broker-dealer is required to send monthly statements disclosing recent price information with respect to the penny stock held in a customer's account and information with respect to the limited market in penny stocks.

 

The additional sales practice and disclosure requirements imposed upon brokers-dealers may discourage broker-dealers from effecting transactions in our shares, which could severely limit the market liquidity of the shares and impede the sale of our shares in the secondary market, assuming one develops.

 

The Offering will be Sold by Our CEO

 

We are offering up to a total of 25,000,000 shares of common stock. The offering price is $ per share. The offering will be for twelve (12) months unless closed sooner by a sale of all of the shares offered. In our sole discretion, we have the right to terminate the offering at any time, even before we have sold the 25,000,000 shares. There are no specific events which might trigger our decision to terminate the offering.

 

The shares are being offered by us on a “best efforts” basis and there can be no assurance that all or any of the shares offered will be subscribed. If less than the maximum proceeds are available to us, our development and prospects could be adversely affected. There is no minimum offering required for this offering to close. All funds received as a result of this offering will be immediately available to us for our general business purposes.

 

We cannot assure you that all or any of the shares offered under this prospectus will be sold. No one has committed to purchase any of the shares offered. Therefore, we may sell only a nominal number of shares; in which case our ability to execute our business plan might be negatively impacted. We reserve the right to withdraw or cancel this offering and to accept or reject any subscription in whole or in part, for any reason or for no reason. Subscriptions will be accepted or rejected promptly. All monies from rejected subscriptions will be returned immediately by us to the subscriber, without interest or deductions. Certificates for shares purchased will be issued and distributed by our transfer agent promptly after a subscription is accepted and "good funds" are received in our account.

 

If it turns out that we have not raised enough money to effectuate our business plan, we will try to raise additional funds from a second public offering, a private placement or loans. At the present time, we have not made any plans to raise additional money and there is no assurance that we would be able to raise additional money in the future. If we need additional money and are not successful, we will have to suspend or cease operations.

  

We will sell the shares in this offering through our CEO, Mr. Dean Grey. Mr. Grey will receive no commission from the sale of the shares nor will he register as a broker-dealer pursuant to Section 15 of the Securities Exchange Act of 1934 in reliance upon Rule 3(a) 4-1. Rule 3(a) 4-1 sets forth those conditions under which a person associated with an issuer may participate in the offering of the issuer's securities and not be deemed to be a broker-dealer. Mr. Grey satisfies the requirements of Rule 3(a) 4-1 in that:

 

1.

He is not subject to a statutory disqualification, as that term is defined in Section 3(a)(39) of the Act, at the time of his

2.

He is not compensated in connection with his participation by the payment of commissions or other remuneration based either directly or indirectly on transactions in securities; and

3.

He is not, at the time of their participation, an associated person of a broker- dealer; and

4.

He meets the conditions of Paragraph (a)(4)(ii) of Rule 3(a)4-1 of the Exchange Act, in that he (A) primarily performs, or is intended primarily to perform at the end of the offering, substantial duties for or on behalf of the issuer otherwise than in connection with transactions in securities; and (B) is not a broker or dealer, or an associated person of a broker or dealer, within the preceding twelve (12) months; and (C) do not participate in selling and offering of securities for any issuer more than once every twelve (12) months other than in reliance on Paragraphs (a)(4)(i) or (a)(4)(iii).

 

 

 

 

As long as we satisfy all of these conditions, we are comfortable that we will be able to satisfy the requirements of Rule 3(a)4-1 of the Exchange Act.

 

As our CEO will sell the shares being offered pursuant to this offering, Regulation M prohibits the Company and its officers and directors from certain types of trading activities during the time of distribution of our securities. Specifically, Regulation M prohibits our officers and directors from bidding for or purchasing any common stock or attempting to induce any other person to purchase any common stock, until the distribution of our securities pursuant to this offering has ended.

 

We reserve the right to utilize the services of licensed broker/dealers and compensate these broker/dealers with a commission not to exceed 10% of the proceeds raised.

 

Offering Period and Expiration Date

 

This offering will commence on the effective date of this prospectus, as determined by the Securities and Exchange Commission, and continue for a period of twelve (12) months unless closed sooner by a sale of all of the shares offered. In our sole discretion, we have the right to terminate the offering at any time, even before we have sold the 25,000,000 shares. There are no specific events which might trigger our decision to terminate the offering.

 
Procedures for Subscribing

 

If you decide to subscribe for any shares in this offering, you must deliver a check or certified funds for acceptance or rejection. There is no minimum investment amount. All checks for subscriptions must be made payable to "Skylab USA, Inc.” Further instructions are found in the Subscription Agreement attached as an Exhibit to this registration statement and must be followed in subscribing for shares offered hereunder.

 

Right to Reject Subscriptions

 

We maintain the right to accept or reject subscriptions in whole or in part, for any reason or for no reason. All monies from rejected subscriptions will be returned immediately by us to the subscriber, without interest or deductions. Subscriptions for securities will be accepted or rejected within 48 hours of our having received them.

 

Description of Securities

 

Our authorized capital stock consists of 950,000,000 shares of common stock, with a par value of $0.0001 per share, and 750,000,000 shares of Preferred Series Class P1 shares of stock, par value $0.0001 per share, and 100,000,000 shares of Preferred Series Class A shares of stock, par value $0.0001. As of August 15, 2018, there were 25,006,269 shares of our common stock issued and outstanding. Our shares are currently held by one (181) stockholders of record. We have not issued any shares of preferred stock.

 

Common Stock

 

Our common stock is entitled to one vote per share on all matters submitted to a vote of the stockholders, including the election of directors. Except as otherwise required by law or provided in any resolution adopted by our board of directors with respect to any series of preferred stock, the holders of our common stock will possess all voting power. Generally, all matters to be voted on by stockholders must be approved by a majority (or, in the case of election of directors, by a plurality) of the votes entitled to be cast by all shares of our common stock that are present in person or represented by proxy, subject to any voting rights granted to holders of any preferred stock. Holders of our common stock representing fifty percent (50%) of our capital stock issued, outstanding and entitled to vote, represented in person or by proxy, are necessary to constitute a quorum at any meeting of our stockholders. A vote by the holders of a majority of our outstanding shares is required to effectuate certain fundamental corporate changes such as liquidation, merger or an amendment to our Articles of Incorporation. Our Articles of Incorporation do not provide for cumulative voting in the election of directors.

 

 

 

 

Subject to any preferential rights of any outstanding series of preferred stock created by our board of directors from time to time, the holders of shares of our common stock will be entitled to such cash dividends as may be declared from time to time by our board of directors from funds available therefore.

 

Subject to any preferential rights of any outstanding series of preferred stock created from time to time by our board of directors, upon liquidation, dissolution or winding up, the holders of shares of our common stock will be entitled to receive pro rata all assets available for distribution to such holders.

 

In the event of any merger or consolidation with or into another company in connection with which shares of our common stock are converted into or exchangeable for shares of stock, other securities or property (including cash), all holders of our common stock will be entitled to receive the same kind and number of shares of stock and other securities and property (including cash). Holders of our common stock have no pre-emptive rights, no conversion rights and there are no redemption provisions applicable to our common stock.

 

Preferred Stock

 

Our board of directors may become authorized to shares of our preferred stock and to divide the authorized shares of our preferred stock into one or more series, each of which must be so designated as to distinguish the shares of each series of preferred stock from the shares of all other series and classes. Our board of directors is authorized, within any limitations prescribed by law and our articles of incorporation, to fix and determine the designations, rights, qualifications, preferences, limitations and terms of the shares of any series of preferred stock including, but not limited to, the following:

 

1.        The number of shares constituting that series and the distinctive designation of that series, which may be by distinguishing number, letter or title;

 

2.        The dividend rate on the shares of that series, whether dividends will be cumulative, and if so, from which date(s), and the relative rights of priority, if any, of payment of dividends on shares of that series;

   

3.       Whether that series will have voting rights, in addition to the voting rights provided by law, and, if so, the terms of such voting rights;

 

4.       Whether that series will have conversion privileges, and, if so, the terms and conditions of such conversion, including provision for adjustment of the conversion rate in such events as the Board of Directors determines;

 

5.       Whether or not the shares of that series will be redeemable, and, if so, the terms and conditions of such redemption, including the date or date upon or after which they are redeemable, and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates;

 

6.       Whether that series will have a sinking fund for the redemption or purchase of shares of that series, and, if so, the terms and amount of such sinking fund; 

 

7.       The rights of the shares of that series in the event of voluntary or involuntary liquidation, dissolution or winding up of the corporation, and the relative rights of priority, if any, of payment of shares of that series;

 

8.       Any other relative rights, preferences and limitations of that series;

 

We currently have one (1) series of Preferred Stock - Series A Non-Convertible Preferred Stock (the “Series A”).

  

Holders of shares of the Series A have the right to cast ten (10) votes for each share of Series A held at every shareholders’ meeting or action taken other than at a meeting of shareholders. The shares of Series A can also be converted into shares of Common Stock at the ratio of 10 shares of Common Stock for every one (1) share of Series A.

 

 

 

 

Dividend Policy

 

We have never declared or paid any cash dividends on our common stock. We currently intend to retain future earnings, if any, to finance the expansion of our business. As a result, we do not anticipate paying any cash dividends in the foreseeable future.

 

Share Purchase Warrants

 

We have not issued and do not have outstanding any warrants to purchase shares of our common stock.

 

Options

 

We have not issued and do not have outstanding any options to purchase shares of our common stock.

 

Convertible Securities

 

We have not issued and do not have outstanding any securities convertible into shares of our common stock or any rights convertible or exchangeable into shares of our common stock.

 

Florida Anti-Takeover Laws

 

Florida General Corporation Act, Sections 607.0901 and 607.0902, provides state regulation over the acquisition of a controlling interest in certain Florida corporations unless the articles of incorporation or bylaws of the corporation provide that the provisions of these sections do not apply. Our articles of incorporation and bylaws do not state that these provisions do not apply. The statute creates a number of restrictions on the ability of a person or entity to acquire control of a Florida company by setting down certain rules of conduct and voting restrictions in any acquisition attempt, among other things.

 

Florida Affiliate Transactions, Section 607.0901 of the FBCA contains an affiliated transactions statute which provides that certain transactions involving a corporation and a shareholder owning 10% or more of the corporation’s outstanding voting shares (an “affiliated shareholder”) must generally be approved by the affirmative vote of the holders of two-thirds of the voting shares other than those owned by the affiliated shareholder. The transactions covered by the statute include, with certain exceptions, (i) mergers and consolidations to which the corporation and the affiliated shareholder are parties; (ii) sales or other dispositions of substantial amounts of the corporation’s assets to the affiliated shareholder; (iii) issuances by the corporation of substantial amounts of its securities to the affiliated shareholder; (iv) the adoption of any plan for the liquidation or dissolution of the corporation proposed by or pursuant to an arrangement with the affiliated shareholder; (v) any reclassification of the corporation’s securities which has the effect of substantially increasing the percentage of the outstanding voting shares of the corporation beneficially owned by the affiliated shareholder; and (vi) the receipt by the affiliated shareholder of certain loans or other financial assistance from the corporation. These special shareholder approval requirements do not apply in any of the following circumstances: (a) if the transaction was approved by a majority of the corporation’s disinterested directors; (b) if the corporation did not have more than 300 shareholders of record at any time during the preceding three years; (c) if the affiliated shareholder has been the beneficial owner of at least 80% of the corporation’s outstanding voting shares for the past five years; (d) if the affiliated shareholder is the beneficial owner of at least 90% of the corporation’s outstanding voting shares, exclusive of those acquired in a transaction not approved by a majority of disinterested directors; or (e) if the consideration received by each shareholder in connection with the transaction satisfies the “fair price” provisions of the statute.

 

Control-share Acquisitions, Section 607.0902 of the FBCA contains a control-share acquisition statute which limits the voting rights of “control shares” acquired in a “control-share acquisition,” which is intended to deter hostile takeovers of publicly held Florida corporations. Under this section, control shares acquired in a control share acquisition have voting rights only if, and to the extent, granted in a resolution of the shareholders of the corporation approved by (i) the majority of all the votes entitled to be cast by each class or series entitled to vote on the proposed control-share acquisition and (ii) a majority of all shares of each class or series entitled to vote separately on the proposal, excluding any shares that are owned by the acquiring person or persons, each officer of the corporation and each employee of the corporation who is also a director of the corporation. For the purposes of the FBCA, “control shares” means shares of a corporation which provide for at least 20% of the voting power in the election of the corporation’s directors. For the purposes of the FBCA, “control share acquisition” means, with certain exceptions, the direct or indirect acquisition of control shares.

 

 

 

 

Interests of Named Experts and Counsel

 

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

 

The law firm of Booth Udall Fuller, PLC of Tempe, Arizona our independent legal counsel, has provided an opinion on the validity of the issuance of shares of our common stock pursuant this offering.

 

Dave Banerjee CPA, an Accountancy Corporation, have audited our financial statements for the year ended December 31, 2016, which are included in this prospectus and registration statement. Dave Banerjee CPA, an Accountancy Corporation has presented their report with respect to our audited financial statements for the year ended December 31, 2016. The report of Dave Banerjee CPA, an Accountancy Corporation is included in reliance upon their authority as experts in accounting and auditing.

 

L&L CPAs, PA, has audited our financial statements for the year ended December 31, 2017, which are included in this prospectus and registration statement. L&L CPAs, PA has presented their report with respect to our audited financial statements for the year ended December 31, 2017. The report of L&L CPAs, PA is included in reliance upon their authority as experts in accounting and auditing.

 

Description of Business

 

Company Overview

 

Skylab Apps is a disruptive technology platform which allows Brands, Causes, & Influencers to have their own social network, with all the control and monetization unavailable when using social media. Skylab’s platform merges many of today’s top social media features into one, thus providing application users with the compulsive need to check their platform multiple times a day.

 

We were incorporated as Skylab Apps Inc. (“SAI” or “Skylab”) on September 4, 2015 in the State of Delaware and is registered in the State of California as a foreign stock company. Skylab USA, Inc. (the “Company”), the parent company, acquired Pandora Venture Capital Corporation in 2017. Pandora Venture Capital Corporation was a subsidiary of WRIT Media Group, a publicly traded company trading under the symbol WRIT, and assumed the name of Skylab USA, Inc. after being acquired. The surviving company, Skylab USA, Inc. was spun off from WRIT and acquired SAI as its wholly owned subsidiary. The spin-off and acquisition were completed on or about March 29, 2018.

 

The surviving entity Skylab USA Inc., and its subsidiary SAI, was created for the purpose of developing a Saas white label platform for influencer and brands to train, track, reward and monetize their communities. The platform is driven by the Company’s proprietary Gamification Engine, which allows the client to customize the Platform to fit the needs of its target market. Through the Platform’s Content Management System (CMS) the client can modify many features of the platform without the need to work with outside platform developers.

 

Social media engagement measures the public shares, likes and comments for an online business’ social media efforts. The public’s engagement, or interaction with the social media platform, has historically been a common metric for evaluating social media performance.

 

Our focus is to provide a highly engaging, differentiated experience where the combination of challenge and progress drives our product. Our social media engagement platform is one of the fastest growing technologies that allow the clients to customize and mold the platform to fit the needs of their target market or community.

 

Interactive social media platforms are large and growing quickly, driven by key technology and consumer trends, creating the potential for leading applications to emerge from the category. The proliferation of mobile devices is dramatically expanding the social media audience.

  

 

 

 

Our Products

 

We develop and publish applications for smartphones and mobile devices and market them through platform stores located on the device.  

 

Market Analysis

 

Smartphone platform users spend the most time on social networking and messaging apps. The category includes popular apps such as Facebook, Twitter, Pinterest, WhatsApp and Viber.

 

Marketing

 

We recognize the critical importance of marketing. We will require a properly designed and executed marketing plan to ensure market penetration and business success.

 

We aim to develop cost effective marketing through online social networks and a sales team.

 

Our Website

 

Our plan is to position Skylab USA, Inc. as an original, creative smartphone platform developer. To do this, we have and will continue to put a great amount of time and resources into developing a premiere e-commerce website and alliances with reputable developers. Currently, we have limited access to a world market due to the lack of funding that such a drive would require. We have designed a strategy to expand our product base and improve our website through our R & D efforts.

 

We are confident that continued development of our site, http://skylab.world.com, will result in increased sales and profits. Our vision is to create a website that will become an integral part of our marketing, sales, and daily operations. 

 

Competition

 

The Smartphone Platform Developer industry is highly concentrated. Although the industry contained over 800 companies in 2016, the top four players was expected to account for 73.1% of revenue.

 

The industry exhibits a high level of competition. The number of smartphone platform developers has grown exponentially over the past few years due to low barriers to entry and solid demand for a seemingly endless array of possible platform creations. Competition between industry operators is extremely high and smartphone apps compete with a variety of products for revenue.

 

Larger companies, like Facebook, hold a significant portion of the market, however, we believe users are looking for novel apps to service customer’s needs.

  

Regulation and Legislation

 

We are subject to labor and employment laws, laws governing advertising and promotions, privacy laws, product and other safety regulations, consumer protection regulations, environmental requirements and other laws that regulate retailers and govern the promotion and sale of merchandise and the operation of retail facilities. We believe that we are in compliance with applicable laws in all material respects.

 

Employees

 

We presently employ Dean Grey, as our President, CEO.

 

Description of Property

 

We do not own any real property. We lease office space at the address 10120 South Eastern Avenue, Suite 200 , Henderson, Nevada, 89052.

 

 

 

 

Legal Proceedings

 

On May 25, 2017 a former software development contractor of SAI filed suit in California related to a service contract entered into in 2016. The lawsuit claims a breach of contract by SAI and claims damages of approximately $220,000. Skylab believes the claims are without merit. In October 2017, a settlement was reached resulting in SAI paying the former software developer $20,000 and issuing 50,000 share of its common stock.

 

We are not currently a party to any legal proceedings. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.

 

Our agent for service of process is in Florida. The name of our agent is InCorp Services Inc., 17888 67^th Court North, Loxahatchee, FL 33470.

 

Market for Common Equity and Related Stockholder Matters

 

No Public Market for Common Stock

 

There is presently no public market for our common stock. We anticipate making an application for trading of our common stock on the over the counter bulletin board upon the effectiveness of the registration statement of which this prospectus forms a part. We can provide no assurance that our shares will be traded on the bulletin board, or if traded, that a public market will materialize.

 

The Securities Exchange Commission 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 quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the Commission, that: (a) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading;(b) contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements of Securities' laws; (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price;(d) contains a toll-free telephone number for inquiries on disciplinary actions;(e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and;(f) contains such other information and is in such form, including language, type, size and format, as the Commission shall require by rule or regulation.

 

The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with; (a) bid and offer quotations for the penny stock;(b) the compensation of the broker-dealer and its salesperson in the transaction;(c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statements showing the market value of each penny stock held in the customer's account.

 

In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and 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 stock if it becomes subject to these penny stock rules. Therefore, because our common stock is subject to the penny stock rules, stockholders may have difficulty selling those securities.

 

Holders of Our Common Stock

 

Currently, we have 251 holders of record of our common stock.

 

 

 

 

Rule 144 Shares

 

None of our common stock is currently available for resale to the public under Rule 144. In general, Rule 144 as currently in effect permits our common stock that has been acquired by a person who is an affiliate of ours, or has been an affiliate of ours within the past three months, to be sold into the market in an amount that does not exceed, during any three-month period, the greater of:

 

(1)       one percent of the total number of shares of our common stock outstanding; or

(2)       the average weekly reported trading volume of our common stock for the four calendar weeks prior to the sale.

 

Such sales are also subject to specific manner of sale provisions, a six-month holding period requirement, notice requirements and the availability of current public information about us.

 

Rule 144 also provides that a person who is not deemed to have been an affiliate of ours at any time during the three months preceding a sale, and who has for at least six months beneficially owned shares of our common stock that are restricted securities, will be entitled to freely sell such shares of our common stock subject only to the availability of current public information regarding us. A person who is not deemed to have been an affiliate of ours at any time during the three months preceding a sale, and who has beneficially owned for at least one year shares of our common stock that are restricted securities, will be entitled to freely sell such shares of our common stock under Rule 144 without regard to the current public information requirements of Rule 144.

 

Stock Option Grants

 

To date, we have not granted any stock options.

 

Dividends

 

There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where after giving effect to the distribution of the dividend:

 

(1)       we would not be able to pay our debts as they become due in the usual course of business, or;

(2)       our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution.

 

We have not declared any dividends and we do not plan to declare any dividends in the foreseeable future.

 

 

 

 

 

 

 

 

Management Discussion and Analysis of Financial Condition and Results of Operations

 

Forward-Looking Statements

 

Management's statements contained in this portion of the prospectus are not historical facts and are forward-looking statements. Factors which could have a material adverse effect on the operations and future prospects of the Company on a consolidated basis include, but are not limited to, those matters discussed under the section entitled “Risk Factors,” above. Such risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

 

Our Plan for the Next 12 Months

 

The following is a list of business goals and milestones we wish to accomplish within the next twelve months.

 

·

Secure necessary funding

·

Conduct research and development of new software

·

Engage in advertising and marketing

·

Hire skilled contract labor to complete our team

·

Pay for legal and accounting costs

  

Our first major milestones will be securing funds and upping the scale of our product. This is our primary focus. In three years, we hope to have established our brand and company internationally.

 

Advertising and Marketing

  

We intend to increase our marketing and web presence immediately when funding is received.

 

We intend to budget a total of $1,000,000 for market expansion if we sell 100% of our offering. The shortfall in funds to complete the above objections are expected to be met by our revenues. In the event we are able to raise less than 100% of our offering, we will have to scale back on advertising and marketing.

 

Labor

 

We currently have 9 independent contractors that work in our office and a 13 person outsource development team. Depending on the level of proceeds received we would like to expand both the number of independent contractors and development team members. This would require contracting additional independent contractors and adding suitably skilled workers to our outsource development team. Should we not receive the required proceeds the company will continue to use current skilled contract labor to complete the production of its platform. We intend to hire new employees depending on our production and marketing needs, as funds are available.

 

Offering Expenses - Legal and Accounting

 

We have already paid for all legal and accounting expenses that we expect to incur in connection with this offering and therefore no such expenses will be deducted from the maximum amount of $3,000,000 in proceeds from this offering.

 

Results of Operations for Period ending June 30, 2018 and June 30, 2017

 

Revenues

 

Our total revenue reported for the period ended June, 30, 2018, was $219,615. We had $293,292 in total revenues through June, 30, 2017. Most of our revenues are attributable to subscription and transaction fees.

 

 

 

 

We expect revenues to increase for the year ended December 31, 2018 as a result of increased sales resulting from improved marketing and IT development. If we are able to raise money, we hope to generate additional revenues through market expansion.

 

Components of Results of Operations

 

Revenue

 

We generate platform revenue from advertising sales, subscription and transaction revenue share, and software licensing fees. We generate most of our platform revenue in the United States.

 

Cost of Revenue

 

Cost of revenue consists of research and development and allocated personnel-related costs, including salaries, benefits and stock-based compensation that support platform services, including advertising. We anticipate that cost of platform revenue will increase in absolute dollars.

 

Operating and Other Expenses

 

Research and Development

 

Research and development expenses consist primarily of development and improvement of our products including new technologies and features and functionality. In addition, research and development expenses include allocated facilities and overhead costs. We believe continued investment is important to attaining our strategic objectives and expect research and development expenses to increase in absolute dollars for the foreseeable future.

 

Sales and Marketing

 

Sales and marketing expenses consist primarily business development, product management, marketing, communications, and partner and customer support functions. Sales and marketing expenses also include costs for marketing, trade shows and other events, professional services, travel and allocated facilities and other overhead. We expect our sales and marketing expenses to increase as we continue to grow our business.

 

General and Administrative

 

General and administrative expenses consist primarily for our executive, finance, legal, information technology and other administrative personnel. We expect our general and administrative expenses to increase following the completion of this offering due to the anticipated growth of our business and related infrastructure as well as accounting, legal, insurance, investor relations and other costs associated with becoming a public company.

 

Cost of Product Development

 

Our cost for product development for the six-months ended June 30, 2018 was $290,297. We had $440,183 in product development costs for the same period from the prior year.

 

Operating Expenses

 

Operating expenses were $914,468 for the six-months ended June 30, 2018. Operating expenses were $847,769 for the same period from the prior year. Our operating expenses for the six-month period ended June 30, 2018 consisted of depreciation and amortization in the amount of $95,244, general and administrative expenses of $261,629, product development expenses of $290,297, stock compensation expenses $228,310, and professional fees expenses of $38,988.

 

We anticipate our operating expenses will increase as we further implement our business plans and expand our operations. The increase will be attributable to the measures described above to implement our business plan and the professional fees associated with our becoming a reporting company under the Securities Exchange Act of 1934.

 

 

 

 

Net Loss

 

Net loss for the six-months ended June 30, 2018 was $677,229. Our net loss for period six-months ended June 30, 2017 was $601,475.

  

Liquidity and Capital Resources

 

As of June 30, 2018, we had total current assets of $82,549, consisting of cash and accounts receivable. We had current liabilities of $1,820,248 as of June 30, 2018. Accordingly, we had a working capital deficit of $1,737,699 as of June 30, 2018, compared to a working capital deficit of $1,414,723 as of December 31, 2017.

 

During the six months ended June 30, 2018, cash flows used in operating activities was $209,401 and cash flows used in investing activities was $4,910. Financing activities for the six-months ended June 30, 2018 generated $202,376 in cash from proceeds from a note payable to a related party and proceeds from the sale of common stock.

 

As outlined above, we expect to spend approximately $1,000,000 over the course of our next full fiscal year, based on our current operations and monthly overhead obligations. As of June 30, 2018, we had $75,249 in cash. The success of our business plan therefore depends on raising funds through the current offering. If the maximum offering is sold, we should have sufficient cash to plan to expand our business until September 2019. If substantially less than the maximum offering is sold, however, our ability to will be impaired. Our ability to operate beyond September 2019, is contingent upon us obtaining additional financing and/or upon realizing sales revenue sufficient to fund our ongoing expenses. Until we are able to sustain our ongoing operations through sales revenue, we intend to fund operations through debt and/or equity financing arrangements, which may be insufficient to fund our capital expenditures, working capital, or other cash requirements. We do not have any formal commitments or arrangements for the sales of stock or the advancement or loan of funds at this time. There can be no assurance that such additional financing will be available to us on acceptable terms, or at all.

 

Results of Operations for Periods ending December 31, 2017 and December 31, 2016

 

Revenues

 

Our total revenue reported for the years ended December 31, 2017 and 2016, was $562,171 and $733,200, respectively. Most of our revenues are attributable to software licensing fees.

 

Components of Results of Operations

 

Revenue

 

We generate platform revenue from advertising sales, subscription and transaction revenue share, and software licensing fees. We generate most of our platform revenue in the United States.

 

Cost of Revenue

 

Cost of revenue consists of research and development and allocated personnel-related costs, including salaries, benefits and stock-based compensation that support platform services, including advertising. We anticipate that cost of platform revenue will increase in absolute dollars.

 

 

 

 

Operating and Other Expenses

 

Research and Development

 

Research and development expenses consist primarily of development and improvement of our products including new technologies and features and functionality. In addition, research and development expenses include allocated facilities and overhead costs. We believe continued investment is important to attaining our strategic objectives and expect research and development expenses to increase in absolute dollars for the foreseeable future.

 

Sales and Marketing

 

Sales and marketing expenses consist primarily business development, product management, marketing, communications, and partner and customer support functions. Sales and marketing expenses also include costs for marketing, trade shows and other events, professional services, travel and allocated facilities and other overhead. We expect our sales and marketing expenses to increase as we continue to grow our business.

 

General and Administrative

 

General and administrative expenses consist primarily for our executive, finance, legal, information technology and other administrative personnel. We expect our general and administrative expenses to increase following the completion of this offering due to the anticipated growth of our business and related infrastructure as well as accounting, legal, insurance, investor relations and other costs associated with becoming a public company.

 

Cost of Product Development

 

Our cost of product for the years ended December 31, 2017 and 2016 was $728,752 and $259,100, respectively.

 

Operating Expenses

 

Operating expenses for the years ended December 31, 2017 and 2016 were $2,035,432 and $731,762, respectively. Our operating expenses for year ending December 31, 2017 consisted of depreciation and amortization in the amount of $187,886, general and administrative expenses of $471,483, product development expenses of $728,752, professional fees expenses of $114,449, and stock compensation expense of $471,483, compared to operating expenses for the year ended December 31, 2016 consisting of depreciation and amortization in the amount of $20,240, general and administrative expenses in the amount of $396,874, product development expenses of $259,100, professional fees of $55,548, and stock compensation expense of $0.

 

Net Loss

 

Our net loss for the year ended December 31, 2017 was $1,617,247, compared to a net loss for prior year in the amount of $22,667.

  

Liquidity and Capital Resources

 

As of December 31, 2017, we had total current assets of $44,764, consisting of cash and accounts receivable. We had current liabilities of $1,459,487 as of December 31, 2017. Accordingly, we had a working capital deficit of $1,414,723 as of December 31, 2017, compared to a working capital deficit of $566,950 as of December 31, 2016.

 

For the year ended December 31, 2017, cash flows used in operating activities $679,621 and cash flows used in investing activities $29,345. Financing activities for the year ended December 31, 2017 generated $607,100 in cash from issuance of note payable and convertible note payable, and proceeds from exercise of warrants, offset by payments from convertible note payable.

 

Going Concern

 

Our total current assets at June 30, 2018, were $82,549. This amount does not provide adequate working capital for us to successfully operate our business and to service our debt. Expenses incurred to the date of this prospectus are being recorded our books as they occur. This raises substantial doubt about our ability to continue as a going concern. Our continuation as a going concern is dependent upon obtaining additional working capital. Management believes that we will be able to operate for the coming year by obtaining additional loans from Mr. Grey and from equity funding, via proceeds raised from the offering set forth in this prospectus. However, there can be no assurances that management’s plans will be successful.

 

 

 

 

Off Balance Sheet Arrangements

 

As of June 30, 2018, there were no off-balance sheet arrangements.

 

 

Emerging Growth Companies

 

Because we generated less than $1 billion in total annual gross revenues during our most recently completed fiscal year, we qualify as an “emerging growth company" under the Jumpstart Our Business Startups ("JOBS") Act.

 

We will lose our emerging growth company status on the earliest occurrence of any of the following events:

 

1.     on the last day of any fiscal year in which we earn at least $1 billion in total annual gross revenues, which amount is adjusted for inflation every five years;

2.     on the last day of the fiscal year of the issuer following the fifth anniversary of the date of our first sale of common equity securities pursuant to an effective registration statement;

3.     on the date on which we have, during the previous 3-year period, issued more than $1 billion in non-convertible debt; or

4.     the date on which such issuer is deemed to be a `large accelerated filer', as defined in section 240.12b-2 of title 17, Code of Federal Regulations, or any successor thereto."

 

A "large accelerated filer" is an issuer that, at the end of its fiscal year, meets the following conditions:

 

1.     it has an aggregate worldwide market value of the voting and non-voting common equity held by its non-affiliates of $700 million or more as of the last business day of the issuer's most recently completed second fiscal quarter

2.     It has been subject to the requirements of section 13(a) or 15(d) of the Act for a period of at least twelve calendar months; and

3.     It has filed at least one annual report pursuant to section 13(a) or 15(d) of the Act.

  

As an emerging growth company, exemptions from the following provisions are available to us:

 

1.     Section 404(b) of the Sarbanes-Oxley Act of 2002, which requires auditor attestation of internal controls;

2.     Section 14A(a) and (b) of the Securities Exchange Act of 1934, which require companies to hold shareholder advisory votes on executive compensation and golden parachute compensation;

3.     Section 14(i) of the Exchange Act (which has not yet been implemented), which requires companies to disclose the relationship between executive compensation actually paid and the financial performance of the company;

4.     Section 953(b)(1) of the Dodd-Frank Act (which has not yet been implemented), which requires companies to disclose the ratio between the annual total compensation of the CEO and the median of the annual total compensation of all employees of the companies; and

5.     The requirement to provide certain other executive compensation disclosure under Item 402 of Regulation S-K. Instead, an emerging growth company must only comply with the more limited provisions of Item 402 applicable to smaller reporting companies, regardless of the issuer's size.

  

Pursuant to Section 107 of the JOBS Act, an emerging growth company may choose to forgo such exemption and instead comply with the requirements that apply to an issuer that is not an emerging growth company. We have elected to maintain our status as an emerging growth company and take advantage of the JOBS Act provisions.

 

Changes In and Disagreements with Accountants

 

We have had no changes in or disagreements with our accountants.

 

 

 

 

 

Directors and Executive Officers

 

Our executive officers and directors and their respective ages as of December 31, 2017 are as follows:

 

Name		Age		Position(s) and Office(s) Held
Dean Grey		50		President, Chief Executive Officer and Director
Lorrie Edelblute		48		Secretary and Treasurer

 

Set forth below is a brief description of the background and business experience of each of our current executive officers and directors.

 

Dean Grey - President, CEO and Director

 

Mr. Dean Grey founded Skylab Apps Inc., a Delaware corporation, in September 2015, acts as its President and CEO and serves as the sole member of the Company’s Board of Directors. Mr. Grey became an officer and member of the Board of Directors of Skylab USA, Inc. in February 2018 when Skylab Apps completed its reverse takeover of Skylab USA, Inc.

 

Skylab Apps using a concept known as the Science of Engagement to help companies, influencers, to build websites and mobile apps to achieve their stated goals. As CEO, Mr. Grey is responsible for the company’s overall business plan, operations, innovations, development and technology. Skylab Apps and Skylab USA are currently located in Carlsbad, California.

 

In January 2014, Mr. Grey founded and was the Chief Information Officer of Transactive, a mobile merchant and lending platform located in Del Mar, California. Mr. Grey also found founded several other mobile application companies.

 

Prior to this, Mr. Grey founded a successful life coaching business with operations in 28 countries. Mr. Grey has received numerous awards for his business accomplishments such as Cambridge Who’s Who, Strathmores’s Who’s Who Worldwide, and was honored by the Top 40 Under 40 List.

 

Lorrie Edelblute – Secretary and Treasurer

 

Ms. Edelblute is the founder and owner of CCCS, LLC, an accounting business located in Las Vegas, Nevada. CCCS was formed in 1999 and Ms. Edelblute is still its owner. As the owner, she manages a staff of five (5) people, prepares tax returns, reviews staff work, prepares compilations and review financial statements. From 2009 through 2015, Ms. Edelblute also management a private accounting firm know as D. K. Wallin Ltd. while the owner of such firm served as the State of Nevada’s State Controller. During that time, she supervised and managed the firm’s staff, reviewed all staff work, prepared tax returns, prepared compilations, reviewed financials, managed client relations, conducted interim and year end accounting, payroll and payroll reports. Ms. Edelblute is also the Chief Financial Officer of PDE Holdings, LLC and Enix Residential HVAC, which are commercial construction and multi-family HVAC companies, respectively, located in Nevada that were founded by Ms. Edelblute and her husband in 2012. In her role as CFO for these companies, Ms. Edelblute oversees all accounting and finance functions for the companies.

 

Ms. Edelblute earned a Bachelor’s Degree in Accounting from the University of Phoenix in 2000.

 

Directors

 

Our bylaws state that the number of directors of the corporation shall be fixed by the Board of Directors from time to time.

 

Term of Office

 

Subject to the rights of the holders of any series of Common Stock or Preferred Stock to elect additional directors under specified circumstances, directors shall be elected at each annual meeting of stockholders to serve until the next annual meeting of stockholders.

 

Significant Employees

 

We have no significant employees other than our CEO, Mr. Dean Grey.

 

 

 

 

Involvement in Certain Legal Proceedings

 

To the best of our knowledge, during the past ten years, none of the following occurred with respect to our present or former director, executive officer, or employee: (1) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (2) any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his or her involvement in any type of business, securities or banking activities; and (4) being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.

 

Executive Compensation

 

Compensation Discussion and Analysis

 

We presently have employment agreement with Dean Grey, our CEO and director. We have not established a system of executive compensation or any fixed policies regarding compensation of executive officers. However, Mr. Grey’s compensation was agreed upon to $15,000 per month.

 

Summary Compensation Table

 

The table below summarizes all compensation awarded to, earned by, or paid to each named executive officer for our last two completed fiscal years for all services rendered to us.

 

SUMMARY COMPENSATION TABLE
Name and principal position			Year				Salary ($)				Bonus ($)				Stock Awards ($)				Option Awards ($)				Non-Equity Incentive Plan Compensation ($)				Nonqualified Deferred Compensation Earnings ($)				All Other Compensation ($)				Total ($)
Dean Grey, President/CEO(1)			2017				86,850				0				0				0				0				129,150				0				216,000
Dean Grey, President/CEO			2016				109,800																				106,200								216,000
Lorrie Edelblute, Secretary and Treasurer			2017				0				0				0				0				0				0				0				0
Lorrie Edelblute, Secretary and Treasurer			2016				0				0				0				0				0				0				0				0

 

 

(1)

Amounts paid to Mr. Grey include rent in the amount of $36,000 annually paid or to be paid to him (or one of his associated companies) by the Company for the Company’s use of office space provided by Mr. Dean (or one of his associated companies).

 

Narrative Disclosure to the Summary Compensation Table

 

Mr. Grey’s annual salary for 2017 and 2015 is $180,000, plus $36,000 annually for use of his office space (or the space provided by one or more of his associated entities). Due to cash flow issues, certain portions of his compensation were not paid in the year earned and have been deferred.

 

Our decision to compensate officers depends on the availability of our cash resources with respect to the need for cash to further business purposes.

 

Securities Authorized for Issuance Under Equity Compensation Plans

 

To date, we have not adopted a stock option plan or other equity compensation plan and have not issued any stock, options, or other securities as compensation.

 

Outstanding Equity Awards At Fiscal Year-end Table

 

The table below summarizes all unexercised options, stock that has not vested, and equity incentive plan awards for each named executive officer outstanding as of the end of our last completed fiscal year.

 

 

 

 

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
OPTION AWARDS																								STOCK AWARDS
Name				Number of Securities Underlying Unexercised Options (#) Exercisable				Number of Securities Underlying Unexercised Options (#) Unexercisable				Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)				Option Exercise Price ($)				Option Expiration Date				Number of Shares or Shares of Stock That Have Not Vested (#)				Market Value of Shares or Shares of Stock That Have Not Vested ($)				Equity Incentive Plan Awards: Number of Unearned Shares, Shares or Other Rights That Have Not Vested (#)				Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Shares or Other Rights That Have Not Vested (#)
				0				0				0				0				0				0				0				0				0
				0				0				0				0				0				0				0				0				0

 

Security Ownership of Certain Beneficial Owners and Management

 

The following table sets forth, as of August 31, 2018, the beneficial ownership of our common stock by each executive officer and director, by each person known by us to beneficially own more than 5% of our common stock and by the executive officers and directors as a group. Except as otherwise indicated, all shares are owned directly and the percentage shown is based on 25,169,683 shares of common stock issued and outstanding on August 31, 2018.

 

Title of class				Name of beneficial owner		Amount of beneficial ownership				Percent of class
	Common			Dean Grey			10,623,513				42.21%
	Common			Lorrie Edelbute			72,669				0.29%
	Common			Total all executive officers and directors							42.78%
				DBRP Holdings, LTD.			3,620,006				14.38%
	Common			Other 5% Shareholders			3,620,006				14.38%

 

As used in this table, "beneficial ownership" means the sole or shared power to vote, or to direct the voting of, a security, or the sole or shared investment power with respect to a security (i.e., the power to dispose of, or to direct the disposition of, a security). In addition, for purposes of this table, a person is deemed, as of any date, to have "beneficial ownership" of any security that such person has the right to acquire within 60 days after such date.

 

The persons named above have full voting and investment power with respect to the shares indicated. Under the rules of the Securities and Exchange Commission, a person (or group of persons) is deemed to be a "beneficial owner" of a security if he or she, directly or indirectly, has or shares the power to vote or to direct the voting of such security, or the power to dispose of or to direct the disposition of such security. Accordingly, more than one person may be deemed to be a beneficial owner of the same security. A person is also deemed to be a beneficial owner of any security, which that person has the right to acquire within 60 days, such as options or warrants to purchase our common stock.

 

Disclosure of Commission Position of Indemnification for Securities Act Liabilities

 

In accordance with the provisions in our Articles of Incorporation, we will indemnify an officer, director, or former officer or director, to the full extent permitted by law.

 

 

 

 

Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Act") may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by a director, officer or controlling person of us in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

 

Certain Relationships and Related Transactions

 

Except as set forth below or in the section titled “Executive Compensation,” none of our directors or executive officers, nor any proposed nominee for election as a director, nor any person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights attached to all of our outstanding shares, nor any members of the immediate family (including spouse, parents, children, siblings, and in-laws) of any of the foregoing persons has any material interest, direct or indirect, in any transaction since our incorporation or in any presently proposed transaction which, in either case, has or will materially affect us.

 

WDG is a Nevada corporation that is owned one hundred percent (100%) by our CEO and sole director, Mr. Grey, and was formed for the sole purpose of facilitating the payment of invoices. Mr. Grey is involved or owns several different incubator companies that use the same independent contractors, lease, etc. WDG was set up to provide the Company with one entity that will hire and employee all of the independent contractors that are used by the Company to develop its technology, as well as make all payments for rent, utilities, etc. In so doing, the Company only has to pay a comprehensive bill issued to it by WDG rather than manage multiple accounts.

 

Silver Surfer is a company that Dean Grey works with for multiple contracting projects. Mr. Grey’s functions and fees vary from project to project. Skylab apps paid Silver Surfer for Dean Grey’s creative, marketing, and development services.  Most of Mr. Grey’s contracts runs through Silver Surfer. Mr. Grey does not own Silver Surfer Management, he is an independent contract for Silver Surfer and manages and performs duties for multiple clients.

 

Skylab Apps paid Silver Surfer for the nine-months ended September 30, 2017 and 2016, $10,000 and $5,000, respectively.

 

Mr. Grey’s compensation was agreed upon to be $15,000 per month. A portion of this was paid directly to Mr. Grey and a portion to Silver Surfer. Management services were paid directly to him (or via WDG), from Skylab Apps. His creative, marketing and development costs were paid to Silver Surfer. Mr. Grey and Silver Surfer were paid $0 for the nine-months ending September 30, 2017 and $260 for the nine-months ending September 30, 2016.

 

Available Information

 

We have filed a registration statement on form S-1 under the Securities Act of 1933 with the Securities and Exchange Commission with respect to the shares of our common stock offered through this prospectus. This prospectus is filed as a part of that registration statement, but does not contain all of the information contained in the registration statement and exhibits. Statements made in the registration statement are summaries of the material terms of the referenced contracts, agreements or documents of the company. We refer you to our registration statement and each exhibit attached to it for a more detailed description of matters involving the company, and the statements we have made in this prospectus are qualified in their entirety by reference to these additional materials. You may inspect the registration statement, exhibits and schedules filed with the Securities and Exchange Commission at the Commission's principal office in Washington, D.C. Copies of all or any part of the registration statement may be obtained from the Public Reference Section of the Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549. Please Call the Commission at (202) 942-8088 for further information on the operation of the public reference rooms. The Securities and Exchange Commission also maintains a Web Site at http://www.sec.gov that contains reports, proxy Statements and information regarding registrants that files electronically with the Commission. Our registration statement and the referenced exhibits can also be found on this site.

 

If we are not required to provide an annual report to our security holders, we intend to still voluntarily do so when otherwise due, and will attach audited financial statements with such report.

 

Dealer Prospectus Delivery Obligation

 

All dealers that effect transactions in these securities whether or not participating in this offering may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

 

 

 

 

 

Financial Statements

 

Index to Financial Statements:

 

		For the Period Ended June 30, 2018
F-1		Consolidated Balance Sheets at June 30, 2018 to December 31, 2017
F-3		Consolidated Statement of Operations for the Six Months Ended June 30, 2018 and 2017
F-4		Consolidated Statement of Cash Flows for the Six Months Ended June 30, 2018 and 2017
F-5		Notes to Consolidated Financial Statements

 

 

 

		For the Year Ended December 31, 2017 and 2016
F-13		Reports of Independent Registered Public Accounting Firm
F-15		Consolidated Balance Sheets at December 31, 2017 and 2016
F-16		Consolidated Statement of Operations for the year ended December 31, 2017 and 2016
F-17		Statement of Stockholder’s Equity as of December 31, 2017
F-18		Consolidated Statement of Cash Flows for the year ended December 31, 2017 and 2016
F-19		Notes to Consolidated Financial Statements

 

 

 

 

SKYLAB USA, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited)

         

 

		June 30, 2018				December 31, 2017
ASSETS
Current Assets
Cash		$	75,249			$	33,064
Accounts receivable, net			7,300				11,700
Other current assets			–				–
Total current assets			82,549				44,764
Capitalized software, net			268,363				357,818
Property, plant, and equipment, net			28,357				29,237
Other assets			8,200				8,200
Total Assets		$	387,469			$	440,019
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable and accrued expenses		$	43,178			$	26,659
Accounts payable – related parties			150,353				100,452
Accrued interest			148,124				72,106
Notes payable			340,000				340,000
Notes payable - related parties			139,376				112,500
Current portion of convertible notes payable, net			134,600				79,600
Current portion of convertible notes payable related party, net			259,019				259,019
Deferred revenue			605,598				469,151
Total current liabilities			1,820,248				1,459,487
Long-term liabilities:
Convertible notes payable, net			–				55,000
Convertible notes payable related party, net			–				–
Total long-term liabilities			–				55,000
Total liabilities			1,820,248				1,514,487
Commitments and contingencies
Stockholders’ Deficit
Preferred stock, $0.0001 par value, 750,000,000 shares authorized, 0 issued and outstanding as of June 30, 2018 and December 31, 2017			–				–
Common stock, $0.0001 par value, 950,000,000 shares authorized, 25,006,269 and 22,802,912 issued and outstanding as of June 30, 2018 and December 31, 2017, respectively			2,501				2,280
Additional paid in capital			1,449,123				1,045,534
Accumulated deficit			(2,799,511	)			(2,122,282	)
Total stockholders' deficit attributable to Skylab USA, Inc. stockholders			(1,347,887	)			(1,074,468	)
Noncontrolling interest			(84,892	)			–
Total stockholders' deficit			(1,432,779	)			(1,074,468	)
Total Liabilities and Stockholders' Deficit		$	387,469			$	440,019

 

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

 

 

SKYLAB USA, INC.

CONSOLIDATED STATEMENT OF OPERATIONS

(unaudited)

         

 

		Six Months Ended June 30, 2018				Six Months Ended June 30, 2017
Revenues:
Subscription and transaction fees		$	152,833			$	285,792
Software license fees			66,782				7,500
Total revenues			219,615				293,292
Operating expenses:
Product development			290,297				440,183
General and administrative expenses			261,629				265,205
Stock Compensation			228,310				–
Professional fees			38,988				49,600
Depreciation and amortization expense			95,244				92,781
Total operating expenses			914,468				847,769
Operating income (loss)			(694,853	)			(554,477	)
Other income (expense):
Interest and other expenses			(78,054	)			(47,081	)
Interest income and other income			3,817				83
Total other income (expenses)			(74,237	)			(46,998	)
Income (loss) before income taxes			(769,090	)			(601,475	)
Income tax expense			–				–
Net loss			(769,090	)			(601,475	)
Net loss attributed to noncontrolling interest			91,861				–
Net loss attributed to Skylab USA, Inc. stockholders		$	(677,229	)		$	(601,475	)
Net loss per common share, basic and diluted		$	(0.03	)		$	(0.03	)
Weighted average number of common shares outstanding, basic and diluted			24,084,176				18,774,678

 

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

 

 

SKYLAB USA, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

(unaudited)

         

 

		Six Months Ended June 30, 2018				Six Months Ended June 30, 2017
Cash Flows from Operating Activities:
Net loss		$	(769,090	)		$	(601,475	)
Adjustments to reconcile net loss to net cash used in operations:
Depreciation and amortization			95,245				92,781
Share-based compensation			228,310				40,439
Changes in operating assets and liabilities:
Accounts receivable			4,400				(102,060	)
Prepaid expenses and other current assets			(1,250	)			14,350
Other assets			–				(8,200	)
Accounts payable and accrued expenses			15,519				61,182
Accounts payable – related parties			5,000				(5,000	)
Accrued interest			76,018				6,652
Accrued compensation			–				77,700
Deferred revenue			136,447				83,418
Net cash used in operating activities			(209,401	)			(340,213	)
Cash Flows from Investing Activities:
Property and equipment purchases			(4,910	)			(27,918	)
Net cash used in investing activities			(4,910	)			(27,918	)
Cash Flows from Financing Activities:
Proceeds from note payable			–				240,000
Proceeds from note payable related party			26,876				112,500
Proceeds from convertible note payable			–				113,000
Proceeds from exercise of warrants			–				20,000
Proceeds from sale of common stock			175,500				–
Net cash provided by financing activities			202,376				485,500
Net change in cash			(11,935	)			117,369
Cash at beginning of period			33,064				134,930
Cash at end of period		$	21,129			$	252,299
Supplemental Cash Flow Disclosure:
Interest paid		$	–			$	2,036
Taxes paid		$	–			$	–
Common stock issued to settle convertible notes payable and interest		$	–			$	518,007

 

 

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

 

 

SKYLAB USA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Six months ended June 30, 2018

 

Note 1—Organization and Nature of Business

 

Skylab USA, Inc. (“Skylab USA”) was originally incorporated on May 9, 2014 under the name Pandora Venture Capital Corp. On July 17, 2017 Skylab USA changed to the current name.

 

Skylab Apps, Inc. (“Skylab Apps”) was incorporated on September 5, 2015 in the State of Delaware for the purpose of developing a SaaS white label platform for influencer and brands to train, track, reward and monetize their communities. Prior to the incorporation of Skylab Apps the controlling shareholder of Skylab Apps, Dean Grey, incorporated C4 LLC (“C4”) on April 20, 2015 in the State of Nevada for the same purpose as described above for Skylab Apps. The operations and activities of C4 were contributed to Skylab Apps by Mr. Grey at the point Skylab Apps was incorporated. The financial statements include the financial statements of Skylab Apps and C4 from the inception of C4. The entity C4 was legally dissolved March 24, 2017.

 

On July 2, 2017, Skylab Apps entered into a Share Exchange Agreement with Writ Media Group, Inc. and its wholly-owned subsidiary Skylab USA.  The transaction closed on March 29, 2018.  After this agreement was signed, Writ Media Group, Inc. completed a spinoff of Skylab USA to its own shareholders.  As such, at the point of the spinoff, Skylab USA was no longer a subsidiary of Writ Media Group, Inc. but was owned by the shareholders of Writ Media Group Inc.  The former shareholders of Skylab Apps will receive 95% of the shares of the combined entity in exchange for Skylab Apps becoming wholly owned subsidiary of Skylab USA. The transaction will be accounted for as a reverse merger. For accounting purposes, Skylab Apps was deemed to be the accounting acquirer in the transaction and, consequently, the transaction was treated as a recapitalization of Skylab USA. Accordingly, Skylab Apps’ assets, liabilities and results of operations became the historical financial statements of Skylab USA, and the Skylab Apps’ assets, liabilities and results of operations were consolidated with Skylab USA effective as of the date of the closing of the Merger. No step-up in basis or intangible assets or goodwill was recorded in this transaction.

 

The consolidated financial statements include the accounts of Skylab USA and its wholly-owned subsidiary Skylab Apps (collectively referred to as “Skylab” or the “Company”). All intercompany balances and transactions have been eliminated in consolidation.

 

Note 2—Significant Accounting Policies

 

Basis of Presentation of Financial Statements

 

The accompanying unaudited financial statements of Skylab have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.  In our opinion the financial statements include all adjustments (consisting of normal recurring accruals) necessary in order to make the condensed financial statements not misleading.  Operating results for the six months ended June 30, 2018 are not necessarily indicative of the final results that may be expected for the year ended December 31, 2018. For more complete financial information, these unaudited financial statements should be read in conjunction with the audited financial statements of Skylab Apps for the year ended December 31, 2017 included in our Form S-1 filed with the SEC. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal period, as reported in the Form S-1, have been omitted.

 

 

 

 

 

Capitalized Software Costs

 

Capitalization of software development costs for software that is to be sold, leased or otherwise marketed begins upon the establishment of technological feasibility. The establishment of technological feasibility and the ongoing assessment of recoverability of capitalized software development costs requires considerable judgment by us with respect to certain factors, including, but not limited to, technological feasibility, anticipated future gross revenues, estimated economic life, and changes in software and hardware technologies. Capitalized costs commence amortization on the date of general release using the greater of the straight-line method over the estimated useful life, or the ratio of revenue in the period to total expected revenues over the product’s expected useful life. From our inception through June 30, 2018 we have not capitalized any cost related to software under the criteria discussed in this paragraph.

 

We capitalize certain development costs associated with internal use software incurred during the application development stage. We expense costs associated with preliminary project phase activities, training, maintenance and any post-implementation period costs as incurred. Capitalization of qualifying application development cost begins when management authorized and commits to funding the project and it is probable that the project will be completed for the function intended. Capitalized internal use software costs are normally amortized over estimated useful live of three years once the related project has been completed and deployed for customer use. At the time the software is considered to have be an indefinite lived asset in which case it is evaluated for impairment at least annually. As of June 30, 2018, we have capitalized $268,363 (net of accumulated amortization of $268,363) related to software under the criteria discussed in this paragraph.

 

Revenue Recognition

 

Non-Software Arrangements

 

For arrangements governed by general revenue recognition literature, such as with our SaaS offerings, we recognize revenue when four basic criteria are met. These criteria are: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the arrangement fee is fixed or determinable and collectability is reasonably assured. For our SaaS offerings, revenue is generally recognized on a subscription or transaction basis over the period of performance.

 

For arrangements consisting of multiple elements, revenue is allocated to each element based on a selling price hierarchy. The selling price of each element is based on VSOE if available, third-party evidence (TPE) if VSOE is not available or estimated selling price (ESP) if neither VSOE nor TPE are available. The residual method of allocation in a non-software arrangement is not permitted and, instead, arrangement consideration is allocated at the inception of the arrangement to all deliverables using the relative selling price method. The relative selling price method allocates any discount in the arrangement proportionately to each deliverable based on the proportion of each deliverable’s selling price to the total arrangement fee. We are typically unable to establish TPE, which is based on the selling price charged by unrelated third-party vendors for similar deliverables when they are sold separately, as we are generally unable to obtain sufficient information on actual vendor selling prices to substantiate TPE. The objective of ESP is to estimate the price at which we would transact if the deliverable were sold separately rather than as part of a multiple element arrangement. Our determination of ESP considers several factors including actual selling prices for similar transactions, gross margin expectations and our ongoing pricing strategy. We formally analyze our ESP determinations on at least an annual basis.

 

Whether a deliverable represents a separate unit of accounting, thus resulting in discrete revenue recognition as the revenue recognition criteria for that deliverable are met, is dependent on whether the deliverable has value to the customer on a standalone basis. A deliverable has standalone value if it is sold separately by us or any other vendor or if the deliverable could be resold by the customer. Additionally, in an arrangement that includes a general right of return related to delivered items, delivery or performance of any undelivered items must be considered probable and substantially within our control.

 

We periodically charge up-front fees related to installation and integration services in connection with certain of our SaaS offerings. These fees typically do not have stand-alone value and are deferred and recognized as revenue ratably over the estimated customer relationship period (generally three years). The revenue recognition period associated with these fees normally commences upon delivery of the platform to the customer including the administrative controls. Contract origination costs and incremental direct costs are expensed as incurred.

 

As of June 30, 2018 and December 31, 2017, the Company has recorded $605,598 and $469,151 and as deferred revenue associated with the deferral of up-front fees related to our SaaS offerings.

 

 

 

 

 

Software Arrangements

 

We recognize revenue on our software license arrangements when four basic criteria are met: persuasive evidence of an arrangement exists, delivery of the product has occurred, the fee is fixed and determinable and collectability is probable. We consider a fully executed agreement or a customer purchase order to be persuasive evidence of an arrangement. Delivery is deemed to have occurred upon transfer of the product to the customer or the completion of services rendered. We consider the arrangement fee to be fixed and determinable if it is not subject to adjustment and if the customer has not been granted extended payment terms. Extended payment terms are deemed to be present when any portion of the software license fee is due in excess of 90 days after the date of product delivery. In arrangements that contain extended payment terms, software revenue is recorded as customer payments become contractually due, assuming all other revenue recognition criteria have been met. We consider the arrangement fee to be probable of collection if our internal credit analysis indicates that the customer will be able to pay contractual amounts as they become due.

 

Our software arrangements can contain multiple revenue elements, such as software licenses, professional services and post-contract customer support. For multiple element software arrangements which qualify for separate element treatment, revenue is recognized for each element when each of the four basic criteria is met which, excluding post-contract customer support, is typically upon delivery. Revenue for post-contract customer support agreements is recognized ratably over the term of the agreement, which is generally one year. Revenue is allocated to each element, based on vendor specific objective evidence (VSOE). VSOE is limited to the price charged when the element is sold separately or, for an element not yet being sold separately, the price established by management having the relevant authority.

 

Certain of our clients software arrangements require significant customization and modification and involve extended implementation periods. These arrangements do not qualify for separate element revenue recognition treatment as described above, and instead must be accounted for under contract accounting. Under contract accounting, companies must select from two generally accepted methods of accounting: the completed contract method and the percentage of completion method. The completed contract method recognizes revenue and costs upon contract completion, and all project costs and revenues are reported as deferred items in the balance sheet until that time. The percentage of completion method recognizes revenue and costs on a contract over time, as the work progresses. We use the completed contract method.

 

As of June 30, 2018 and December 31, 2017, the Company has recorded $0 as deferred revenue associated with the deferral of software revenue for projects not yet completed at period end.

 

Deferred revenue

 

		June 30, 2018
Deferred revenue – January 1, 2018		$	469,151
Additions to deferred revenue			356,062
Related party forgiveness of deferred balance			–
Deferred revenue recognized			(219,615	)
Deferred revenue – June 30, 2018		$	605,598

 

Going Concern

 

The Company's financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company has negative working capital, recurring losses, and does not have a source of revenues sufficient to cover its operating costs. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

 

The ability of the Company to continue as a going concern is dependent upon its ability to successfully execute the business plan and attain profitable operations. The accompanying financial statements do not include any adjustments that may be necessary if the Company is unable to continue as a going concern.

 

 

 

 

 

In the coming year, the Company’s foreseeable cash requirements will relate to continual development of the operations of its business, maintaining its good standing and making the requisite filings with the Securities and Exchange Commission, and the payment of expenses associated with operations and business developments. The Company may experience a cash shortfall and be required to raise additional capital.

 

Historically, it has mostly relied upon convertible notes payable and cash flows from operations to finance its operations and growth. Management may raise additional capital by retaining net earnings or through future public or private offerings of the Company’s stock or through loans from private investors, although there can be no assurance that it will be able to obtain such financing. The Company’s failure to do so could have a material and adverse effect upon it and its shareholders.

 

Note 3—Recent Accounting Pronouncements

 

Recently Adopted Pronouncements and Accounting Pronouncements to be Adopted

 

Compensation—Stock Compensation: On June 20, 2018, the FASB issued ASU No. 2018-07, Compensation—Stock Compensation (Topic 718) - Improvements to Nonemployee Share-Based Payment Accounting, which aligns the accounting for share-based payment awards issued to employees and nonemployees. Under ASU No. 2018-07, the existing employee guidance will apply to nonemployee share-based transactions (as long as the transaction is not effectively a form of financing), with the exception of specific guidance related to the attribution of compensation cost. The cost of nonemployee awards will continue to be recorded as if the grantor had paid cash for the goods or services. In addition, the contractual term will be able to be used in lieu of an expected term in the option-pricing model for nonemployee awards. The Company elected to early adopt this standard in the first quarter of 2018. The adoption had no impact on the Company’s historic financial statements.

 

Revenue Recognition: In May 2014, the FASB issued an accounting standard update which provides for new revenue recognition guidance, superseding nearly all existing revenue recognition guidance. The core principle of the new guidance is to recognize revenue when promised goods or services are transferred to customers, in an amount that reflects the consideration to which the vendor expects to receive for those goods or services. The new standard requires significantly more judgment and estimation within the revenue recognition process than required under existing U.S. GAAP, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to separate performance obligations. The new standard also significantly increases the financial statement disclosure related to revenue recognition. This standard is effective for us on January 1, 2018 (the first quarter of our fiscal year ending December 31, 2018) and was implemented using the modified retrospective approach it was determined that the new standard had no impact on the Company’s accounting for revenue.

 

Leases: In February 2016, the FASB issued an accounting standard update which requires balance sheet recognition of a lease liability and a corresponding right-of-use asset for all leases with terms longer than twelve months. The pattern of recognition of lease related revenue and expenses will be dependent on its classification. The updated standard requires additional disclosures to enable users of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. This standard is effective for us on January 1, 2019 with early adoption permitted; adoption is on a modified retrospective basis. We are still evaluating the anticipated impact of this standard on our financial statements.

 

Statement of Cash Flows: In August and November of 2016, the FASB issued updates to the accounting standard which addresses the classification and presentation of certain cash receipts, cash payments and restricted cash in the statement of cash flows. The standard is effective for us on January 1, 2018 and requires a retrospective approach. The adoption of this standard did not have a material impact on our financial statements.

 

Business Combinations: In January 2017, the FASB issued an accounting standard update to clarify the definition of a business and to provide guidance on determining whether an integrated set of assets and activities constitutes a business. The standard is effective for us January 1, 2018, on a prospective basis. The adoption of this standard did not have a material impact on our financial statements.

 

 

 

 

Note 4—Capitalized Software and Property and Equipment

 

Capitalized software consisted of the following:

 

		June 30,				December 31,
		2018				2017
Capitalized software		$	536,726			$	536,726
Less: Accumulated depreciation and amortization			(268,363	)			(178,908	)
Total capitalized software, net		$	268,363			$	357,818

 

Amortization expense for the six months ended June 30, 2018 and 2017 were $89,455 and $89,455, respectively related to capitalized software.

 

Property and equipment consisted of the following:

 

		June 30,				December 31,
		2018				2017
Furniture and fixtures		$	30,646			$	30,646
Computers and equipment			38,041				33,131
Total property and equipment, gross			68,686				63,777
Less: Accumulated depreciation and amortization			(40,329	)			(34,540	)
Total property and equipment, net		$	28,357			$	29,237

 

Depreciation expense for the six months ended June 30, 2018 and 2017 were $5,789 and $3,326, respectively related to property and equipment.

 

Note 5—Commitments and Contingencies

 

Leases

 

Rent expense for the six months ended June 30, 2018, and 2017 was $0 and $29,496, respectively related to use of the Company’s Chief Executive Officer’s home office. The arrangement was on a month to month basis and was not used during the six months ended June 30, 2018.

 

In February 2017 the Company entered into an office lease in Carlsbad, California for a 38-month term commencing on March 1, 2017. The lease requires a security deposit of $8,200 with escalating monthly rent payments ranging from $4,100 up to $9,091 per month. Rent expense under this arrangement was $53,190 and $23,423 for the six months ended June 30, 2018 and 2017. In July 2018, the Company and landlord agreed to terminate this agreement.

 

Legal Matters

 

On May 25, 2017 a former software development contractor of Skylab filed suit in California related to a service contract entered into in 2016. The lawsuit claims a breach of contract by Skylab and claims damages of approximately $220,000. The Company is currently negotiating a settlement and does not believe the settlement with be material to the Company.

 

 

 

 

 

Note 6— Notes Payable

 

Convertible notes payable

 

Convertible notes payable consists of the following:

 

		As of,
		June 30, 2018				December 31, 2017
Note payable dated May 22, 2017, bearing interest at 5% per annum, due May 21, 2019, convertible at 90% of the lowest VWAP in past 5 trading days (floor - 0.01)		$	25,000			$	25,000
Note payable dated May 22, 2017, bearing interest at 5% per annum, due May 21, 2019, convertible at 90% of the lowest VWAP in past 5 trading days (floor - 0.01)			30,000				30,000
Note payable dated November 21, 2017, bearing interest at 8% per annum, due November 21, 2018, convertible at 60% of the lowest VWAP for ten prior trading days			79,600				79,600
Total convertible notes payable			134,600				134,600
Less original issue discount			–				–
Amortization of discount			–				–
Notes payable, net of discount			134,600				134,600
Less, current portion			(134,600	)			(79,600	)
Long term portion of notes payable		$	–			$	55,000

 

Convertible notes payable related party

 

Convertible notes payable related party consists of the following and are notes from Silver Surfer:

 

		As of,
		June 30, 2018				December 31, 2017
Note payable dated December 31, 2015, bearing interest at 8% per annum, due December 31, 2017, convertible at $0.05. Past due interest rate of 22%.			84,019				84,019
Note payable dated December 31, 2016, bearing interest at 8% per annum, due December 31, 2018, convertible at $0.08			175,000				175,000
Total convertible notes payable			259,019				259,019
Less original issue discount			–				–
Amortization of discount			–				–
Notes payable, net of discount			259,019				259,019
Less, current portion			(259,019	)			(259,019	)
Long term portion of notes payable		$	–			$	–

 

The conversion price for the instruments based on the company’s valuation is calculated as the pre-determined company valuation divided by the total shares outstanding on the conversion date.

 

The Company evaluated the conversion terms and determined that the conversion feature qualifies for a scope exception from ASC 815 because the net settlement is not readily convertible to cash as a result the instrument does not require bifurcation of the conversion feature and presentation as a derivative liability. Further, the company determined that the conversion price was higher than the fair value of the stock at the time of debt issuance resulting in no beneficial conversion feature.

 

 

 

 

Notes Payable

 

Notes payable consists of the following:

 

		As of,
		June 30, 2018				December 31, 2017
Note payable dated June 1, 2017, bearing interest at 12% per annum, due September 1, 2017		$	240,000			$	240,000
Note payable dated August 22, 2017, bearing interest at 12% per annum, due November 22, 2017			100,000				100,000
Total notes payable			340,000				340,000
Less, current portion			(340,000	)			(340,000	)
Long term portion of notes payable		$	–			$	–

 

Notes Payable – Related Party

 

Notes payable related parties consists of the following and are loans:

 

		As of,
		June 30, 2018				December 31, 2017
Note payable dated March 10, 2017, bearing interest at 15% per annum, due September 9, 2017 - Silver Surfer		$	12,500			$	12,500
Note payable dated April 7, 2017, bearing interest at 15% per annum, due October 6, 2017 - Silver Surfer			100,000				100,000
Note payable dated January 27, 2018, bearing interest at 12% per annum, due July 27, 2018 - Silver Surfer			20,842				–
Note payable dated February 8, 2018, bearing interest at 12% per annum, due August 8, 2018 - Dean Grey			6,034				–
Total notes payable			139,376				112,500
Less, current portion			(139,376	)			(112,500	)
Long term portion of notes payable		$	–			$	–

 

Note 7—Equity

 

The Company has authorized for issuance 750,000,000 shares each of Preferred Stock and 950,000,000 shares of common stock.  Both have a par value of $0.0001.  Of the Preferred Stock 100,000,000 shares have been designated as Series A. Each share of this class of Preferred Stock is convertible into 10 shares of common stock and includes 10 votes.

 

On March 29, 2018 the Company completed a reverse merger as explained in Note 1. As part of that transaction 32,682,443 shares of Skylab Apps were recast into 23,750,000 shares of Skylab USA. Immediately following the transaction a total of 25,006,269 shares were issued and outstanding which includes 1,256,269 held by the former owners of Skylab USA. All share references in these financial statements are that of Skylab USA on a post-merger basis unless explained otherwise.

 

During the six months ended June 30, 2018, 337,500 shares of common stock were sold for cash proceeds of $135,000. In addition $40,500 was received for the sale of common stock however the shares were not issued until August 2018.

 

During the six months ended June 30, 2018 the Company issued 609,588 shares of Common Stock to various employees and consultants for services and recorded an expense of $228,310. The expense for these shares as well as shares issued in the prior year are being recognized over the associated vesting period of the shares ranging up to five years. As of June 30, 2018, 971,709 shares remain unvested.

 

As of June 30, 2018 there are no stock options or warrants outstanding.

 

 

 

 

Note 8 – Related Party Transactions

 

WDG Management Group, Inc. (“WDG”) is a NV Corporation that is owned 100% by Dean Grey, and was formed for the sole purpose of bill pay.  Dean Grey is involved or owns several different incubator companies that use the same independent contractors, lease, etc.  WDG was used to simplify the accounting and 1099 issuance process, by using one company for all independent contractor payments, rent, utilities.  There were no additional fees charged by WDG to Skylab or the incubator companies, it does not have a profit for any years.

 

Silver Surfer Management Venture, LLC (“Silver Surfer”) is a Company that Dean Grey works with for multiple contracting projects.  Dean’s functions and fees vary from project to project.  Skylab apps paid Silver Surfer for Dean Grey’s creative, marketing, and development services.  Most of Mr. Grey’s contracts runs through Silver Surfer.  Mr. Grey does not own Silver Surfer Management, he is an independent contract for Silver Surfer and manages and performs duties for multiple clients.

 

Mr. Grey’s compensation was agreed upon to be $15,000 per month.  A portion of this was paid directly to Mr. Grey and a portion to Silver Surfer.  Management services were paid directly to him (or via WDG), from Skylab Apps.  His creative, marketing and development costs were paid to Silver Surfer. Mr. Grey and Silver Surfer earned $90,000 for the six months ended June 30, 2017 and $90,000 for six months ended June 30, 2018 of which $150,353 was payable as of December 31, 2017.

 

On January 15, 2018, the Company transferred ownership rights of the intellectual property behind the software platform to WDG Management Group, Inc. d/b/a Skynet (“Skynet”). Skynet is owned by the shareholders of record of Skylab Apps on the date of the transfer. In addition, Mr. Dean Grey has voting control and is the CEO and Board Member of both entities. The Company currently has a verbal agreement with Skynet to continue to have access to use the intellectual property that was transferred in perpetuity. The agreement is that the Company will have the right to use the asset in the United Stated with no royalty or set up fee in exchange for the requirement to maintain and update the software for Skynet on an as needed basis. The Company evaluated Skynet and concluded that it is required to be consolidated as a variable interest entity and as such has been consolidated from the point of the transaction. The Company and Skynet are under common control and as such carry over basis was applied when the software platform was transferred to Skynet. The Company holds no ownership interest in Skynet which is reflected in the non-controlling interest portion of the financial statements.

 

Note 9—Subsequent Events

 

Subsequent events have been evaluated for disclosure through September 10, 2018, the date the financial statements were available for issuance.

 

Subsequent to June 30, 2018, the Company sold 112,500 shares of common stock for $90,000.

 

Beginning in August 2018 the Company entered into a month to month office lease agreement with Mr. Grey. The Company will lease on office space in Carlsbad, California for $10,500 per month inclusive of utilities and cleaning services.

 

 

 

 

19720 Jetton Road, 3rd Floor           Cornelius, NC 28031           Tel: 704-897-8336           Fax: 704-919-5089

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors and
Skylab Apps, Inc.

 

We have audited the accompanying consolidated balance sheets of Skylab Apps, Inc. (“the Company”) as of December 31, 2017 and the related consolidated statements of operations, stockholders’ deficit, and consolidated cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

 

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing 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 over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

 

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2017 and the results of its operations, changes in stockholders’ deficit and cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The Company has suffered recurring operating losses, has an accumulated stockholders’ deficit, has negative working capital, has had minimal revenues from operations, and has yet to generate an internal cash flow that raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/ L&L CPAS, PA

 

L&L CPAS, PA

Certified Public Accountants

Cornelius, NC

The United States of America

July 24, 2018

 

We have served as the Company's auditor since 2018.

www.llcpas.net

 

 

 

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

 

To the Board of Directors and Shareholders of
Skylab Apps, Inc.

 

We have audited the accompanying balance sheet of Skylab Apps, Inc. (the “Company”) as of December 31, 2016, and the related statement of operations, shareholders’ deficit, and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

 

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

Our audit included consideration of internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Skylab Apps, Inc. as of December 31, 2016, the results of its operations, and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

 

/s/ Dave Banerjee CPA, an Accountancy Corporation

 

Dave Banerjee CPA, an Accountancy Corporation

 

Woodland Hills, CA 91367

December 4, 2017

 

 

 

SKYLAB APPS, INC.
BALANCE SHEETS

 

		December 31, 2017				December 31, 2016
ASSETS
Current Assets
Cash		$	33,064			$	134,930
Accounts receivable, net			11,700				55,197
Other current assets			–				19,767
Total current assets			44,764				209,894
Capitalized software, net			357,818				536,726
Property, plant, and equipment, net			29,237				8,869
Other assets			8,200				–
Total Assets		$	440,019			$	755,489
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable and accrued expenses		$	26,659			$	52,793
Accounts payable – related parties			100,452				5,000
Accrued interest			72,106				24,729
Notes payable			340,000				–
Notes payable - related parties			112,500				–
Current portion of convertible notes payable, net			79,600				200,000
Current portion of convertible notes payable related party, net			259,019				84,019
Deferred revenue			469,151				410,303
Total current liabilities			1,459,487				776,844
Long-term liabilities:
Convertible notes payable, net			55,000				300,000
Convertible notes payable related party, net			–				175,000
Total long-term liabilities			55,000				475,000
Total liabilities			1,514,487				1,251,844
Commitments and contingencies
Stockholders’ Deficit
Class A Common stock, $0.00001 par value, 10,000,000 shares authorized, 11,379,152 and 2,955,000 issued and outstanding as of December 31, 2017 and 2016, respectively			114				30
Class F Common stock, $0.00001 par value, 20,000,000 shares authorized, 20,000,000 and 20,000,000 issued and outstanding as of December 31, 2017 and 2016, respectively			200				200
Additional paid in capital			1,047,500				8,450
Accumulated deficit			(2,122,282	)			(505,035	)
Total stockholders' deficit			(1,074,468	)			(496,355	)
Total Liabilities and Stockholders' Deficit		$	440,019			$	755,489

 

 

The accompanying notes are an integral part of these financial statements

 

 

 

 

SKYLAB APPS, INC.

STATEMENT OF OPERATIONS

 

		Year ended December 31, 2017				Year ended December 31, 2016
Revenues:
Subscription and transaction fees		$	531,668			$	73,383
Software license fees			30,700				659,817
Total revenues			562,368				733,200
Operating expenses:
Product development			728,752				259,100
General and administrative expenses			532,862				396,874
Stock Compensation			471,483				–
Professional fees			114,449				55,548
Depreciation and amortization expense			187,886				20,240
Total operating expenses			2,035,432				731,762
Operating income (loss)			(1,473,064	)			1,438
Other income (expense):
Interest and other expenses			(169,449	)			(24,126	)
Interest income and other income			25,266				21
Total other income (expenses)			(144,183	)			(24,105	)
Income (loss) before income taxes			(1,617,247	)			(22,667	)
Income tax expense			–				–
Net loss		$	(1,617,247	)		$	(22,667	)
Net loss per common share, basic and diluted		$	(0.06	)		$	(0.00	)
Weighted average number of common shares outstanding, basic and diluted			28,676,976				21,303,456

 

The accompanying notes are an integral part of these financial statements

 

 

 

 

Skylab Apps, Inc.

Statement of Stockholders' Deficit

 

		Common Stock - Series A								Common Stock - Series F								Additional Paid-in Capital				Accumulated Deficit				Total Stockholders’ (Deficit)
		Shares				Amount				Shares				Amount
Balance at December 31, 2015			–			$	–				20,000,000			$	200			$	–			$	(482,368	)		$	(482,168	)
Founder shares returned			–				–				(6,992,000	)			(70	)			–				–				(70	)
Stock compensation expense			2,955,000				30				6,992,000				70				8,450				–				8,550
Net loss			–				–				–				–				–				(22,667	)			(22,667	)
Balance at December 31, 2016			2,955,000				30				20,000,000				200				8,450				(505,035	)			(496,355	)
Stock compensation expense			6,087,212				61				–				–				471,422				–				471,483
Excersise of common stock warrants			131,306				1				–				–				19,999				–				20,000
Issues of shares for conversion of notes payable			2,205,634				22				–				–				517,985				–				518,007
Capital contribution			–				–				–				–				29,644				–				29,644
Net loss			–				–				–				–				–				(1,617,247	)			(1,617,247	)
Balance at December 31, 2017			11,379,152			$	114				20,000,000			$	200			$	1,047,500			$	(2,122,282	)		$	(1,074,468	)

 

The accompanying notes are an integral part of these financial statements

 

 

 

 

SKYLAB APPS, INC.

STATEMENT OF CASH FLOWS

 

		Year ended December 31, 2017				Year ended December 31, 2016
Cash Flows from Operating Activities:
Net loss		$	(1,617,247	)		$	(22,667	)
Adjustments to reconcile net loss to net cash used in operations:
Depreciation and amortization			187,885				20,240
Share-based compensation			471,483				8,480
Changes in operating assets and liabilities:
Accounts receivable			43,497				(55,197	)
Prepaid expenses and other current assets			19,767				–
Other assets			(8,200	)			(19,767	)
Accounts payable and accrued expenses			(26,134	)			(36,377	)
Accounts payable – related parties			95,452				5,000
Accrued interest			65,384				24,126
Deferred revenue			88,492				(131,829	)
Net cash used in operating activities			(679,621	)			(207,991	)
Cash Flows from Investing Activities:
Capitalized software			–				(322,491	)
Property and equipment purchases			(29,345	)			(25,451	)
Net cash used in investing activities			(29,345	)			(347,942	)
Cash Flows from Financing Activities:
Payments on amounts due to related party			–				(11,570	)
Proceeds from note payable			452,500				–
Payments from convertible note payable			(58,000	)			–
Proceeds from convertible note payable			192,600				475,000
Proceeds from exercise of warrants			20,000				–
Proceeds from sale of common stock			–				–
Net cash provided by financing activities			607,100				463,430
Net change in cash			(101,866	)			(92,503	)
Cash at beginning of period			134,930				227,433
Cash at end of period		$	33,064			$	134,930
Supplemental Cash Flow Disclosure:
Interest paid		$	–			$	–
Taxes paid		$	–			$	–
Common stock issued to settle convertible notes payable and interest		$	518,007			$	–
Capital contribution		$	29,644			$	–

 

The accompanying notes are an integral part of these financial statements

 

 

 

 

SKYLAB APPS, INC.

NOTES TO FINANCIAL STATEMENTS

Years ended December 31, 2017 and 2016

 

Note 1—Organization and Nature of Business

 

Skylab Apps, Inc. (“Skylab”) was incorporated on September 5, 2015 in the State of Delaware for the purpose of developing a SaaS white label platform for influencer and brands to train, track, reward and monetize their communities. Prior to the incorporation of Skylab the controlling shareholder of Skylab, Dean Grey, incorporated C4 LLC (“C4”) on April 20, 2015 in the State of Nevada for the same purpose as described above for Skylabs. The operations and activities of C4 were contributed to Skylab by Mr. Grey at the point Skylab was incorporated. The financial statements include the financial statements of Skylab and C4 from the inception of C4. The entity C4 was legally dissolved March 24, 2017.

 

Note 2—Significant Accounting Policies

 

Use of Estimates in the Preparation of Financial Statements

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Estimates include, but are not limited to, revenue recognition, allowances for doubtful accounts, recoverability of deferred tax assets and certain other of our accrued liabilities. Actual results could differ from those estimates.

 

Cash and Cash Equivalents

 

We consider all highly liquid instruments with an original maturity of three months or less to be cash equivalents. The carrying value of these instruments approximates their fair value.

 

Concentration of Credit Risk

 

Financial instruments that potentially subject us to significant concentrations of credit risk consist of cash and cash equivalents and accounts receivable. Balances of cash and cash equivalents can be in excess of any insurance, such as FDIC coverage, that may protect our deposits.

 

Our accounts receivable are reported in our balance sheets net of allowances for uncollectible accounts. We believe that the concentration of credit risk with respect to accounts receivable is limited due to a large portion of the overall fees being collected prior to delivery of the software. On-going credit evaluations are performed, generally with a focus on new customers or customers with whom we have had no prior collections history, and collateral is generally not required. We maintain reserves for potential losses based on customer specific situations and such losses, in the aggregate, have not historically exceeded our expectations. There was one customer that, individually, accounted for more than 95% of our accounts receivable balance at December 31, 2016. No such concentration existed as of December 31, 2017. For the year ended December 31, 2017, we had 1 customer that accounted for approximately 12% of our revenue. For the year ended December 31, 2016, we had one customer that accounted for approximately 85% of our revenue.

 

Financial Instruments

 

The fair value of our financial instruments, which include cash and cash equivalents, accounts receivable, accounts payable and our convertible notes are based on assumptions concerning the amount and timing of estimated future cash flows and assumed discount rates reflecting varying degrees of perceived risk.

 

 

 

 

Accounts Receivable

 

Substantially all of the Company’s accounts receivable balance is related to trade receivables. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments for services. Accounts with known financial issues are first reviewed and specific estimates are recorded. Account balances are charged against the allowance when it is probable that the receivable will not be recovered. As of December 31, 2017 and 2016, the Company had no valuation allowance for the Company’s accounts receivable.

 

Property and Equipment

 

Property and equipment are stated at cost, net of accumulated amortization and depreciation. Depreciation is recorded on a straight-line basis over the estimated useful lives of the assets as follows:

 

Furniture and fixtures	3-7 years
Computers and equipment	3-5 years
Leasehold improvements	Lower of estimated life or remaining lease term

 

Periodically, based on specific transactions, we may assign a life outside of the general range of useful lives noted here if a particular asset’s estimated period of use falls outside of the normal range.

 

Other Intangible Assets

 

The Company reviews the carrying value of long-lived assets, including property and equipment, for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the asset is used, and the effect of obsolescence, demand, competition, and economic factors. Based on this assessment, the Company has not identified such impairment losses as of December 31, 2017 and 2016.

 

Advertising Costs

 

We expense advertising costs as incurred. Advertising costs were $5,594, and $3,248 for the year ended December 31, 2017 and 2016, respectively.

 

Commissions Expense

 

We record commissions as a component of sales and marketing expense when earned by the respective salesperson. Excluding certain arrangements within our subscription sales, for which commissions are earned as revenue is recorded. Commissions associated with professional services are typically earned in the month that services are rendered. Commissions associated with post-contract customer support arrangements and subscription-based arrangements are typically earned when the customer is billed for the underlying contractual period, or in the period the order is received. Commissions are normally paid within thirty days of the month in which they are earned.

 

Research and Development Expenditures

 

Research and development costs incurred prior to the establishment of technological feasibility (for software to be sold, leased or otherwise marketed), or prior to application development (for internal-use software) are expensed as incurred.

 

 

 

 

Debt Issuance Costs

 

Debt issuance costs are included as a direct reduction to the carrying value of the debt on our balance sheets and are being amortized to interest expense ratably over the term of the associated debt.

 

Costs in connection with a revolving credit facility are included as part of our other current assets on our balance sheets and are being amortized to interest expense ratably over the term of the associated facility.

 

Income Taxes and Income Tax Uncertainties

 

We recognize deferred tax assets and deferred tax liabilities based on differences in the financial reporting and tax basis of the underlying assets or liabilities, measured at tax rates that are expected to be in effect when the differences reverse. A valuation allowance to reduce the carrying value of deferred tax assets is recorded if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

 

In respect of income tax uncertainties, we perform a two-step analysis for all tax positions. The first step involves an evaluation of the underlying tax position based solely on technical merits (such as tax law) and the second step involves measuring the tax position based on the probability of it being sustained in the event of a tax examination. We recognize tax benefits at the largest amount that we deem more likely than not will be realized upon ultimate settlement of any tax uncertainty. Tax positions that fail to qualify for recognition are recognized in the period in which the more-likely-than-not standard has been reached, when the tax positions are resolved with the respective taxing authority or when the statute of limitations for tax examination has expired.

 

We record any interest or penalties accruing in respect of uncertain tax positions as a component of income tax expense.

 

Share-Based Compensation

 

Accounting Standards Codification (“ASC”) 718, “Compensation-Stock Compensation" established financial accounting and reporting standards for stock-based compensation plans. It defines a fair value based method of accounting for an employee stock option or similar equity instrument. Accordingly, employee share-based payment compensation is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the requisite service period.

 

The Company accounts for compensation cost for stock option plans and for share-based payments to non-employees in accordance with ASC 505-50, “Equity-Based Payment to Non-Employees”. Additionally, share-based awards to non-employees are expensed over the period in which the related services are rendered at their fair value. The Company accounts for share-based payments to non-employees in accordance with ASC 505-50 “Equity-Based Payment to Non-Employee”.

 

Capitalized Software Costs

 

Capitalization of software development costs for software that is to be sold, leased or otherwise marketed begins upon the establishment of technological feasibility. The establishment of technological feasibility and the ongoing assessment of recoverability of capitalized software development costs requires considerable judgment by us with respect to certain factors, including, but not limited to, technological feasibility, anticipated future gross revenues, estimated economic life, and changes in software and hardware technologies. Capitalized costs commence amortization on the date of general release using the greater of the straight-line method over the estimated useful life, or the ratio of revenue in the period to total expected revenues over the product’s expected useful life. From our inception through December 31, 2017 we have not capitalized any cost related to software under the criteria discussed in this paragraph.

 

 

 

 

We capitalize certain development costs associated with internal use software incurred during the application development stage. We expense costs associated with preliminary project phase activities, training, maintenance and any post-implementation period costs as incurred. Capitalization of qualifying application development cost begins when management authorized and commits to funding the project and it is probable that the project will be completed for the function intended. Capitalized internal use software costs are normally amortized over estimated useful lives ranging from 2 to 5 years once the related project has been completed and deployed for customer use. At time the software is considered to have be an indefinite lived asset in which case it is evaluated for impairment at least annually. As of December 31, 2017 and 2016, we have capitalized $357,818 and $536,726 (net of accumulated amortization of $178,909 and $0, respectively) related to software under the criteria discussed in this paragraph.

 

Revenue Recognition

 

Non-Software Arrangements

 

For arrangements governed by general revenue recognition literature, such as with our SaaS offerings, we recognize revenue when four basic criteria are met. These criteria are: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the arrangement fee is fixed or determinable and collectability is reasonably assured. For our SaaS offerings, revenue is generally recognized on a subscription or transaction basis over the period of performance.

 

For arrangements consisting of multiple elements, revenue is allocated to each element based on a selling price hierarchy. The selling price of each element is based on VSOE if available, third-party evidence (TPE) if VSOE is not available or estimated selling price (ESP) if neither VSOE nor TPE are available. The residual method of allocation in a non-software arrangement is not permitted and, instead, arrangement consideration is allocated at the inception of the arrangement to all deliverables using the relative selling price method. The relative selling price method allocates any discount in the arrangement proportionately to each deliverable based on the proportion of each deliverable’s selling price to the total arrangement fee. We are typically unable to establish TPE, which is based on the selling price charged by unrelated third-party vendors for similar deliverables when they are sold separately, as we are generally unable to obtain sufficient information on actual vendor selling prices to substantiate TPE. The objective of ESP is to estimate the price at which we would transact if the deliverable were sold separately rather than as part of a multiple element arrangement. Our determination of ESP considers several factors including actual selling prices for similar transactions, gross margin expectations and our ongoing pricing strategy. We formally analyze our ESP

 

determinations on at least an annual basis.

 

Whether a deliverable represents a separate unit of accounting, thus resulting in discrete revenue recognition as the revenue recognition criteria for that deliverable are met, is dependent on whether the deliverable has value to the customer on a standalone basis. A deliverable has standalone value if it is sold separately by us or any other vendor or if the deliverable could be resold by the customer. Additionally, in an arrangement that includes a general right of return related to delivered items, delivery or performance of any undelivered items must be considered probable and substantially within our control.

 

 

We periodically charge up-front fees related to installation and integration services in connection with certain of our SaaS offerings. These fees typically do not have stand-alone value and are deferred and recognized as revenue ratably over the estimated customer relationship period (generally three years). The revenue recognition period associated with these fees normally commences upon delivery of the platform to the customer including the administrative controls. Contract origination costs and incremental direct costs are expensed as incurred.

 

As of December 31, 2017 and 2016, the Company has recorded $469,151 and $410,303 and as deferred revenue associated with the deferral of up-front fees related to our SaaS offerings.

 

 

 

 

Software Arrangements

 

We recognize revenue on our software license arrangements when four basic criteria are met: persuasive evidence of an arrangement exists, delivery of the product has occurred, the fee is fixed and determinable and collectability is probable. We consider a fully executed agreement or a customer purchase order to be persuasive evidence of an arrangement. Delivery is deemed to have occurred upon transfer of the product to the customer or the completion of services rendered. We consider the arrangement fee to be fixed and determinable if it is not subject to adjustment and if the customer has not been granted extended payment terms. Extended payment terms are deemed to be present when any portion of the software license fee is due in excess of 90 days after the date of product delivery. In arrangements that contain extended payment terms, software revenue is recorded as customer payments become contractually due, assuming all other revenue recognition criteria have been met. We consider the arrangement fee to be probable of collection if our internal credit analysis indicates that the customer will be able to pay contractual amounts as they become due.

 

Our software arrangements can contain multiple revenue elements, such as software licenses, professional services and post-contract customer support. For multiple element software arrangements which qualify for separate element treatment, revenue is recognized for each element when each of the four basic criteria is met which, excluding post-contract customer support, is typically upon delivery. Revenue for post-contract customer support agreements is recognized ratably over the term of the agreement, which is generally one year. Revenue is allocated to each element, based on vendor specific objective evidence (VSOE). VSOE is limited to the price charged when the element is sold separately or, for an element not yet being sold separately, the price established by management having the relevant authority.

 

Certain of our software arrangements require significant customization and modification and involve extended implementation periods. These arrangements do not qualify for separate element revenue recognition treatment as described above, and instead must be accounted for under contract accounting. Under contract accounting, companies must select from two generally accepted methods of accounting: the completed contract method and the percentage of completion method. The completed contract method recognizes revenue and costs upon contract completion, and all project costs and revenues are reported as deferred items in the balance sheet until that time. The percentage of completion method recognizes revenue and costs on a contract over time, as the work progresses. We use the completed contract method.

 

As of December 31, 2017 and 2016, the Company has recorded $0 and $0 as deferred revenue associated with the deferral of software revenue for projects not yet completed at period end.

 

Deferred revenue

 

		2017				2016
Deferred revenue – beginning of the year		$	410,303			$	542,132
Additions to deferred revenue			650,860				601,371
Related party forgiveness of deferred balance			(29,644	)			–
Deferred revenue recognized			(562,368	)			(733,200	)
Deferred revenue – end of year		$	469,151			$	410,303

 

 

Earnings per Share

 

We report both basic and diluted earnings per share. Basic earnings per share is calculated based on the weighted average number of shares of common stock outstanding and excludes the dilutive effect of warrants, stock options or any other type of convertible securities. Diluted earnings per share is calculated based on the weighted average number of shares of common stock outstanding and the dilutive effect of stock options, warrants and other types of convertible securities are included in the calculation. Dilutive securities are excluded from the diluted earnings per share calculation because their effect is anti-dilutive as of December 31, 2017.

 

 

 

 

Foreign Currency Translation

 

Gains or losses resulting from foreign currency translation are included as a component of accumulated other comprehensive income or loss. Foreign currency transaction gains and losses are included in results of operations as.

 

Comprehensive Income or Loss

 

Comprehensive income or loss includes all changes in equity during a period from non-owner sources, such as net income or loss, foreign currency translation adjustments, certain pension adjustments and unrealized gains and losses on available for sale securities.

 

Going Concern

 

The Company's financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company has negative working capital, recurring losses, and does not have a source of revenues sufficient to cover its operating costs. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

 

The ability of the Company to continue as a going concern is dependent upon its ability to successfully execute the business plan and attain profitable operations. The accompanying financial statements do not include any adjustments that may be necessary if the Company is unable to continue as a going concern.

 

In the coming year, the Company’s foreseeable cash requirements will relate to continual development of the operations of its business, maintaining its good standing and making the requisite filings with the Securities and Exchange Commission, and the payment of expenses associated with operations and business developments. The Company may experience a cash shortfall and be required to raise additional capital.

 

Historically, it has mostly relied upon convertible notes payable and cash flows from operations to finance its operations and growth. Management may raise additional capital by retaining net earnings or through future public or private offerings of the Company’s stock or through loans from private investors, although there can be no assurance that it will be able to obtain such financing. The Company’s failure to do so could have a material and adverse effect upon it and its shareholders.

 

Note 3—Recent Accounting Pronouncements

 

Recently Adopted Pronouncements and Accounting Pronouncements to be Adopted

 

Going Concern: In August 2014, the FASB issued an accounting standard update which requires management to evaluate, at each annual or interim reporting period, whether there are conditions or events that exist that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date the financial statements are issued and provide related disclosures. This standard is applicable for our annual and interim reporting in fiscal year 2017.

 

Cloud Computing Arrangements: In December 2016, the FASB issued a technical update to this standard, clarifying that any software license within the scope of this accounting standard shall be accounted for as the acquisition of an intangible asset by the licensee. The technical update to this standard is effective for us on January 1, 2017. Upon adoption, software licenses will be classified as an intangible asset rather than as a component of property and equipment in our balance sheet. We do not anticipate any impact to our statement of comprehensive loss or cash flows.

 

Deferred Taxes - Classification: In November 2015, the FASB issued an accounting standard update which requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent in the balance sheet. As a result, each separate tax jurisdiction will have one net tax position, either a noncurrent deferred tax asset or a noncurrent deferred tax liability. The standard is effective for us on January 1, 2017. The adoption of this standard is not anticipated to have an impact on our financial statements.

 

 

 

 

Revenue Recognition: In May 2014, the FASB issued an accounting standard update which provides for new revenue recognition guidance, superseding nearly all existing revenue recognition guidance. The core principle of the new guidance is to recognize revenue when promised goods or services are transferred to customers, in an amount that reflects the consideration to which the vendor expects to receive for those goods or services. The new standard is expected to require significantly more judgment and estimation within the revenue recognition process than required under existing U.S. GAAP, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to separate performance obligations. The new standard is also expected to significantly increase the financial statement disclosure related to revenue recognition. This standard is currently effective for us on January 1, 2018 (the first quarter of our fiscal year ending December 31, 2018) and will be implemented using the modified retrospective approach with the cumulative effect of initially applying the standard recognized at the date of initial application inclusive of certain additional disclosures.

 

We are continuing to evaluate the expected impact of this standard on our financial statements and currently plan to adopt the standard using the modified retrospective method. While our assessment of the impact of this standard is not complete, we currently believe that the most significant impact will be in certain areas:

 

·

Under the new standard, VSOE will no longer be required to determine the fair value of elements in arrangement. As a result, the absence of VSOE in certain software arrangements will no longer result in strict revenue deferral. Absent a change in how we license our products, we believe that this will result in greater up-front recognition of software revenue for certain of our license arrangements.

 

·

Under the new standard, certain expenses we incur will require deferral and recognition over the period in which revenue is recognized, subject to certain exceptions. We believe that this will result in the deferral of certain fulfillment costs associated with our SaaS offerings which would then be recognized as expense over a multi-year period; such costs are expensed directly as incurred today.

 

·

Under the new standard, costs to obtain a contract, including sales commissions, will be capitalized and amortized on a basis that is consistent with the transfer of goods and services to its customer. We anticipate that this will result in the deferral of certain commission related costs that, today, are expensed as incurred.

 

·

Significantly enhanced financial statement disclosures related to revenue, including information related to the allocation of transaction price across undelivered performance obligations.

 

However, we are unable to quantify the impact of these outcomes at this time, nor can we ensure that our continuing analysis and interpretation of the standard will result in these financial reporting outcomes.

 

Leases: In February 2016, the FASB issued an accounting standard update which requires balance sheet recognition of a lease liability and a corresponding right-of-use asset for all leases with terms longer than twelve months. The pattern of recognition of lease related revenue and expenses will be dependent on its classification. The updated standard requires additional disclosures to enable users of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. This standard is effective for us on January 1, 2019 with early adoption permitted; adoption is on a modified retrospective basis. We are still evaluating the anticipated impact of this standard on our financial statements.

 

Share-Based Compensation: In March 2016, the FASB issued an accounting standard update intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax impact of excess tax benefits and tax deficiencies, accounting for forfeitures, statutory tax withholding requirements and the presentation of excess tax benefits in the statement of cash flows. This standard is effective for us on January 1, 2017.

 

In June 2018, the FASB issued an accounting standard update to align the accounting for non-employee stock based compensation to be similar to employee stock based compensation. The standard is effective for us on January 1, 2019 but can be early adopted at or after ASC 606 is implemented.

 

 

 

 

Statement of Cash Flows: In August and November of 2016, the FASB issued updates to the accounting standard which addresses the classification and presentation of certain cash receipts, cash payments and restricted cash in the statement of cash flows. The standard is effective for us on January 1, 2018 and requires a retrospective approach. We are currently evaluating the anticipated impact of this standard on our financial statements.

 

Business Combinations: In January 2017, the FASB issued an accounting standard update to clarify the definition of a business and to provide guidance on determining whether an integrated set of assets and activities constitutes a business. The standard is effective for us January 1, 2018, on a prospective basis. We do not currently believe that the adoption of this standard will have a material impact on our financial statements.

 

Note 4—Fair Value

 

Fair Value of Assets and Liabilities

 

We measure fair value at the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the assumptions that market participants would use in pricing an asset or liability (the inputs) are based on a tiered fair value hierarchy consisting of three levels, as follows:

 

Level 1: Observable inputs such as quoted prices for identical assets or liabilities in active markets.

 

Level 2: Other inputs that are observable directly or indirectly, such as quoted prices for similar instruments in active markets or for similar markets that are not active.

 

Level 3: Unobservable inputs for which there is little or no market data and which require us to develop our own assumptions about how market participants would price the asset or liability.

 

Valuation techniques for assets and liabilities include methodologies such as the market approach, the income approach or the cost approach, and may use unobservable inputs such as projections, estimates and management’s interpretation of current market data. These unobservable inputs are only utilized to the extent that observable inputs are not available or cost-effective to obtain.

 

At December 31, 2017 and 2016, we had no assets or liabilities that were required to be measured at fair value on a recurring basis.

 

Fair Value of Financial Instruments

 

We have certain financial instruments which consist of cash and cash equivalents, accounts receivable, accounts payable and notes payable. For each of these instruments fair value approximates their carrying values, due to the short-term nature of these instruments.

 

Note 5—Capitalized Software and Property and Equipment

 

Capitalized software consisted of the following:

 

		December 31,
		2017				2016
Capitalized software		$	536,726			$	536,726
Less: Accumulated depreciation and amortization			(178,908	)			`-
Total capitalized software, net		$	357,818			$	536,726

 

Amortization expense for the years ended December 31, 2017 and 2016 were $178,908 and $0, respectively related to capitalized software.

 

 

 

 

Property and equipment consisted of the following:

 

		December 31,
		2017				2016
Furniture and fixtures		$	30,646			$	7,970
Computers and equipment			33,131				26,462
Total property and equipment, gross			63,777				34,432
Less: Accumulated depreciation and amortization			(34,540	)			(25,563	)
Total property and equipment, net		$	29,237			$	8,869

 

Depreciation expense for the years ended December 31, 2017 and 2016 were $8,977 and $20,240, respectively related to property and equipment.

 

Note 6—Commitments and Contingencies

 

Leases

 

Rent expense for the years ended December 31, 2017, and 2016 was $30,323 and $28,198, respectively related to use of the Company’s Chief Executive Officer’s home office. The arrangement was on a month to month basis.

 

In February 2017 the Company entered into an office lease in Carlsbad, California for a 38-month term commencing on March 1, 2017. The lease requires a security deposit of $8,200 with escalating monthly rent payments ranging from $4,100 up to $9,091 per month. The future minimum lease commitment under this lease for the fiscal year ending December 31, 2018, 2019 and 2020 is $101,270, $104,815 and $35,751, respectively. Rent expense under this arrangement was $81,921 and $0 for the years ended December 31, 2017 and 2016. In July 2018, the Company and landlord agreed to terminate this agreement.

 

Legal Matters

 

On May 25, 2017 a former software development contractor of Skylab filed suit in California related to a service contract entered into in 2016. The lawsuit claims a breach of contract by Skylab and claims damages of approximately $220,000. The Company is currently negotiating a settlement and does not believe the settlement with be material to the Company.

 

Note 7— Notes Payable

 

Convertible notes payable

 

Convertible notes payable consists of the following:

		As of,
		December 31, 2017				December 31, 2016
Note payable dated December 1, 2015, bearing interest at 5% per annum, due November 30, 2017, convertible based on a fixed company valuation of $5,000,000		$	–			$	50,000
Note payable dated December 1, 2015, bearing interest at 5% per annum, due November 30, 2017, convertible based on a fixed company valuation of $5,000,000			–				50,000
Note payable dated December 11, 2015, bearing interest at 5% per annum, due December 10, 2017, convertible based on a fixed company valuation of $5,000,000			–				100,000
Note payable dated February 26, 2016, bearing interest at 5% per annum, due February 25, 2018, convertible based on a fixed company valuation of $5,000,000			–				50,000
Note payable dated April 4, 2016, bearing interest at 5% per annum, due March 3, 2018, convertible based on a fixed company valuation of $5,000,000			–				50,000
Note payable dated August 30, 2016, bearing interest at 5% per annum, due August 2, 2018, convertible based on a fixed company valuation of $20,000,000			–				100,000
Note payable dated October 8, 2016, bearing interest at 5% per annum, due October 7, 2018, convertible based on a fixed company valuation of $20,000,000			–				100,000
Note payable dated May 22, 2017, bearing interest at 5% per annum, due May 21, 2019, convertible at 90% of the lowest VWAP in past 5 trading days (floor - 0.01)			25,000				–
Note payable dated May 22, 2017, bearing interest at 5% per annum, due May 21, 2019, convertible at 90% of the lowest VWAP in past 5 trading days (floor - 0.01)			30,000				–
Note payable dated November 21, 2017, bearing interest at 8% per annum, due November 21, 2018, convertible at 60% of the lowest VWAP for ten prior trading days			79,600				–
Total convertible notes payable			134,600				500,000
Less original issue discount			–				–
Amortization of discount			–				–
Notes payable, net of discount			134,600				500,000
Less, current portion			(79,600	)			(200,000	)
Long term portion of notes payable		$	55,000			$	300,000

 

 

 

 

Convertible notes payable related party

 

Convertible notes payable related party consists of the following and are notes from Silver Surfer:

 

		As of,
		December 31, 2016				December 31, 2017
Note payable dated December 31, 2015, bearing interest at 8% per annum, due December 31, 2017, convertible at $0.05 Past due interest rate of 22%.			84,019				84,019
Note payable dated December 31, 2016, bearing interest at 8% per annum, due December 31, 2018, convertible at $0.08			175,000				175,000
Total convertible notes payable			259,019				259,019
Less original issue discount			–				–
Amortization of discount			–				–
Notes payable, net of discount			259,019				259,019
Less, current portion			(259,019	)			(84,019	)
Long term portion of notes payable		$	–			$	175,000

 

The conversion price for the instruments based on the company’s valuation is calculated as the pre-determined company valuation divided by the total shares outstanding on the conversion date.

 

The Company evaluated the conversion terms and determined that the conversion feature qualifies for a scope exception from ASC 815 because the net settlement is not readily convertible to cash as a result the instrument does not require bifurcation of the conversion feature and presentation as a derivative liability. Further, the company determined that the conversion price was higher than the fair value of the stock at the time of debt issuance resulting in no beneficial conversion feature.

 

During the year ended December 31, 2017, $500,000 of the above notes payable plus $18,006 of accrued interest was converted into 2,205,634 Common Stock Class A shares in accordance with the terms of the convertible notes payable agreements.

 

In June 2017 the Company issued $58,000 of convertible notes payable. The notes have two-year terms and accrue interest at 5%. The notes are convertible at the higher of $0.01 or 90% of the lowest VWAP during the five days prior to conversion. The note along with accrued interest was paid back with cash during the year ended December 31, 2017.

 

Years ending December 31,		Future
		Principal Payments
2018		$	338,619
2019			55,000
2020			–
2021			–
2022			–
Thereafter			–
		$	393,619

 

Notes Payable

 

Notes payable consists of the following:

 

		As of,
		December 31, 2017				December 31, 2016
Note payable dated June 1, 2017, bearing interest at 12% per annum, due September 1, 2017		$	240,000			$	–
Note payable dated August 22, 2017, bearing interest at 12% per annum, due November 22, 2017			100,000				–
Total notes payable			340,000				–
Less, current portion			–				–
Long term portion of notes payable		$	340,000			$	–

 

 

 

 

Notes Payable – Related Party

 

Notes payable related parties consists of the following and are loans from Silver Surfer:

 

		As of,
		December 31, 2017				December 31, 2016
Note payable dated March 10, 2017, bearing interest at 15%per annum, due September 9, 2017		$	12,500			$	–
Note payable dated April 7, 2017, bearing interest at 15% per annum, due October 6, 2017			100,000				–
Total notes payable			112,500				–
Less, current portion			–				–
Long term portion of notes payable		$	112,500			$	–

 

Note 8—Equity

 

The Company has authorized for issuance 20,000,000 shares each of Series A and Series F of common stock. Both have a par value of $0.00001. The Series F has 50 votes for each share hold while Series A has one vote. The Series F is convertible into Series A on a one to one basis.

 

During the year ending December 31, 2016 the Company issued 2,805,000 shares of Series A Common Stock to various employees and consultants for services and recorded an expense of $8,480. In addition the founder returned 6,992,000 shares of common stock which were then issued to various employees and consultants for services valued at $70.

 

During the year ending December 31, 2017 the Company issued 6,087,212 shares of Series A Common Stock to various employees and consultants for services and recorded an expense of $471,483. As of December 31, 2017, 1,925,005 shares remain unvested. Expenses are being recognized over the vesting term of each issuance.

 

During the year ended December 31, 2017, $500,000 convertible notes payable plus $18,006 of accrued interest was converted into 2,205,634 Common Stock Class A shares in accordance with the terms of the convertible notes payable agreements.

 

During the year ended December 31, 2017, 131,306 warrants were exercised for $40,000. The warrants were issued in the prior year with convertible notes payable. No warrants remain outstanding following this exercise.

 

During the year ended December 31, 2017, a capital contribution of $26,644 was recorded related to an entity controlled by Mr. Grey. Additional information can be found in the Related Party Footnote.

 

As of December 31, 2017 there are no stock options or warrants outstanding.

 

Note 9—Income Taxes

 

Provision for Income Taxes

 

The Company accounts for income taxes in accordance with FASB ASC 740 “Income Taxes”. Under FASB 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 amounts 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. FASB ASC 740 also provides criteria for the recognition, measurement, presentation and disclosure of uncertain tax positions. Under FASB ASC 740, the impact of an uncertain tax position on the income tax return may only be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. At December 31, 2017 and 2016 the Company has no unrecognized tax benefits.

 

 

 

 

The New Tax Act, signed into law on December 22, 2017 made significant changes to the Internal Revenue Code. These changes include of corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017. Additionally, the NOL carryforward period for new NOLs will change from 20 succeeding taxable years to an indefinite period. With the elimination of the alternative minimum tax, NOLs for taxable years beginning after December 31, 2017, can offset 80% of Federal taxable income. Since the Company is using the asset and liability method of accounting for income taxes and because deferred tax assets and liabilities are measured using enacted tax rates applied to taxable income in the years in which temporary differences are expected to reverse, the Company is revaluing the net deferred assets, fully offset by a valuation allowance, after December 31, 2017.

 

We file U.S. federal income tax returns and returns in various state, local and foreign jurisdictions. All tax years since our inception are subject to U.S. federal, state and local income tax examinations by tax authorities.

 

The Company has not taken a tax position that, if challenged, would have a material effect on the financial statements for the years ended December 31, 2017 and 2016 applicable under FASB ASC 740. We did not recognize any adjustment to the liability for uncertain tax position and therefore did not record any adjustment to the beginning balance of accumulated deficit on the balance sheet. All tax returns for the Company remain open for examination by the IRS.

 

The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income before provision for income taxes. The sources and tax effects of the differences for the periods presented are as follows:

 

Income tax provision at the federal statutory rate	35 %
Effect on operating losses	(35 %)

 

Net deferred tax assets consisted of the following:

 

		December 31, 2017				December 31, 2016
Net operating loss carry forward		$	670,000			$	186,000
Valuation allowance			(670,000	)			(186,000	)
Net deferred tax asset		$	–			$	–

 

 

A reconciliation of income taxes computed at the statutory rate is as follows:

 

		December 31, 2017				December 31, 2016
Computed federal income tax expense at statutory rate of 35%		$	(235,000	)		$	(19,000	)
Change in valuation allowance			235,000				19,000
Income tax expense		$	–			$	–

 

At December 31, 2017, we had U.S. net operating loss carryforwards of $856,000 which expire at various times through fiscal year 2037. Our operating losses and tax credit carryforwards may be subject to limitations under provisions of the Internal Revenue Code.

 

Valuation Allowance

 

We record a deferred tax asset if we believe that it is more likely than not that we will realize a future tax benefit. Ultimate realization of any deferred tax asset is dependent on our ability to generate sufficient future taxable income in the appropriate tax jurisdiction before the expiration of carryforward periods, if any. Our assessment of deferred tax asset recoverability considers many different factors including historical and projected operating results, the reversal of existing deferred tax liabilities that provide a source of future taxable income, the impact of current tax planning strategies and the availability of future tax planning strategies. We establish a valuation allowance against any deferred tax asset for which we are unable to conclude that recoverability is more likely than not. This is inherently judgmental, since we are required to assess many different factors and evaluate as much objective evidence as we can in reaching an overall conclusion. The particularly sensitive component of our evaluation is our projection of future operating results since this relies heavily on our estimates of future revenue and expense levels by tax jurisdiction. We provided a full valuation allowance on the net deferred tax asset, consisting of net operating loss carry forwards, because management has determined that it is more likely than not that we will not earn income sufficient to realize the deferred tax assets during the carry forward period. The valuation allowance increased by $235,000 in fiscal year 2017 from fiscal year 2016.

 

 

 

 

Note 10 – Related Party Transactions

 

In 2015, the Chief Executive Officer, Dean Grey paid $11,570 of expenses on behalf of the company. There was no stated interest rate, repayment terms or collateral on the amounts due to the related party. The amounts were repaid in full in 2016.

 

WDG is a NV Corporation that is owned 100% by Dean Grey, and was formed for the sole purpose of bill pay. Dean Grey is involved or owns several different incubator companies that use the same independent contractors, lease, etc. WDG was used to simplify the accounting and 1099 issuance process, by using one company for all independent contractor payments, rent, utilities. There were no additional fees charged by WDG to Skylab or the incubator companies, it does not have a profit for any years.

 

Silver Surfer is a Company that Dean Grey works with for multiple contracting projects. Dean’s functions and fees vary from project to project. Skylab apps paid Silver Surfer for Dean Grey’s creative, marketing, and development services. Most of Mr. Grey’s contracts runs through Silver Surfer. Mr. Grey does not own Silver Surfer Management, he is an independent contract for Silver Surfer and manages and performs duties for multiple clients.

 

Mr. Grey’s compensation was agreed upon to be $15,000 per month. A portion of this was paid directly to Mr. Grey and a portion to Silver Surfer. Management services were paid directly to him (or via WDG), from Skylab Apps. His creative and creative, marketing and development costs were paid to Silver Surfer. Mr. Grey and Silver Surfer earned $180,000 for 2017 and $187,800 for 2016 of which $100,452 was payable as of December 31, 2017.

 

During 2017 the Company recognized $49,205 of revenue from an entity controlled by Mr. Grey. Related to that transaction a capital contribution of $29,644 was recorded related to the related party forgoing future services that were previously paid for.

 

Note 11—Subsequent Events

 

Subsequent events have been evaluated for disclosure through July 24, 2018, the date the financial statements were available for issuance.

 

Reverse Merger

 

On July 2, 2017, the Company entered into a Share Exchange Agreement with Writ Media Group, Inc. and its wholly-owned subsidiary Pandora Venture Capital Corp. The share exchange has not yet closed. After this agreement was signed Writ Media Group, Inc. completed a spinoff of Pandora Venture Capital Corp to its own shareholders. As such Pandora Venture Capital Corp is no longer a subsidiary of Writ Media Group, Inc. but is now owned by the shareholders of Writ Media Group Inc. If the transaction between Skylab and Pandora Venture Capital Corp closes the shareholders of Skylab will exchange their shares for 95% ownership in Pandora Venture Capital Corp resulting in a business combination. This transaction as currently contemplated will be accounted for a reverse merger whereby Skylab is the accounting acquirer. The transaction closed on January 15, 2018.

 

Skynet, Inc.

 

On January 15, 2018, the Company transferred ownership rights of the software platform to Skynet Inc (“Skynet”). Skynet is owned by the shareholders of record of Skylab Apps on the date of the transfer. In addition, Mr. Dean Grey is the CEO & Board Member of both entities. The Company current has a verbal agreement with Skynet to continue to have access to use the intellectual property that was transferred in perpetuity. The understanding is that post the Company raising $1,500,000 Skynet will charge the Company a set-up fee up to $200,000 and a license fee on gross revenue up to 20%.

 

 

 

 

 

Part II

 

Information Not Required In the Prospectus

 

Item 13. Other Expenses Of Issuance And Distribution

 

The estimated costs of this offering are as follows:

 

Securities and Exchange Commission registration fee		$	373
Federal Taxes			–
State Taxes and Fees			–
Listing Fees			–
Printing Fees			–
Transfer Agent Fees			5,000
Accounting fees and expenses			19,750
Legal fees and expenses			25,000
Total			50,123

 

All amounts are estimates, other than the Commission's registration fee.

 

Item 14. Indemnification of Directors and Officers

 

Our officers and directors are indemnified as provided by the Delaware Code and our bylaws.

 

Under the governing Delaware codes, director immunity from liability to a company or its shareholders for monetary liabilities applies automatically unless it is specifically limited by a company's articles of incorporation. Our articles of incorporation do not contain any limiting language regarding director immunity from liability. Excepted from this immunity are:

 

1.

a willful failure to deal fairly with the company or its shareholders in connection with a matter in which

2.

a violation of criminal law (unless the director had reasonable cause to believe that his or her conduct was lawful or no reasonable cause to believe that his or her conduct was unlawful);

3.

a transaction from which the director derived an improper personal profit; and

4.

willful misconduct.

 

Our bylaws provide that we will indemnify our directors and officers to the fullest extent not prohibited by Delaware law; provided, however, that we may modify the extent of such indemnification by individual contracts with our directors and officers; and, provided, further, that we shall not be required to indemnify any director or officer in connection with any proceeding (or part thereof) initiated by such person unless:

 

1.

such indemnification is expressly required to be made by law;

2.

the proceeding was authorized by our Board of Directors;

3.

such indemnification is provided by us, in our sole discretion, pursuant to the powers vested us under Delaware law; or;

4.

such indemnification is required to be made pursuant to the bylaws.

 

Our bylaws provide that we will advance to any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director or officer, of the company, or is or was serving at the request of the company as a director or executive officer of another company, partnership, joint venture, trust or other enterprise, prior to the final disposition of the proceeding, promptly following request therefore, all expenses incurred by any director or officer in connection with such proceeding upon receipt of an undertaking by or on behalf of such person to repay said amounts if it should be determined ultimately that such person is not entitled to be indemnified under our bylaws or otherwise.

 

 

 

 

Our bylaws provide that no advance shall be made by us to an officer of the company, except by reason of the fact that such officer is or was a director of the company in which event this paragraph shall not apply, in any action, suit or proceeding, whether civil, criminal, administrative or investigative, if a determination is reasonably and promptly made: (a) by the board of directors by a majority vote of a quorum consisting of directors who were not parties to the proceeding, or (b) if such quorum is not obtainable, or, even if obtainable, a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, that the facts known to the decision-making party at the time such determination is made demonstrate clearly and convincingly that such person acted in bad faith or in a manner that such person did not believe to be in or not opposed to the best interests of the company.

 

Item 15. Recent Sales of Unregistered Securities (this section may or may not apply)

 

We conducted a share exchange of 23,750,000 shares of our common stock on November 14, 2017. SAI shareholders acquired these shares in a 1 for 1 exchange for Skylab USA, Inc. Shares.

 

These shares were issued pursuant to Section 4(a)(2) of the Securities Act of 1933 and are restricted shares as defined in the Securities Act. We did not engage in any general solicitation or advertising.

 

Item 16. Exhibits

 

Exhibit Number		Description
3.1		Amended and Restated Articles of Incorporation
3.2		By-laws
5.1		Opinion of Booth Udall Fuller, PLC with consent to use*
10.1		Amended and Restated Share Exchange Agreement dated January 15, 2018 by and between the Registrant, Skylab Apps Inc. and the shareholders.
23.1		Consent of L&L CPAS, PA, Independent Registered Public Accounting Firm
23.2		Consent of Dave Banerjee CPA, an Accountancy Corporation, Independent Registered Public Accounting Firm

 

* Incorporated by reference to the Exhibits filed by the Registrant to its Form S-1 filed on May 15, 2018.

 

Item 17. Undertakings

 

The undersigned registrant hereby undertakes:

 

1.       To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

 

a.       To include any prospectus required by Section 10 (a)(3) of the Securities Act of 1933;

 

b.       To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement.

 

c.       To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

 

2.       That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

 

3.       To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

 

 

 

 

4.       That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:

 

a.       Each prospectus filed by the registrant shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and

 

b.       Each prospectus required to be filed as part of a registration statement in reliance on Rule 430B relating to an offering for the purpose of providing the information required by section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date; or

 

c.       Each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

 

5.       That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

 

a.       Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

 

b.       Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

 

c.       The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

 

d.       Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

 

6.       In the event the registrant requests acceleration of effective date or filing of registration statement becoming effective upon filing then the registrant undertakes to advise you as follows:

 

a.       If any provision or arrangement exists whereby the registrant may indemnify a director, officer or controlling person of the registrant against liabilities arising under the Securities Act, or 

 

b.       There is no underwriter

 

c.       The benefits of such indemnification are not waived by such persons

   

 

 

 

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

 

 

 

 

 

 

 

 

 

 

 

 

 

SIGNATURES

 

In accordance with the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-1 and authorized this registration statement to be signed on its behalf by the undersigned, in California on September 10, 2018.

 

Skylab USA, Inc.
By:	/s/ Dean Grey
	Dean Grey President, Chief Executive Officer and sole member of the Board of Directors Principal Executive Officer)

 

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

 

By:	/s/ Dean Grey
	Dean Grey President, Chief Executive Officer and sole member of the Board of Directors (Principal Executive Officer)
By:	/s/ Lorrie Edelblute
	Lorrie Edelblute, Secretary/Treasurer and Principal Accounting Officer

 

 

September 11, 2018

 

 

 

 

Exhibit 3.1

 

AMENDED AND RESTATED

 

ARTICLES OF INCORPORATION

 

OF

 

PANDORA VENTURE CAPITAL CORP

 

Document Number: P14000042830

 

The undersigned, being the President and sole member of the Board of Directors of Pandora Venture Capital Corp, a Florida corporation, hereby certifies that the following Amended and Restated Articles of Incorporation have been adopted by the Board of Directors of the Corporation via written consent to action without a meeting and by written consent to action without a meeting by a shareholder possessing a majority of votes for all issued and outstanding shares of the Corporation with the number of votes cast for the amendment being sufficient for approval on the date set forth below.

 

ARTICLE I

 

Corporate Name

 

The name of this corporation is Skylab USA, lnc. (the "Corporation").

 

ARTICLE II

 

Principal Office

 

The principal office for the Corporation shall be 5600 Avenida Encinas, Suite 140C, Carlsbad, CA 92008.  

 

ARTICLE III

 

General Nature of business

 

The Corporation may transact any lawful business for which corporations may be incorporated under Florida law.

 

ARTICLE IV

 

Capital Stock

 

Common Stock: The aggregate number of shares of stock authorized to be issued by this Corporation shall be 950,000,000 shares of common stock, each with a par value of $.0001. Each share of issued and outstanding common stock shall entitle the holder thereof to fully participate in all shareholder meetings, to cast one vote on each matter with respect to which shareholders have the right to vote, and to share ratably in all dividends and other distributions declared and paid with respect to the common stock, as well as in the net assets of the corporation upon liquidation or dissolution.

 

 

 

  

Preferred Stock: The Corporation is authorized to issue 750,000,000 shares of $.0001 par value Preferred Stock. The Board of Directors is expressly vested with the authority to divide any or all of the Preferred Stock into series and to fix and determine the relative rights and preferences of the shares of each series so established, provided, however, that the rights and preferences of various series may vary only with respect to:

 

(a)

the rate of dividend;

(b)

whether the shares may be called and, if so, the ca11 price and the terms and conditions of call;

(c)

the amount payable upon the shares in the event of voluntary and involuntary liquidation;

(d)

sinking fund provisions, if any, for the call or redemption of the shares;

(e)

the terms and conditions, if any, on which the shares may be converted;

(f)

voting rights including number of votes per share; and

(g)

whether the shares will be cumulative, noncumulative or partially cumulative as to dividends and the dates from which any cumulative dividends are to accumulate.

 

The Board of Directors shall exercise the foregoing authority by adopting a resolution setting forth the designation of each series and the number of shares therein, and fixing and determining the relative rights and preferences thereof. The Board of Directors may make any change in the designation, terms, limitations and relative rights or preferences of any series in the same manner, so long as no shares of such series are outstanding at such time.

 

Within the limits and restrictions, if any, stated in any resolution of the Board of Directors originally fixing the number of shares constituting any series, the Board of Directors is authorized to increase or decrease (but not below the number of shares of such series then outstanding) the number of shares of any series subsequent to the issue of shares of such series. In case the number of shares of any series shall be so decreased, the share constituting such decrease shall resume the status which they had prior to the adoption of the resolution originally fixing the number of shares of such series.

 

SERIES "A" CONVERTIBLE PREFERRED STOCK

Certificate of Designations

 

Skylab USA, Inc., pursuant to Section 607.0602 of the Florida Business Corporation Act, does hereby make this Certificate of Designations, Rights and Preferences and does hereby authorize the issuance of, and fixes the designations and preferences and rights, and qualifications, limitations and restrictions, of a series of preferred stock of the Corporation consisting of 100,000,000 shares, par value $0.0001 per share, to be designated "Series A Convertible Preferred Stock" (hereinafter, the "Series A Preferred Stock"); each share of Series A Preferred Stock shall have ten (10) votes per share and may be convertible into ten (10) $0.0001 par value common shares as more fully described below; and, each share of Series A Preferred Stock shall rank equally in all respects and shall be subject to the following terms and provisions:

 

1.       Dividends. The holders of the Series A Preferred Stock shall be entitled to receive, when, if and as declared by the Board, out of funds legally available therefor, cumulative dividends payable in cash.

 

(a) Dividend Periods: Dividend Rate.

 

(i) Dividend Periods. The dividend periods (each, a "Dividend Period") shall be as follows: The initial Dividend Period shall begin on August 1, 2017 and end on July 31, 2018 (the "Initial Dividend Period"). Thereafter, each Dividend Period shall commence on the day immediately following the last day of the preceding Dividend Period and shall end on the anniversary of the last day of the Initial Dividend Period.

 

(ii)       Dividend Rate. The annual interest rate at which cumulative preferred dividends will accrue on each share of Series A Preferred Stock (the "Dividend Rate"), shall be 0%.

 

(b)       No dividends shall he declared or paid or set apart for payment on the shares of Common Stock of the Corporation for any dividend period unless full cumulative dividends have been or contemporaneously are declared and paid on the Series A Preferred Stock through the most recent Dividend Payment Date. Without prejudice to the foregoing, if full cumulative dividends have not been paid on shares of the Series A Preferred Stock, all dividends declared on shares of the Series A Preferred Stock shall be paid pro rata to the holders of outstanding shares of the Series A Preferred Stock. The Series A Preferred Stock shall not be subordinate to any other class of issued and outstanding shares of preferred stock of the Corporation regarding payment of dividends.

 

2.       Voting Rights.

 

(a) Except as otherwise provided herein or as provided by law, the holders of the Series A Preferred Stock shall have full voting rights and powers, equal to the voting rights and powers of holders of Common Stock and shall be entitled to notice of any stockholders meeting in accordance with the Bylaws of the Corporation, as amended (the "Bylaws") and shall be entitled to vote, with respect to any question upon which holders of Common Stock are entitled to vote, including, without limitation, the right to vote for the election of directors, voting together with the holders of Common Stock as one class. Each share of Series A Preferred Stock shall be entitled to the ten (10) votes per share.

 

 

 

 

 

 

(b) The Corporation shall not, without the affirmative consent or approval of the holders of shares representing at least a majority, by voting power, of the Series A Preferred Shares then outstanding, voting separately as one class, given by written consent in lieu of a meeting or by vote at a meeting called for such purpose for which notice shall have been given to the holders of the Series A Preferred Stock in the manner provided in the Bylaws of the Corporation:

 

(i)

in any manner authorize, create, designate, issue or sell any class or series of capital stock (including any shares of treasury stock) or rights, options, warrants or other securities convertible into or exercisable or exchangeable for capital stock or any debt security which by its terms is convertible into or exchangeable for any equity security or has any other equity feature or any security that is a combination of debt and equity, which in each case, as to the payment of dividends, distribution of assets or redemptions, including, without limitation, distributions to be made upon the liquidation, dissolution or winding up of the Corporation or a merger, consolidation or sale of the assets thereof, and which is senior to the Series A Preferred Stock:

 

(ii)

in any manner alter or change the terms, designations, powers, preferences or relative, optional or other special rights, or the qualifications, limitations or restrictions, of the Series A Preferred Stock;

 

(iii)

reclassify the shares of any class or series of subordinate stock into shares of any class or series of capital stock (A) ranking, either as to payment of dividends, distributions or assets or redemptions, including, without limitation, distributions to be made upon the liquidation, dissolution or winding up of the Corporation or a merger, consolidation or sale of assets thereof, senior to the Series A Preferred Stock or (B) which in any manner adversely affects the rights of the holders of Series A Preferred Stock in their capacity as such; or

 

(iv)

take any action to cause any amendment, alteration or repeal of any of the provisions of (A) the Certificate of Incorporation or (B) the Bylaws, if such amendment, alteration or repeal would have a material adverse effect on the rights of the holders of the Series A Preferred Stock or on the directors elected by the holders of the Series A Preferred Stock.

 

3.       Rights on Liquidation.

 

(a) In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation (any such event being hereinafter referred to as a "Liquidation"), before any distribution of assets of the Corporation shall be made to or set apart for the holders of the Common Stock and subject and subordinate to the rights of secured creditors of the Corporation, the holders of Series A Preferred Stock shall receive an amount per share equal to the greater of (i) one dollar ($1.00), adjusted for any recapitalization, stock combinations, stock dividends (whether paid or unpaid), stock options and the like with respect to such shares (the "Liquidation Preference") plus any accumulated but unpaid dividends (whether or not earned or declared) on the Series A Preferred Stock, and (ii) the amount such holder would have received if such holder has converted its shares of Series A Preferred Stock to Common Stock, subject to but immediately prior to such Liquidation. If the assets and funds of the Corporation thus distributed among the holders of Series A Preferred Stock shall be insufficient to make in full the payment herein required, such assets shall be distributed pro-rata among the holders of Series A Preferred Stock based on the aggregate Liquidation Preferences of the shares of Series A Preferred Stock held by each such holder. The Liquidation Preferences for the Series A Preferred Stock shall not be subordinate to the Liquidation Preferences of any issued and outstanding shares of any other series of preferred stock of the Corporation that may hereafter be created.

 

(b) If the assets and funds of the Corporation available for distribution to stockholders exceed the aggregate amount payable with respect to all shares of Series A Preferred Stock then outstanding, then, after the payment required by paragraph 3(a) above shall have been made or irrevocably set aside, the holders of Common Stock, shall be entitled to receive payment of a pro rata portion of such remaining assets based on the aggregate number of shares of Common Stock held or deemed to be held by such holder. The holders of Series A Preferred Stock shall not have the right to participate in such aforementioned distribution.

 

(c) Upon the sale by the Corporation of all or substantially all of its assets, the acquisition by the Corporation by another entity by means of any transaction or series of transactions (including, without limitation, the acquisition of the shares of capital stock of the Corporation in an amount sufficient to permit the acquiror to elect a majority 'of the Board of Directors of the Corporation, any reorganization, merger or consolidation, but excluding any reincorporation), or the acquisition of any of the Corporation's material subsidiaries, the holders of the Series A Preferred Stock shall be treated as if such transaction were a liquidation of the Corporation, which shall entitle the holders of Series A Preferred Stock to the Liquidation Preference set forth in Section 3(a) above, as if all consideration being received by the Corporation and its stockholders in connection with such transaction were being distributed in an event of liquidation of the Corporation.

 

 

 

 

 

 

4.       Conversion.

 

(a) Right to Convert. At any time after issuance, the holder of any share or shares of Series A Preferred Stock shall have the right, at such holder's option, to convert all or any lesser portion of such holder's shares of Series A Preferred Stock to Common Stock of the Corporation on a ten-for-one (10:1) share basis (the "Conversion Ratio").

 

(b) Mechanics of Conversion.

 

(i) Such right of conversion shall be exercised by the holder of shares of Series A Preferred Stock by delivering to the Corporation a conversion notice in the form prescribed by the Corporation (the "Conversion Notice") appropriately completed and duly signed and specifying the number of shares of Series A Preferred Stock that the holder elects to convert (the "Converting. Shares") into shares of Common Stock, and by surrender not later than two (2) business days thereafter of the certificate or certificates representing such Converting Shares. The Conversion Notice shall also contain a statement of the name or names (with addresses and tax identification or social security numbers) in which the certificate or certificates for Common Stock shall be issued, if other than the name in which the Conversion Shares are registered. As promptly as practicable after the receipt of the Conversion Notice, the Corporation shall issue and deliver, or cause to be delivered, to the holder of the Converting Shares or such holder's nominee, a certificate or certificates for the number of shares of Common Stock issuable upon the conversion of such Converting Shares. Such conversion shall be deemed to have been effected as of the close of business on the date of receipt by the Corporation of the Conversion Notice (the "Conversion Date") and the person or persons entitled to receive the shares of Common Stock issuable upon conversion shall be treated for all purposes as the holder or holders of record of such shares of Common Stock as of the close of business on the Conversion Date.

 

(ii) The Corporation shall issue certificates representing the shares of Common Stock to be received upon conversion of the Series A Preferred Stock (the “Conversion Shares“) (and certificates for unconverted Series A Preferred Stock) as promptly as practicable following the Conversion Date and shall transmit the certificates by messenger or reputable overnight delivery service to reach the address designed by such holder as promptly as practicable after the receipt by the Corporation of such Conversion Notice. If certificates evidencing the Conversion Shares are not received by the holder within (10) business days of the Conversion Notice, then the holder will be entitled to revoke and withdraw its Conversion Notice, in whole or in part, at any time prior to its receipt of those certificates. In lieu of delivering physical certificates representing the Conversion Shares or in payment of dividends hereunder, provided the Corporation's transfer agent is participating in the Depository Trust Company ("DTC") Fast Automated Securities Transfer ("FAST") program, upon request of the holder, the Corporation shall use its commercially reasonable efforts to cause its transfer agent to electronically transmit the Common Stock issuable upon conversion or dividend payment to the holder, by crediting the account of the holder's prime broker with DTC though its Deposit Withdrawal Agent Commission ("DWAC") system. Such holder and the Corporation agree to coordinate with DTC, to accomplish this objective. The person or persons entitled to receive the Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such Common Shares at the close of business on the Conversion Date.

 

(iii) In the event the Corporation is prohibited from issuing shares of Common Stock as a result of any restrictions or prohibitions under applicable law or the rules or regulations of any stock exchange, interdealer quotation system or other self-regulatory organization, the Corporation shall promptly as practicable use commercially reasonable efforts to seek the. approval of its stockholders and take such other action to authorize the issuance of the full number of shares of Common Stock issuable upon the full conversion of the then outstanding shares of Series A Preferred Stock.

 

(c) Adjustment of Conversion Ratio:

 

(i) In the event the outstanding shares of Common Stock shall be subdivided by stock split, stock dividends or otherwise, into a greater number of shares of Common Stock, the Conversion Ratio then in effect shall, concurrent y with the effectiveness of such subdivision, be proportionately increased. In the event the outstanding shares of Common Stock shall be combined or consolidated, by reclassification or otherwise, into a lesser number of shares of Common Stock, the Conversion Ratio then in effect shall concurrently with the effectiveness of such combination or consolidation, be proportionally reduced.

 

(ii) In the event the Corporation at any time or from time to time makes, or fixes a record date for the determination of holders of Common Stock entitled to receive any distribution (excluding any repurchases of securities by the Corporation not made on a pro rata basis from all holders of any class of the Corporation's securities) payable in property or in securities of the Corporation other than shares of Common Stock, and other than as otherwise adjusted hereunder or as provided in subsection (i) above, then and in each such event the holders of the Series A Preferred Stock shall receive at the time of such distribution, the amount of property or the number of securities of the Corporation that they would have received had their Series A Preferred Stock been converted into Common Stock immediately prior to such event.

 

(iii) Upon any liquidation, dissolution or winding up of the Corporation, if the Common Stock issuable upon conversion of the Series A Preferred Stock shall be changed into the same or a different number of shares of any other class or classes of stock, whether by capital reorganization, reclassification or otherwise (other than a subdivision or combination of shares provided for above), each share of Series A Preferred Stock shall thereafter be convertible into the number of shams of stock or other securities or property to which a holder of the number of shares of Common Stock of the Corporation deliverable upon conversion of such share of Series A Preferred Stock shall have been entitled upon such reorganization or reclassification.

 

 

 

 

 

 

(iv) Except as provided herein, the Corporation will not, by amendment of its Certificate of Incorporation, by the filing of a Certificate of Designation, or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Corporation but will at all times in good faith assist in the carrying out of all the provisions of this subsection (c) and in the taking of all such action as may be necessary or appropriate in order to protect the conversion rights of the holders of the Series A Preferred Stock against impairment.

 

(v) Upon the occurrence of each adjustment or readjustment of the Conversion Ratio pursuant to this subsection (c), the Corporation a its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of Series A Preferred Stock, a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Corporation shall, upon the written request at any time of any holder of Series A Preferred Stock furnish or cause to be furnished to such holder a like certificate setting forth (i) such adjustments and readjustments, (ii) the Conversion Ratio at the time in effect, and (iii) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of the Series A Preferred Stock.

 

5.       Notices of Record Date. In the Event of any fixing by the Corporation of a record date for the holders of any class of securities: (i) for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend or a dividend set forth in Section 1 hereof) or other distribution (whether in cash, property, stock or other securities) with respect to any shares of Common Stock or other securities, (ii) for the purpose of determining any right to subscribe for, purchase or otherwise acquire, or any option for the purchase of any shares of stock of any class or any other securities or property, (iii) to effect any reclassification or capitalization of its Common Stock outstanding involving a change in the Common Stock, or (iv) to merge or consolidate with or into any other Corporation, or sell, lease or convey all or substantially of its property or business, or to liquidate, dissolve or wind up, or to receive any other right, then,' in connection with each such event, the Corporation shall mail to each holder of Series A Preferred Stock: (x) at least twenty (20) days prior to the date specified therein, a notice specifying the date on which any such record is to be taken for the purpose of such dividend, distribution or subscription rights, and the amount and character of such dividend, distribution or subscription right (and specifying the date on which the holders of Common Stock shall be entitled thereto) or for determining rights to vote in respect of the matters referred to in clauses (i) and (ii) above; and (y) in the case of the matters referred to in clauses (iii) and (iv) above, at least twenty (20) days' prior written notice of the date when the same shall take place (and specifying the date on which the holders of Common Stock shall be entitled to exchange their Common Stock for securities or other property deliverable upon the occurrence of such event).

 

6.       Notices. All notices, requests, consents and other communication hereunder shall be in writing, shall be mailed (A) if within the United States by first-class registered or certified airmail, or nationally recognized overnight express courier, postage prepaid, by facsimile or e-mail (if agreed to by the Investor), or (B) if delivered from outside the United States, by international express courier, facsimile or e-mail (if agreed to by a holder of Series A Preferred Stock), and shall be deemed given (i) if delivered by first-class registered or certified mail, three business days after so mailed, (ii) if delivered by nationally recognized overnight carrier, one business day after so mailed, (iii) if delivered by International Federal Express, two business days after so mailed, (iv) if delivered by facsimile or email, upon electronic confirmation of receipt and shall be delivered as addressed as follows:

 

(a) if to the Company, to:

      Boris Nayflish, President

      Skylab USA, Inc.

      5600 Avenida Encinas, Suite 140C

      Carlsbad, CA 92008

 

(b) if to a holder of Series A Preferred Stock, to the address, facsimile number or e-mail address appearing in the Corporation's stockholder (records or, in either case, to such other address, facsimile number or e-mail address as the Corporation or a holder of Series A Preferred Stock may provide to the other in accordance with this Section.

 

7.       Increase of Authorized Shares. The Corporation shall from time to time in accordance with the laws of the State of Florida increase the authorized amount of its Common Stock if at any time the number of shares of Common Stock remaining unissued and available for issuance is not sufficient to permit conversion of the Series A Preferred Stock.

 

8.       Stock Transfer Taxes. The issuance of the stock certificates upon conversion of the Series A Preferred Stock shall be made without charge to the converting holder for any transfer tax in respect of such issue: provided, however, that the Corporation shall) be entitled to withhold any applicable withholding taxes with respect to such issue, if any. The Corporation shall not however, be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of shares in any name other than that of the holder of any of the Series A Preferred Stock converted, and the Corporation shall not be required to issue or deliver any such stock certificate unless and until the person or persons requesting the issue thereof shall have paid to the Corporation the amount of such tax or shall have established to the satisfaction of the Corporation that such tax has been paid.

 

 

 

 

 

ARTICLE V

 

Registered Office and Agent

 

The registered office of the Corporation is located at 8200 Seminole Boulevard, Seminole, Florida 33772 and the registered agent of the Corporation at such address is Clifford J. Hunt, Esquire, do Law Office of Clifford J. Hunt, P.A.

 

ARTICLE VI

 

Incorporator

 

The name and address of the corporation's incorporator is:

 

Name	Address
Boris Nayflish	3300 Griffin Road
	Ft. Lauderdale, FL 33312

 

ARTICLE VII

 

By-Laws

 

The power to adopt, alter, amend or repeal by-laws of the Corporation shall be vested in the shareholders and separately in its Board of Directors, as prescribed by the by-laws of the Corporation.

 

ARTICLE VIII

 

Indemnification

 

If in the judgment of a majority of the entire Board of Directors, (excluding from such majority any director under consideration for indemnification), the criteria set forth in § 607.0850(1) or (2), Florida Statutes, as then in effect, have been met, then the Corporation shall indemnify any director, officer, employee or agent thereof, whether current or former, together with his or her personal representatives, devisees or heirs, in the manner and to the extent contemplated by § 607.0850, as then in effect, or by any successor law thereto.

 

ARTICLE IX

 

Effective Date of Articles

 

These Articles shall be effective upon filing with the Secretary of State for Florida.

 

ARTICLE X

 

Control Share Acquisition Statute Inapplicable

 

Section 607.0902 of the Florida Statutes regarding control share acquisitions is not applicable to this Corporation and shall not have any effect upon the voting rights relating to issued and outstanding shares of capital stock of the Corporation.

 

 

IN WITNESS WHEREOF, the undersigned has executed these Amended and Restated Articles of Incorporation this 17th day of July 2017.

 

/s/: Boris Nayflish                               

Boris Nayflish, President

 

 

 

 

ACKNOWLEDGMENT

 

Having been named Registered Agent to accept service of process for the above-stated Corporation, at the place designated in these articles of incorporation, I hereby accept to act in this capacity, and agree to comply with the provisions of Section' 607.0501 of the Florida Statutes relative to keeping open said office.

 

/s/: Clifford :I, Hunt. Esquire                     

Clifford J/ Hunt, Esquire

Registered Agent

 

 

 

 

 

 

Exhibit 3.2

 

BY-LAWS OF

 

PANDORA VENTURE CAPITAL CORP

 

A Florida Corporation

 

 

ARTICLE I – BUSINESS AND PURPOSE

 

The Corporation is established to engage in any lawful business or enterprise. By way of example and without limitation the Corporation may engage in financial and asset management and consulting services to individuals, businesses, associations, partnerships, trusts, and other entities.

 

In the performance of its business the Corporation shall have all powers granted by the general Corporation laws of the state of Florida. Specifically, and without limitation, the Corporation shall have the power to engage generally in any and all phases of the business of owning, holding, managing, controlling, acquiring, purchasing, disposing of, or otherwise dealing in or with any interest or rights in any real or personal property. The foregoing shall specifically include the power to invest and trade in the securities markets including without limitation the right to buy, sell, trade, barter, or otherwise exchange, acquire and dispose of stocks, bonds, commodities, futures, options, puts, calls (including naked puts and calls) or other vehicles of public or private companies, mutual funds or other entities, whether such be for the Corporation’s own account or on the account of a customer or client of the Corporation; where the Corporation engages in such activities on behalf of a client or customer, said transactions may be conducted through banking or brokerage accounts in the Corporation’s own name or in the name of said client or customer. The business and purpose shall include the conducting and engaging in such activities as is necessary or useful in connection with the foregoing.

 

ARTICLE II - OFFICES

 

The registered office of the Corporation in the State of Florida shall be located in the city of Ft Lauderdale, State of Florida. The Corporation may also maintain offices at such other places within or without the State of Florida as the Board of Directors may, from time to time, determine.

 

ARTICLE III - MEETING OF SHAREHOLDERS

Section 1 - Annual Meetings:

 

The annual meeting of the shareholders of the Corporation shall be held in February of each year at such date, time and location as shall be determined, from time to time, by the Directors.

 

Section 2 - Special Meetings:

 

Special meetings of the shareholders may be called by the Board of Directors or President of the Corporation and shall be held at such date, time and location as shall be determined, from time to time, by the Board of Directors or officer calling said meeting.

 

 

 

 

 

Section 3 - Place of Meetings:

 

Meetings of shareholders shall be held at the registered office of the Corporation, or at such other places, within or without the State of Florida as the Directors may from time to time fix. If no designation is made, the meeting shall be held at the Corporation's registered office in the State of Florida or by telephone.

 

Section 4 - Notice of Meetings:

 

(a) Written or printed notice of each meeting of shareholders, whether annual or special, signed by the president, vice president or secretary, stating the time when and place where it is to be held, as well as the purpose or purposes for which the meeting is called, shall be served either personally or by mail, by or at the direction of the president, the secretary, or the officer or the person calling the meeting, not less than ten (10) nor more than thirty (30) days before the date of the meeting, unless the lapse of the prescribed time shall have been waived before or after the taking of such action, upon each shareholder of record entitled to vote at such meeting, and to any other shareholder to whom the giving of notice may be required by law. If mailed, such notice shall be deemed to be given when deposited in the United States mail, addressed to the shareholder as it appears on the share transfer records of the Corporation or to the current address, which a shareholder has delivered to the Corporation in a written notice.

 

(b) Further notice to a shareholder is not required when notice of two consecutive annual meetings, and all notices of meetings or of the taking of action by written consent without a meeting to him or her during the period between those two consecutive annual meetings; or all, and at least two payments sent by first-class mail of dividends or interest on securities during a 12- month period have been mailed addressed to him or her at his or her address as shown on the records of the Corporation and have been returned undeliverable.

 

Section 5 - Quorum:

 

(a) Except as otherwise provided herein, or by law, or in the Articles of Incorporation (such Articles and any amendments thereof being hereinafter collectively referred to as the "Articles of Incorporation"), a quorum shall be present at all meetings of shareholders of the Corporation, if the holders of a majority of the shares entitled to vote on that matter are represented at the meeting in person or by proxy.

 

(b) The subsequent withdrawal of any shareholder from the meeting, after the commencement of a meeting, or the refusal of any shareholder represented in person or by proxy to vote, shall have no effect on the existence of a quorum, after a quorum has been established at such meeting.

 

(c) Despite the absence of a quorum at any meeting of shareholders, the shareholders present may adjourn the meeting.

 

Section 6 - Voting and Acting:

 

(a) Except as otherwise provided by law, the Articles of Incorporation, or these By-laws, any corporate action, the affirmative vote of the majority of shares entitled to vote on that matter and represented either in person or by proxy at a meeting of shareholders at which a quorum is present, shall be the act of the shareholders of the Corporation.

 

 

 

 

 

(b) Except as otherwise provided by statute, the Certificate of Incorporation, or these By-laws, at each meeting of shareholders, each shareholder of the Corporation entitled to vote thereat, shall be entitled to one vote for each share registered in his name on the books of the Corporation.

 

(c) Where appropriate communication facilities are reasonably available, any or all shareholders shall have the right to participate in any shareholders' meeting, by means of conference telephone or any means of communications by which all persons participating in the meeting are able to hear each other.

 

Section 7 - Proxies:

 

Each shareholder entitled to vote or to express consent or dissent without a meeting, may do so either in person or by proxy, so long as such proxy is executed in writing by the shareholder himself, his authorized officer, director, employee or agent or by causing the signature of the stockholder to be affixed to the writing by any reasonable means, including, but not limited to, a facsimile signature, or by his attorney-in-fact annexed thereto and duly authorized in writing. Every proxy shall be revocable at will unless the proxy conspicuously states that it is irrevocable and the proxy is coupled with an interest. A telegram, telex, cablegram, or similar transmission by the shareholder, or a photographic, photo static, facsimile, shall be treated as a valid proxy, and treated as a substitution of the original proxy, so long as such transmission is a complete reproduction executed by the shareholder. If it is determined that the telegram, cablegram or other electronic transmission is valid, the persons appointed by the Corporation to count the votes of shareholders and determine the validity of proxies and ballots or other persons making those determinations must specify the information upon which they relied. No proxy shall be valid after the expiration of six months from the date of its execution, unless otherwise provided in the proxy. Such instrument shall be exhibited to the Secretary at the meeting and shall be filed with the records of the Corporation. If any shareholder designates two or more persons to act as proxies, a majority of those persons present at the meeting, or, if one is present, then that one has and may exercise all of the powers conferred by the shareholder upon all of the persons so designated unless the shareholder provides otherwise.

 

Section 8 - Action Without a Meeting:

 

Unless otherwise provided for in the Articles of Incorporation of the Corporation, any action to be taken at any annual or special shareholders' meeting, may be taken without a meeting, without prior notice and without a vote if written consents are signed by a majority of the shareholders of the Corporation, except however if a different proportion of voting power is required by law, the Articles of Incorporation or these By-laws, than that proportion of written consents is required. Such written consents must be filed with the minutes of the proceedings of the shareholders of the Corporation. Any meeting required or authorized to be held by these articles may be conducted by means of a telephone conference, or similar method of communication by which all persons participating in the meeting can hear each other. Participation in a meeting pursuant to this section constitutes presence in person at the meeting.

 

 

 

 

ARTICLE IV - BOARD OF DIRECTORS

 

Section 1 - Number, Term, Election and Qualifications:

 

(a) The first Board of Directors and all subsequent Boards of the Corporation shall consist of one (1) individual, unless and until otherwise determined by vote of a majority of the entire Board of Directors. The Board of Directors or shareholders all have the power, in the interim between annual and special meetings of the shareholders, to increase or decrease the number of Directors of the Corporation. A Director need not be a shareholder of the Corporation unless the Certificate of Incorporation of the Corporation or these By-laws so require.

 

(b) Except as may otherwise be provided herein or in the Articles of Incorporation, the members of the Board of Directors of the Corporation shall be elected at the first annual shareholders' meeting and at each annual meeting thereafter, unless their terms are staggered in the Articles of Incorporation of the Corporation or these By-laws, by a plurality of the votes cast at a meeting of shareholders, by the holders of shares entitled to vote in the election.

 

(c) The first Board of Directors shall hold office until the first annual meeting of shareholders and until their successors have been duly elected and qualified or until there is a decrease in the number of Directors. Thereafter, Directors will be elected at the annual meeting of shareholders and shall hold office until the annual meeting of the shareholders next succeeding his election, unless their terms are staggered in the Articles of Incorporation of the Corporation (so long as at least one-fourth (¹/4) in number of the Directors of the Corporation are elected at each annual shareholders' meeting) or these By-laws, or until his prior death, resignation or removal. Any Director may resign at any time upon written notice of such resignation to the Corporation.

 

(d) All Directors of the Corporation shall have equal voting power unless the Articles of Incorporation of the Corporation provide that the voting power of individual Directors or classes of Directors are greater than or less than that of any other individual Directors or classes of Directors, and the different voting powers may be stated in the Articles of Incorporation or may be dependent upon any fact or event that may be ascertained outside the Articles of Incorporation if the manner in which the fact or event may operate on those voting powers is stated in the Articles of Incorporation. If the Articles of Incorporation provide that any Directors have voting power greater than or less than other Directors of the Corporation, every reference in these By-laws to a majority or other proportion of Directors shall be deemed to refer to majority or other proportion of the voting power of all the Directors or classes of Directors, as may be required by the Articles of Incorporation.

 

Section 2 - Duties and Powers:

 

The Board of Directors shall be responsible for the control and management of the business and affairs, property and interests of the Corporation, and may exercise all powers of the Corporation, except such as those stated under Florida state law, are in the Articles of Incorporation or by these By-laws, expressly conferred upon or reserved to the shareholders or any other person or persons named therein. The board shall be responsible for making all major and significant legal, tax, and financial decisions including but limited to the following:

 

(a) Opening bank and brokerage accounts and establishing lines of credit, margin accounts, and other borrowing authority;

 

(b) Establishing written employment agreements and contractor agreements for a duration in excess of one (1) year, or where the amount to be paid hereunder exceeds $100,000 or where any portion of the compensation is based in any manner upon the Corporation’s profitability or financial performance;

 

 

 

 

 

(c) Amendments to the Articles of Incorporation or By-laws;

 

(d) Shareholder agreement, voting trusts or proxies to which the Corporation is a party;

 

(e) Tax elections, including but not limited to the election for sub-chapter S, section 475, or otherwise;

 

(f) The purchase or sale of a business or significant interest therein;

 

(g) The purchase, sale, lease, or donation of property (real or personal, tangible or intangible) used in the operation of the business, including but not limited to office buildings/space, computer systems, vehicles, patents, trademarks, or copyrights;

 

(h) Reorganizations, merges and acquisitions;

 

(i) Loans, refinancing, and issuance of bonds;

 

(j) Declaration of dividends; stock splits; stock issuance; redemption or retirement of corporate shares;

 

(k) Liquidation or dissolution of the Corporation;

 

(l) The establishment, termination, increase or decrease in employee benefit plans including but not limited to pension and profit sharing plans; life, health medical, and dental insurance plans; child care plans; educational plans; or others;

 

(m) The initiation, defense, settlement, compromise, or termination of lawsuits and claims;

 

(n) Indemnification of Directors, Officers, or others;

 

(o) Change of Registered Agent or Registered Office;

 

(p) Filling vacancies on the Board of Directors or Officers;

 

(q) Establishing and terminating committees; appointing and removing members from committees;

 

(r) Salary and compensation matters pertaining to corporate officers;

 

(s) Ratification of prior corporate acts by Directors and Officers.

 

Section 3 - Regular Meetings; Notice:

 

(a) A regular meeting of the Board of Directors shall be held either within or without the State of Florida at such time and at such place as the Board shall fix.

 

 

 

 

 

(b) No notice shall be required of any regular meeting of the Board of Directors and, if given, need not specify the purpose of the meeting; provided, however, that in case the Board of Directors shall fix or change the time or place of any regular meeting when such time and place was fixed before such change, notice of such action shall be given to each director who shall not have been present at the meeting at which such action was taken within the time limited, and in the manner set forth in these By-laws with respect to special meetings, unless such notice shall be waived in the manner set forth in these By-laws.

 

Section 4 - Special Meetings; Notice:

 

(a) Special meetings of the Board of Directors shall be held at such time and place as may be specified in the respective notices or waivers of notice thereof.

 

(b) Except as otherwise required by statute, written notice of special meetings shall be mailed directly to each Director, addressed to him at his residence or usual place of business, or delivered orally, with sufficient time for the convenient assembly of Directors thereat, or shall be sent to him at such place by telegram, radio or cable, or shall be delivered to him personally or given to him orally, not later than the day before the day on which the meeting is to be held. If mailed, the notice of any special meeting shall be deemed to be delivered on the second day after it is deposited in the United States mails, so addressed, with postage prepaid. If notice is given by telegram, it shall be deemed to be delivered when the telegram is delivered to the telegraph company. A notice, or waiver of notice, except as required by these By-laws, need not specify the business to be transacted at or the purpose or purposes of the meeting.

 

(c) Notice of any special meeting shall not be required to be given to any Director who shall attend such meeting without protesting prior thereto or at its commencement, the lack of notice to him, or who submits a signed waiver of notice, whether before or after the meeting. Notice of any adjourned meeting shall not be required to be given.

 

Section 5 - Chairperson:

 

The Chairperson of the Board, if any and if present, shall preside at all meetings of the Board of Directors. If there shall be no Chairperson, or he or she shall be absent, then the President shall preside, and in his absence, any other director chosen by the Board of Directors shall preside.

 

Section 6 - Quorum and Adjournments:

 

(a) At all meetings of the Board of Directors, or any committee thereof, the presence of a majority of the entire Board, or such committee thereof, shall constitute a quorum for the transaction of business, except as otherwise provided by law, by the Certificate of Incorporation, or these Bylaws.

 

(b) A majority of the directors present at the time and place of any regular or special meeting, although less than a quorum, may adjourn the same from time to time without notice, whether or not a quorum exists. Notice of such adjourned meeting shall be given to Directors not present at time of the adjournment and, unless the time and place of the adjourned meeting are announced at the time of the adjournment, to the other Directors who were present at the adjourned meeting.

 

Section 7 - Manner of Acting:

 

(a) At all meetings of the Board of Directors, each director present shall have one vote, irrespective of the number of shares of stock, if any, which he may hold.

 

(b) Except as otherwise provided by law, by the Articles of Incorporation, or these By-laws, action approved by a majority of the votes of the Directors present at any meeting of the Board or any committee thereof, at which a quorum is present shall be the act of the Board of Directors or any committee thereof.

 

 

 

 

 

(c) Any action authorized in writing made prior or subsequent to such action, by all of the Directors entitled to vote thereon and filed with the minutes of the Corporation shall be the act of the Board of Directors, or any committee thereof, and have the same force and effect as if the same had been passed by unanimous vote at a duly called meeting of the Board or committee for all purposes.

 

(d) Where appropriate communications facilities are reasonably available, any or all directors shall have the right to participate in any Board of Directors meeting, or a committee of the Board of Directors meeting, by means of conference telephone or any means of communications by which all persons participating in the meeting are able to hear each other.

 

Section 8 - Vacancies:

 

(a) Unless otherwise provided for by the Articles of Incorporation of the Corporation, any vacancy in the Board of Directors occurring by reason of an increase in the number of directors, or by reason of the death, resignation, disqualification, removal or inability to act of any director, or other cause, shall be filled by an affirmative vote of a majority of the remaining directors, though less than a quorum of the Board or by a sole remaining Director, at any regular meeting or special meeting of the Board of Directors called for that purpose except whenever the shareholders of any class or classes or series thereof are entitled to elect one or more Directors by the Certificate of Incorporation of the Corporation, vacancies and newly created directorships of such class or classes or series may be filled by a majority of the Directors elected by such class or classes or series thereof then in office, or by a sole remaining Director so elected.

 

(b) Unless otherwise provided for by law, the Articles of Incorporation or these By-laws, when one or more Directors shall resign from the board and such resignation is effective at a future date, a majority of the directors, then in office, including those who have so resigned, shall have the power to fill such vacancy or vacancies, the vote otherwise to take effect when such resignation or resignations shall become effective.

 

Section 9 - Resignation:

 

A Director may resign at any time by giving written notice of such resignation to the Corporation.

 

Section 10 - Removal:

 

Unless otherwise provided for by the Articles of Incorporation, one or more or all the Directors of the Corporation may be removed with or without cause at any time by a vote of two-thirds of the shareholders entitled to vote thereon, at a special meeting of the shareholders called for that purpose, unless the Articles of Incorporation provide that Directors may only be removed for cause, provided however, such Director shall not be removed if the Corporation states in its Articles of Incorporation that its Directors shall be elected by cumulative voting and there are a sufficient number of shares cast against his or her removal, which if cumulatively voted at an election of Directors would be sufficient to elect him or her. If a Director was elected by a voting group of shareholders, only the shareholders of that voting group may participate in the vote to remove that Director.

 

 

 

 

 

Section 11 - Compensation:

 

The Board of Directors may authorize and establish reasonable compensation of the Directors for services to the Corporation as Directors, including, but not limited to attendance at any annual or special meeting of the Board.

 

Section 12 - Committees:

 

Unless otherwise provided for by the Articles of Incorporation of the Corporation, the Board of Directors, may from time to time designate from among its members one or more committees, and alternate members thereof, as they deem desirable, each consisting of one or more members, with such powers and authority (to the extent permitted by law and these By-laws) as may be provided in such resolution. Unless the Articles of Incorporation or By-laws state otherwise, the Board of Directors may appoint natural persons who are not Directors to serve on such committees authorized herein. Each such committee shall serve at the pleasure of the Board and, unless otherwise stated by law, the Certificate of Incorporation of the Corporation or these By-laws, shall be governed by the rules and regulations stated herein regarding the Board of Directors. Any meeting required or authorized to be held by this article may be conducted by means of a telephone conference, or similar method of communication by which all persons participating in this meeting can hear each other. Participation in a meeting pursuant to this section constitutes presence in person at the meeting.

  

ARTICLE V - OFFICERS

 

Section 1 - Number, Qualifications, Election and Term of Office:

 

(a) The Corporation's officers shall have such titles and duties as shall be stated in these By-laws or in a resolution of the Board of Directors which is not inconsistent with these By-laws. The officers of the Corporation shall consist of a president, secretary and treasurer, and also may have one or more vice presidents, assistant secretaries and assistant treasurers and such other officers as the Board of Directors may from time to time deem advisable. Any officer may hold two or more offices in the Corporation.

 

(b) The officers of the Corporation shall be elected by the Board of Directors at the regular annual meeting of the Board following the annual meeting of shareholders.

 

(c) Each officer shall hold office until the annual meeting of the Board of Directors next succeeding his election, and until his successor shall have been duly elected and qualified, subject to earlier termination by his or her death, resignation or removal.

 

 

 

 

 

Section 2 – Designation of Officers:

 

(a) Chairman of the Board – The Chairman of the Board shall preside at the meetings of the stockholders and the Board of Directors, and shall see that all orders and resolutions of the Board of Directors are carried into effect.

 

(b) President – The President shall be the chief executive officer of the Corporation and shall have active management of the business of the Corporation. He shall execute on behalf of the Corporation all instruments requiring such execution except to the extent the signing and execution thereof shall be expressly designated by the Board of Directors to some other officer or agent of the Corporation.

 

(c) Secretary – The Secretary shall act under the direction of the President and shall have custody of and maintain all corporate records except the financial records. He shall authenticate all nonfinancial records and documents of the Corporation. Subject to the direction of the President he shall attend all meetings of the Board of Directors and all meetings of the stockholders and record the proceedings. He shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all annual and special meetings of the stockholders and Board of Directors, and shall perform such other duties as may be prescribed by the President or the Board of Directors.

 

(d) Treasurer – The Treasurer shall act under the direction of the President. Subject to the direction of the President, he shall have custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation. He shall deposit all monies and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. He shall disburse the funds of the Corporation as may be ordered by the President of the Board of Directors, taking proper vouchers for such disbursements, and shall render to the President and the Board of Directors, at its regular meetings, or when the Board of Directors so requires, an account of all his transactions as the Treasurer and of the financial condition of the Corporation

 

Section 3 - Resignation:

 

Any officer may resign at any time by giving written notice of such resignation to the Corporation. Section 4 - Removal:

 

Any officer elected by the Board of Directors may be removed, either with or without cause, and a successor elected by the Board at any time, and any officer or assistant officer, if appointed by another officer, may likewise be removed by such officer.

 

Section 5 - Vacancies:

 

A vacancy, however caused, occurring in the Board and any newly created Directorships resulting from an increase in the authorized number of Directors may be filled by the Board of Directors.

 

Section 6 - Bonds:

 

The Corporation may require any or all of its officers or Agents to post a bond, or otherwise, to the Corporation for the faithful performance of their positions or duties.

 

Section 7 - Compensation:

 

The compensation of the officers of the Corporation shall be fixed from time to time by the Board of Directors. Any meeting required or authorized to be held by this article may be conducted by means of a telephone conference, or similar method of communication by which all persons participating in the meeting can hear each other. Participation in a meeting pursuant to this section constitutes presence in person at the meeting.

 

 

 

 

 

ARTICLE VI - BOOKS AND RECORDS

 

Section 1 – Books and Records:

 

The Corporation shall keep as permanent records the minutes of all meetings of its shareholders and Board of Directors; a record of all actions taken by the shareholders or Board of Directors without a meeting; and, a record of all actions taken by a committee of the Board of Directors in place of the Board of Directors on behalf of the above named Corporation. The Corporation shall also continuously maintain accurate accounting records. Furthermore, the above named Corporation shall maintain the following:

 

(a) A record of its shareholders in a form that permits preparation of a list of the names and addresses of all shareholders in alphabetical order by class of shares showing the number and series of shares held by each;

 

(b) The Corporation’s Articles or Restated Articles of Incorporation and all amendments thereto currently in effect;

 

(c) The Corporation’s By-laws or Restated By-laws and all amendments thereto currently in effect;

 

(d) Resolutions adopted by the Board of Directors creating one or more classes or series of shares and fixing their relative rights, preferences and limitations if shares issued pursuant to those resolutions are outstanding;

 

(e) The minutes of all shareholders’ meetings and records of all actions taken by shareholders without a meeting including the financial statements furnished to shareholders as may be required under Florida law;

 

(f) A list of the names and business street addresses of the Corporation’s current directors and officers; and

 

(g) A copy of the above named Corporation’s most recent annual report delivered to the Department of State.

 

Any books, records and minutes may be in written form or in any other form capable of being converted into written form.

 

Section 2 – Shareholder’s Inspection Rights:

 

A shareholder of the Corporation (including a beneficial owner whose shares are held in a voting trust or a nominee on behalf of a beneficial owner) may inspect and copy, during regular business hours at the Corporation’s principal office, any of the corporate records required to be kept pursuant to Section 1 above, of these By-laws, or the Articles of Incorporation, or as may be required by law, if said shareholder gives the above named Corporation written notice of such demand at least five (5) business days before the date on which the shareholder wishes to inspect and copy. The foregoing right of inspection is subject, however, to such other restrictions as are applicable under Florida Law, including, but not limited to, the inspection of certain records being permitted only if the demand for inspection is made in good faith and for a proper purpose (as well as the shareholder describing with reasonable particularity the purpose and records desired to be inspected and such records are directly connected with the purpose). Notice as required herein shall be directed to the Secretary of the Corporation.

 

 

 

 

 

Section 3 – Financial Information:

 

Unless modified by resolution of the shareholders within 120 days of the close of each fiscal year, the Corporation shall furnish the shareholders annual financial statements which may be consolidated or combined statements of the Corporation and one or more of its subsidiaries as appropriate, that include a balance sheet as of the end of the fiscal year, an income statement for that year, and a statement of cash flow for that year. If financial statements are prepared on the basis of generally accepted accounting principles, the annual financial statements must also be prepared on that basis. If the annual financial statements are reported on by a public accountant, said accountant’s report shall accompany said statements. If said annual financial statements are not reported on by a public accountant, then the statements shall be accompanied by a statement of the president or other person responsible for the above named Corporation’s accounting records (a) stating his reasonable belief whether the statements were prepared on the basis of generally accepted accounting principles and if not, describing the basis of preparation; and (b) describing any respects in which the statements were not prepared on a basis of accounting consistent with the statements prepared for the preceding year. The annual financial statements shall be mailed to each shareholder of the above named Corporation within 120 days after the close of each fiscal year or within such additional time as is reasonably necessary to enable the above named Corporation to prepare same.

 

Section 4 – Other Reports to Shareholders:

 

(a) The Corporation shall report any indemnification or advanced expenses to any director, officer, employee, or agent (for indemnification relating to litigation or threatened litigation) in writing to the shareholders with or before the notice of the next shareholders’ meeting, or prior to such meeting if the indemnification or advance occurs after the giving of such notice but prior to the time such meeting is held. Said report shall include a statement specifying the persons paid, the amounts paid, and the nature and status (at the time of such payment) of the litigation or threatened litigation.

 

(b) Additionally, if the Corporation issues or authorizes the issuance of shares for promises to render services in the future, the above named Corporation shall report in writing to the shareholders the number of shares authorized or issued and the consideration received by the above named Corporation, with or before the notice of the next shareholders’ meeting.

 

ARTICLE VII - SHARES OF STOCK

 

Section 1 - Certificate of Stock:

 

(a) The shares of the Corporation shall be represented by certificates or shall be uncertificated shares.

 

 

 

 

 

(b) Certificated shares of the Corporation shall be signed, (either manually or by facsimile), by officers or agents designated by the Corporation for such purposes, and shall certify the number of shares owned by him in the Corporation. Whenever any certificate is countersigned or otherwise authenticated by a transfer agent or transfer clerk, and by a registrar, then a facsimile of the signatures of the officers or agents, the transfer agent or transfer clerk or the registrar of the Corporation may be printed or lithographed upon the certificate in lieu of the actual signatures. If the Corporation uses facsimile signatures of its officers and agents on its stock certificates, it cannot act as registrar of its own stock, but its transfer agent and registrar may be identical if the institution acting in those dual capacities countersigns or otherwise authenticates any stock certificates in both capacities. If any officer who has signed or whose facsimile signature has been placed upon such certificate, shall have ceased to be such officer before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer at the date of its issue.

 

(c) If the Corporation issues uncertificated shares as provided for in these By-laws, within a reasonable time after the issuance or transfer of such uncertificated shares, and at least annually thereafter, the Corporation shall send the shareholder a written statement certifying the number of shares owned by such shareholder in the Corporation.

 

(d) Except as otherwise provided by law, the rights and obligations of the holders of uncertificated shares and the rights and obligations of the holders of certificates representing shares of the same class and series shall be identical.

 

Section 2 - Lost or Destroyed Certificates:

 

The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, stolen or destroyed if the owner:

(a) so requests before the Corporation has notice that the shares have been acquired by a bona fide purchaser,

 

(b) files with the Corporation a sufficient indemnity bond; and

 

(c) satisfies such other requirements, including evidence of such loss, theft or destruction, as may be imposed by the Corporation.

 

Section 3 - Transfers of Shares:

 

(a) Transfers or registration of transfers of shares of the Corporation shall be made on the stock transfer books of the Corporation by the registered holder thereof, or by his attorney duly authorized by a written power of attorney; and in the case of shares represented by certificates, only after the surrender to the Corporation of the certificates representing such shares with such shares properly endorsed, with such evidence of the authenticity of such endorsement, transfer, authorization and other matters as the Corporation may reasonably require, and the payment of all stock transfer taxes due thereon.

 

 

 

 

 

(b) The Corporation shall be entitled to treat the holder of record of any share or shares as the absolute owner thereof for all purposes and, accordingly, shall not be bound to recognize any legal, equitable or other claim to, or interest in, such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise expressly provided by law.

 

Section 4 - Record Date:

 

(a) The Board of Directors may fix, in advance, which shall not be more than sixty days before the meeting or action requiring a determination of shareholders, as the record date for the determination of shareholders entitled to receive notice of, or to vote at, any meeting of shareholders, or to consent to any proposal without a meeting, or for the purpose of determining shareholders entitled to receive payment of any dividends, or allotment of any rights, or for the purpose of any other action. If no record date is fixed, the record date for shareholders entitled to notice of meeting shall be at the close of business on the day preceding the day on which notice is given, or, if no notice is given, the day on which the meeting is held, or if notice is waived, at the close of business on the day before the day on which the meeting is held.

 

(b) The Board of Directors may fix a record date, which shall not precede the date upon which the resolution fixing the record date is adopted for shareholders entitled to receive payment of any dividend or other distribution or allotment of any rights of shareholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action.

 

(c) A determination of shareholders entitled to notice of or to vote at a shareholders' meeting is effective for any adjournment of the meeting unless the Board of Directors fixes a new record date for the adjourned meeting.

 

Section 5 - Fractions of Shares/Scrip:

 

The Board of Directors may authorize the issuance of certificates or payment of money for fractions of a share, either represented by a certificate or uncertificated, which shall entitle the holder to exercise voting rights, receive dividends and participate in any assets of the Corporation in the event of liquidation, in proportion to the fractional holdings; or it may authorize the payment in case of the fair value of fractions of a share as of the time when those entitled to receive such fractions are determined; or it may authorize the issuance, subject to such conditions as may be permitted by law, of scrip in registered or bearer form over the manual or facsimile signature of an officer or agent of the Corporation or its agent for that purpose, exchangeable as therein provided for full shares, but such scrip shall not entitle the holder to any rights of shareholder, except as therein provided. The scrip may contain any provisions or conditions that the Corporation deems advisable. If a scrip ceases to be exchangeable for full share certificates, the shares that would otherwise have been issue-able as provided on the scrip are deemed to be treasury shares unless the scrip contains other provisions for their disposition.

 

 

 

 

 

ARTICLE VIII - DIVIDENDS

 

(a) Dividends may be declared and paid out of any funds available therefore, as often, in such amounts, and at such time or times as the Board of Directors may determine and shares may be issued pro rata and without consideration to the Corporation's shareholders or to the shareholders of one or more classes or series.

 

(b) Shares of one class or series may not be issued as a share dividend to shareholders of another class or series unless:

 

(i) so authorized by the Articles of Incorporation;

 

(ii) a majority of the shareholders of the class or series to be issued approve the issue; or

 

(iii) there are no outstanding shares of the class or series of shares that are authorized to be issued

 

 

ARTICLE IX - INDEMNIFICATION

 

Section 1 – Right of Indemnification:

 

Every person who was or is a party, or is threatened to be made a party to, or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or a person of whom he is the legal representative is or was a director or officer of the Corporation or is or was serving at the request of the Corporation or for its benefit as a director or officer of another Corporation, or as a representative in a partnership, joint venture, trust or other enterprise, shall be indemnified and held harmless to the fullest extent legally permissible under the General Corporation Law of the State of Florida from time to time against all expenses, liability and loss (including attorneys’ fees, judgments, fines and amounts paid or to be paid in settlement) reasonably incurred or suffered by him in connection therewith. The expenses of Officers and Directors incurred in defending a civil or criminal action, suit or proceeding must be paid by the Corporation as they are incurred and in advance of the final disposition of the action, suit or proceeding upon receipt of an undertaking by or on behalf of the Director or Officer to repay the amount if it is ultimately determined by a court of competent jurisdiction that he is not entitled to be indemnified by the Corporation. Such right of indemnification shall be a contract right which may be enforced in any manner desired by such person. Such right of indemnification shall not be exclusive of any other right which such Directors, Officers or representatives may have or hereafter acquire and, without limiting the generality of such statement, they shall be entitled to their respective rights of indemnification under any By-law, agreement, vote of stockholders, provisions of law or otherwise, as well as their rights under this Article.

 

Section 2 – Insurance for Indemnification:

 

The Board of Directors may cause the Corporation to purchase and maintain insurance on behalf of any person who is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director or officer of another Corporation, or as its representative in a partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred in any such capacity or arising out of such status, whether or not the Corporation would have the power to indemnify such person.

 

Section 3 – Amendment:

 

The Board of Directors may from time to time adopt further By-laws with respect to indemnification and may amend these and such By-laws to provide at all times the fullest indemnification permitted by the General Corporation Law of the State of Florida.

 

 

 

 

 

ARTICLE X - FISCAL YEAR

 

The fiscal year of the Corporation is hereby fixed as the calendar year ending on March 31st. Notwithstanding the foregoing the fiscal year shall be subject to change by the Board of Directors from time to time, subject to applicable law.

 

ARTICLE XI - CORPORATE SEAL

 

The corporate seal, if any, shall be in such form as shall be prescribed and altered, from time to time, by the Board of Directors. The use of a seal or stamp by the Corporation on corporate documents is not necessary and the lack thereof shall not in any way affect the legality of a corporate document.

 

ARTICLE XII - AMENDMENTS

 

Section 1 - By Shareholders:

 

All By-laws of the Corporation shall be subject to alteration or repeal, and new By-laws may be made, by a majority vote of the shareholders at the time entitled to vote in the election of Directors even though these By-laws may also be altered, amended or repealed by the Board of Directors.

 

Section 2 - By Directors:

 

The Board of Directors shall have power to make, adopt, alter, amend and repeal, from time to time, By-laws of the Corporation.

 

ARTICLE XIII - WAIVER OF NOTICE:

 

Whenever any notice is required to be given by law, the Articles of Incorporation or these Bylaws, a written waiver signed by the person or persons entitled to such notice, whether before or after the meeting by any person, shall constitute a waiver of notice of such meeting.

 

ARTICLE XIV - INTERESTED DIRECTORS AND OFFICERS:

 

No contract or transaction shall be void or voidable if such contract or transaction is between the Corporation and one or more of its Directors or Officers, or between the Corporation and any other Corporation, partnership, association, or other organization in which one or more of its Directors or Officers, are directors or officers, or have a financial interest, when such Director or Officer is present at or participates in the meeting of the Board, or the committee of the shareholders which authorizes the contract or transaction or his, her or their votes are counted for such purpose, if:

 

 

 

 

 

(a) the material facts as to his, her or their relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee and are noted in the minutes of such meeting, and the Board or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested Directors, even though the disinterested Directors be less than a quorum; or

 

(b) the material facts as to his, her or their relationship or relationships or interest or interests and as to the contract or transaction are disclosed or are known to the shareholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the shareholders; or

 

(c) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified, by the Board of Directors, a committee of the shareholders; or

 

(d) the fact of the common directorship, office or financial interest is not disclosed or known to the Director or Officer at the time the transaction is brought before the Board of Directors of the Corporation for such action.

 

Such interested Directors may be counted when determining the presence of a quorum at the Board of Directors' or committee meeting authorizing the contract or transaction.

 

ARTICLE XV

 

ANNUAL LIST OF OFFICERS, DIRECTORS AND REGISTERED AGENT:

 

The Corporation shall, within sixty days after the filing of its Articles of Incorporation with the Secretary of State, and annually thereafter on or before the last day of the month in which the anniversary date of incorporation occurs each year, file with the Secretary of State a list of its president, secretary and treasurer and all of its Directors, along with the post office box or street address, either residence or business, and a designation of its resident agent in the state of Florida. Such list shall be certified by an officer of the Corporation.

 

 

APPROVED AND ADOPTED on May 9, 2014

 

 

 

 

 

/s/ Boris Nayflish                                

Boris Nayflish, Secretary

 

 

 

 

 

 

 

Exhibit 10.1

 

AMENDED SHARE EXCHANGE AGREEMENT

 

This SHARE EXCHANGE AGREEMENT, dated as of January 15, 2018 is made by and between SKYLAB USA, INC. (f/k/a Company Venture Capital Corp.), a Florida corporation (the "Company"), and SKYLAB APPS INC. ("Skylab"), including each of the persons listed on Exhibit A as a Skylab Shareholder (collectively, the "Skylab Shareholders," and each individually a "Skylab Shareholder").

 

BACKGROUND

 

The Skylab Shareholders have agreed to transfer to the Company, and the Company has agreed to acquire from the Skylab Shareholders, all of the issued and outstanding shares of Skylab (the "Skylab Shares"), in exchange for Ninety Five Percent (95%) of the common shares of the Company's Company Common Stock (the "Exchange Shares"), on the terms and conditions as set forth herein.

 

ARTICLE I.

DEFINITIONS

 

Section 1.1 Unless the context otherwise requires, the terms defined in this Article 1 will have the meanings herein specified for all purposes of this Agreement, applicable to both the singular and plural forms of any of the terms herein defined.

 

"Company Balance Sheet" means the Company balance sheet at December 31, 2017.

 

"Company Board" means the Board of Directors of the Company.

 

"Company Common Stock" means Company's common stock par value $0.0001 per share.

 

"Affiliate" means any Person that directly or indirectly controls, is controlled by or is under common control with the indicated Person.

 

"Agreement" means this Share Exchange Agreement, including all Schedules and Exhibits hereto, as this Share Exchange Agreement may be from time to time amended, modified or supplemented by agreement of the parties.

 

"Skylab Board" means the Board of Directors of Skylab.

 

"Skylab Shares" means the One Hundred Percent (100%) of all issued and outstanding shares of common stock of Skylab, all of which are held of record by the Skylab Shareholders. "Closing Date" has the meaning set forth in Article III.

 

"Code" means the United States Internal Revenue Code of 1986, as amended.

 

"Commission" means the United States Securities and Exchange Commission or any other federal agency then administering the Securities Act or any successor statute.

 

"Company Indemnified Party" has the meaning set forth in Section 11.2.

 

 

 

 

"Contract" means any agreement, contract, obligation, promise, or undertaking (whether written or oral and whether express or implied) that is legally binding.

 

"Damages" means the actual losses, damages, liabilities, penalties, Taxes, interest and expenses (including reasonable attorneys' fees and disbursements and other out-of-pocket expenses and costs incurred in connection with mitigating the Loss and investigating, preparing, settling or defending any pending or threatened action, claim or proceeding (including those brought by third Persons)).

 

"Disclosure Schedule" means the several schedules referred to and identified herein, setting forth certain disclosures, exceptions and other information, data and documents referred to at various places throughout this Agreement.

 

"Environmental. Laws" means any Law or other requirement relating to the environment, natural resources, or public or employee health and safety.

 

"Environmental Permit" means all licenses, permits, authorizations, approvals, franchises and rights required under any applicable Environmental Law or Order.

 

"Equity Security" means any stock or similar security, including, without limitation, securities containing equity features and securities containing profit participation features, or any security convertible into or exchangeable for, with or without consideration, any stock or similar security, or any security carrying any warrant, right or option to subscribe to or purchase any shares of capital stock, or any such warrant or right.

 

"ERISA" means the United States Employee Retirement Income Security Act of 1974, as amended.

 

"Exchange" has the meaning set forth in Section 2.1.

 

"Exchange Act" means the Securities Exchange Act of 1934, as amended, or any similar federal statute, and the rules and regulations of the Commission thereunder, all as the same are in effect from time to time.

 

"Exchange Shares" means the shares of Company Common Stock being issued to the Skylab Shareholders pursuant hereto.

 

"Exhibits" means the several exhibits referred to and identified in this Agreement.

 

"GAAP" means, with respect to any Person, United States generally accepted accounting principles applied on a consistent basis with such Person's past practices.

 

"Governmental Authority" means any federal or national, state or provincial, municipal or local government governmental authority, regulatory or administrative agency, governmental commission, department, board, bureau, agency or instrumentality, political subdivision, commission, court, tribunal, official, arbitrator or arbitral body, in each case whether United States or non-United States with jurisdiction over any party hereto.

 

"Indebtedness" means any obligation, contingent or otherwise. Any obligation secured by a Lien on, or payable out of the proceeds of, or production from, property of the relevant party will be deemed to be Indebtedness.

 

"Intellectual Property" means all industrial and intellectual property, including, without limitation, all United States and non-United States patents, patent applications, patent rights, trademarks, trademark applications, common law trademarks, Internet domain names, trade names, service marks, service mark applications, common law service marks, and the goodwill associated therewith, copyrights, in both published and unpublished works, whether registered or unregistered, copyright applications, franchises, licenses, know-how, trade secrets, technical data, designs, customer lists, confidential and proprietary information, processes and formulae, all computer software programs or applications, layouts, inventions, development tools and all documentation and media constituting, describing or relating to the above, including manuals, memoranda, and records, whether such intellectual property has been created, applied for or obtained anywhere throughout the world.

 

 

 

 

"Intellectual Property Assets" has the meaning set forth in Section 5.17 below.

 

"Laws" means, with respect to any Person, any United States or non-United States federal, national, state, provincial, local, municipal, international, multilateral or other law (including common law), constitution, statute, code, ordinance, rule, regulation or treaty applicable to such Person.

 

"Lien" means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind, including, without limitation, any conditional sale or other title retention agreement, any lease in the nature thereof and the filing of or agreement to give any financing statement under the Uniform Commercial Code of any jurisdiction and including any lien or charge arising by Law.

 

"Material Company Contract" means any and all agreements, contracts, arrangements, leases, commitments or otherwise, of the Company, of the type and nature that the Company is required to file with the Commission.

 

"Material Adverse Effect" means, when used with respect to the Company or Skylab, as the case may be, any change, effect or circumstance which, individually or in the aggregate, would reasonably be expected to (a) have a material adverse effect on the business, assets, financial condition or results of operations of the Company or Skylab, as the case may be, in each case taken as a whole or (b) materially impair the ability of the Company or Skylab (or the Skylab Shareholders), as the case may be, to perform its (or their) obligations under this Agreement, excluding any change, effect or circumstance resulting from (i) the announcement, pendency or consummation of the transactions contemplated by this Agreement, (ii) changes in the United States securities markets generally, or (iii) changes in general economic, currency exchange rate, political or regulatory conditions in industries in which the Company, or Skylab, as the case may be, operate.

 

"Order" means any award, decision, injunction, judgment, order, ruling, subpoena, or verdict entered, issued, made, or rendered by any Governmental Authority.

 

"Ordinary Course of Business" means an action taken by a Person will be deemed to have been taken in the "Ordinary Course of Business" only if:

 

(a)          such action is consistent with the past practices of such Person and is taken in the ordinary course of the normal day-to-day operations of such Person;

 

(b)          such action is not required to be authorized by the board of directors of such Person (or by any Person or group of Persons exercising similar authority); and

 

(c)          such action is similar in nature and magnitude to actions customarily taken, without any authorization by the board of directors (or by any Person or group of Persons exercising similar authority); in the ordinary course of the normal day-to-day operations of other Persons that are in the same line of business as such Person.

 

"Organizational Documents" means (a) the articles or certificate of incorporation and the bylaws of a corporation; (b) the partnership agreement and any statement of partnership of a general partnership; (c) the limited partnership agreement and the certificate of limited partnership of a limited partnership; (d) the articles or certificate of formation and operating agreement of a limited liability company; (e) any other document performing a similar function to the documents specified in clauses (a), (b), (c) and (d) adopted or filed in connection with the creation, formation or organization of a Person; and (f) any and all amendments to any of the foregoing.

 

 

 

 

"Permitted Liens" means (a) Liens for Taxes not yet payable or in respect of which the validity thereof is being contested in good faith by appropriate proceedings and for the payment of which the relevant Person has made adequate reserves; (b) Liens in respect of pledges or deposits under workmen's compensation laws or similar Laws, carriers, warehousemen, mechanics, laborers and material men and similar Liens, if the obligations secured by such Liens are not then delinquent or are being contested in good faith by appropriate proceedings conducted and for the payment of which the relevant Person has made adequate reserves; (c) statutory Liens incidental to the conduct of the business of the relevant Person which were not incurred in connection with the borrowing of money or the obtaining of advances or credits and that do not in the aggregate materially detract from the value of its property or materially impair the use thereof in the operation of its business; and (d) Liens that would not have a Material Adverse Effect.

 

"Person" means all natural persons, corporations, business trusts, associations, companies, general partnerships, limited partnerships, limited liability companies, joint ventures and other entities, governments, agencies and political subdivisions.

 

"Proceeding" means any action, arbitration, audit, hearing, investigation, litigation, or suit (whether civil, criminal, administrative or investigative) commenced, brought, conducted, or heard by or before, or otherwise involving, any Governmental Authority.

 

"Related Person" means, with respect to a particular individual:

 

(a)          each other member of such individual's Family;

 

(b)          any person that is directly or indirectly controlled by such individual or one or more members of such individual's family;

 

(c)          any person in which such individual or members of such individual's family hold (individual or in the aggregate) a Material Interest; and

 

(d)          any person with respect to which such individual or one or more members of such individual's Family serves as a director, officer, partner, executor; or trustee (or similar capacity)

 

With respect to a specified Person other than an individual:

 

(e)          any Person that directly or indirectly controls, is directly or indirectly controlled by, or is directly or indirectly under common control with such specified Person;

 

(f)          any person that holds a Material Interest in such specified Person;

 

(g)          each Person that serves as a director, officer, partner, executor, or trustee of such specified Person (or in similar capacity);

 

(h)          any Person in which such specified Person holds a Material Interest;

 

(i)          any Person with respect to which such specified Person serves as a general partner or a trustee (or in such similar capacity); and

 

(j)          any Related Person of any individual described in clause (b) or (c).

 

For purposes of this definition, (a) the "Family" of an individual includes (i) the individual, (ii) the individual's spouse and former spouses, (iii) any other natural person who is related to the individual or the individual's spouse within the second degree, and (iv) any other natural person who resides with such individual, and (b) "Material Interest" means direct or indirect beneficial ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934) of voting securities or other voting interests representing at least 5% of the outstanding voting power of a Person or equity securities or other equity interests representing at least 5% of the outstanding equity securities or equity interests in a Person.

 

 

 

 

"Rule 144" means Rule 144 under the Securities Act, as the same may be amended from time to time, or any similar or successor rule or regulation hereafter adopted by the Commission.

 

"Schedule 14F Filing" means an information statement to be filed by the Company on Schedule 14F under the Exchange Act following the Closing.

 

"SEC Documents" has the meaning set forth in Section 6.26.

 

"Section 4 (a)(2)" means Section 4(a)(2) of the Securities Act, as the same may be amended from time to time, or any successor statute.

 

"Securities Act" means the Securities Act of 1933, as amended, or any similar or successor federal statute, and the rules and regulations of the Commission thereunder, all as the same will be in effect at the time.

 

"Subsidiary" means, with respect to any Person, any other Person of which such Person (a) beneficially owns, either directly or indirectly, more than 50% of (i) the total combined voting power of all classes of voting securities of such Person, (ii) the total combined equity interests, or (iii) the capital or profit interests of such Person; or (b) otherwise has the power to control such Person.

 

"Survival Period" has the meaning set forth in Section 11.1

 

"Tax" or "Taxes" means all United States, other applicable federal, state or local taxes, charges, fees, levies, imposts, duties and other assessments, as applicable, including, but not limited to, any income, alternative minimum or add-on, estimated, gross income, gross receipts, sales, use, transfer, transactions, intangibles, ad valorem, value-added, franchise, registration, title, license, capital, paid-up capital, profits, withholding, payroll, employment, unemployment, excise, severance, stamp, occupation, premium, real property, recording, personal property, federal highway use, commercial rent, environmental (including, but not limited to, taxes under Section 59A of the Code) or windfall profit tax, custom, duty or other tax, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest, penalties or additions to tax with respect to any of the foregoing.

 

"Tax Group" means any United States and other applicable federal, state, local or foreign consolidated, affiliated, combined, unitary or other similar group of which the Company is now or was formerly a member.

 

"Tax Return" means any return, declaration, report, claim for refund or credit, information return, statement or other similar document filed with any Governmental Authority with respect to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

 

"Transaction Documents" means, collectively, all agreements, instruments and other documents to be executed and delivered in connection with the transactions contemplated by this Agreement.

 

"United States" means the United States of America.

 

"United States Dollars" or "US S"or "s" means the currency of the United States of America.

 

 

 

 

ARTICLE II.

EXCHANGE OF SKYLAB SHARES AND SHARE CONSIDERATION

 

Section 2.1 Share Exchange. At the Closing, each Skylab Shareholder shall transfer to Company the number of Skylab Shares set forth opposite each such Skylab Shareholder's name on Exhibit A, and, in consideration therefor, Company shall issue to such Skylab Shareholder the number of Exchange Shares set forth opposite each Skylab Shareholder's name on Exhibit A (the "Exchange").

 

Section 2.2 Tax Withholding. Company shall be entitled to deduct and withhold from the Exchange Shares otherwise deliverable to the Skylab Shareholders pursuant to this Agreement such amounts as the Company is required to deduct and withhold with respect to the making of such payment under the Code or any provision of state, local, or foreign Tax Law. To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Skylab Shareholder in respect of which such deduction and withholding was made.

 

Section 2.3 Section 368 Reorganization. For United States federal income tax purposes, the Exchange is intended to constitute a "reorganization" within the meaning of Section 368(a)(I)(B) of the Code. The parties to this Agreement hereby adopt this Agreement as a "plan of reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States Treasury Regulations. Notwithstanding the foregoing or anything else to the contrary contained in this Agreement, the parties acknowledge and agree that no party is making any representation or warranty as to the qualification of the Exchange as a reorganization under Section 368 of the Code or as to the effect, if any, that any transaction consummated prior to the Closing Date has or may have on any such reorganization status. The parties acknowledge and agree that each (i) has had the opportunity to obtain independent legal and tax advice with respect to the transaction contemplated by this Agreement, and (ii) is responsible for paying its own Taxes, including without limitation, any adverse Tax consequences that may result if the transaction contemplated by this Agreement is not determined to qualify as a reorganization under Section 368 of the Code.

 

Section 2.4 Directors and Officers of the Company at the Closing Date. Effective as of the Closing Date, Dean Grey shall be appointed President and Director of the Company's Board.

 

ARTICLE III.
CLOSING DATE

 

The closing of the Exchange will occur on January 15, 2018 or at such later or earlier date as all of the closing conditions set forth in Articles VIII and IX have been satisfied or waived and as the parties have unanimously agreed (the "Closing Date").

 

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES OF THE SKYLAB SHAREHOLDERS

 

Each Skylab Shareholder, severally and not jointly, hereby represents and warrants to the Company that the statements contained in this Article IV are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Article IV), except as set forth in the Disclosure Schedule accompanying this Agreement and initialed by the parties (the "Disclosure Schedule"). The Disclosure Schedule will be arranged in paragraphs corresponding to the lettered and numbered paragraphs contained in this Article IV.

 

 

 

 

Section 4.1 Authority. Such Skylab Shareholder has the right, power, authority and capacity to execute and deliver this Agreement and each of the Transaction Documents to which such Skylab Shareholder is a party, to consummate the transactions contemplated by this Agreement and each of the Transaction Documents to which such Skylab Shareholder is a party, and to perform such Skylab Shareholder's obligations under this Agreement and each of the Transaction Documents to which such Skylab Shareholder is a party. This Agreement has been, and each of the Transaction Documents to which such Skylab Shareholder is a party will be, duly and validly authorized and approved, executed and delivered by such Skylab Shareholder. Assuming this Agreement and the Transaction Documents have been duly and validly authorized, executed and delivered by the parties thereto other than such Skylab Shareholder, this Agreement is, and each of the Transaction Documents to which such Skylab Shareholder is a party have been, duly authorized, executed and delivered by such Skylab Shareholder and constitutes the legal, valid and binding obligation of such Skylab Shareholder, enforceable against such Skylab Shareholder in accordance with their respective terms, except as such enforcement is limited by general equitable principles, or by bankruptcy, insolvency and other similar Laws affecting the enforcement of creditors rights generally.

 

Section 4.2 No Conflict. Neither the execution or delivery by such Skylab Shareholder of this Agreement or any Transaction Document to which such Skylab Shareholder is a party, nor the consummation or performance by such Skylab Shareholder of the transactions contemplated hereby or thereby will, directly or indirectly, contravene, conflict with, constitute a default (or an event or condition which, with notice or lapse of time or both, would constitute a default) under, or result in the termination or acceleration of, any agreement or instrument to which such Skylab Shareholder is a party or by which the properties or assets of such Skylab Shareholder are bound; or (c) contravene, conflict with, or result in a violation of, any Law or Order to which such Skylab Shareholder, or any of the properties or assets of such Skylab Shareholder, may be subject.

 

Section 4.3 Ownership of Skylab Shares. Such Skylab Shareholder owns, of record and beneficially, and has good, valid and indefeasible title to and the right to transfer to the Company pursuant to this Agreement, such Skylab Shareholder's Skylab Shares free and clear of any and all Liens. There are no options, rights, voting trusts, shareholder agreements or any other contracts or understandings to which such Skylab Shareholder is a party or by which such Skylab Shareholder or such Skylab Shareholder's Skylab Shares are bound with respect to the issuance, sale, transfer, voting or registration of such Skylab Shareholder's Skylab Shares. At the Closing Date, the Company will acquire good, valid and marketable title to such Skylab Shareholder's Skylab Shares free and clear of any and all Liens.

 

Section 4.4 Litigation. There is no pending Proceeding against such Skylab Shareholder that challenges, or may have the effect of preventing, delaying or making illegal, or otherwise interfering with, any of the transactions contemplated by this Agreement and, to the knowledge of such Skylab Shareholder, nor has any such Proceeding been threatened.

 

Section 4.5 No Brokers or Finders. Except as disclosed in Schedule 4.5, no Person has, or as a result of the transactions contemplated herein will have, any right or valid claim against such Skylab Shareholder for any commission, fee or other compensation as a finder or broker, or in any similar capacity.

 

Section 4.6 Investment Representations.

 

 

 

 

(a)

Unregistered Shares. Each Skylab Shareholder understands and agrees that the Exchange Shares to be issued pursuant to this Agreement have not been registered under the Securities Act or the securities laws of any state of the United States or any foreign country and that the issuance of the Exchange Shares is being effected in reliance upon an exemption from registration afforded under Section 4(2) of the Securities Act for transactions by an issuer not involving a public offering.

 

(b)

Stock Legends. Each Skylab Shareholder hereby agrees with the Company to the inclusion, as applicable of the following legends, or legends substantially similar, on the certificates for the Exchange Shares and any other legend required under any applicable Law, including, without limitation, any United States state corporate and state securities law, or contract:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT (I) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS OR (2) PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND APPLICABLE STATE SECURITIES LAWS, IN WHICH CASE THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE ISSUER AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE ISSUER, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED rN THE MANNER CONTEMPLATED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND APPLICABLE STATE SECURITIES LAWS.

 

(c)          Opinion. No Skylab Shareholder will transfer any or all of the Exchange Shares absent an effective registration statement under the Securities Act and applicable state securities laws covering the disposition of such Skylab Shareholder's Exchange Shares, without first providing the Company with an opinion of counsel (which counsel and opinion are reasonably satisfactory to the Company) to the effect that such transfer will be exempt from the registration and the prospectus delivery requirements of the Securities Act and the registration or qualification requirements of any applicable United States state securities laws.

 

(d)          Consent. Each Skylab Shareholder understands and acknowledges that Company may refuse to transfer the Exchange Shares, unless such Skylab Shareholder complies with this Section 4.6. Each Skylab Shareholder consents to Company making a notation on its records or giving instructions to any transfer agent of the Company's Common Stock in order to implement the restrictions on transfer of the Exchange Shares.

 

(e)          Accredited Investors. Each Skylab Shareholder is, or together with such Skylab Shareholder's Purchaser Representative, as such term is defined in Rule 501(h) of Regulation D under the Securities Act, is, an "accredited investor" within the meaning of Rule 501(a) (1), (2), (3) or (7) of Regulation D under the Securities Act.

 

 

 

 

(f)          Information. Each Skylab Shareholder has received all information it has requested from Company that it considers necessary or appropriate for deciding whether to acquire Company Common Stock, including, but not limited to, information meeting the requirements of Rule 502(b) of Regulation D under the Securities Act. Each Skylab Shareholder has had an opportunity to ask questions and receive answers from Company regarding the terms of the Company Common Stock and to obtain any additional information necessary to verify the accuracy of the information given to him or her.

 

(g)          Experience. Each Skylab Shareholder has such knowledge and experience in financial and business matters that he or she is capable of evaluating the merits and risk of an investment in the Company Common Stock and is able to bear the economic risk of such investment.

 

ARTICLE V.

REPRESENTATIONS AND WARRANTIES OF SKYLAB AND THE SKYLAB SHAREHOLDERS

 

Skylab and the Skylab Shareholders, jointly and severally, represent and warrant to the Company that the statements contained in this Article V are correct and complete as of the date of this Agreement and will be correct and complete (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Article V), except as set forth in the Disclosure Schedule. The Disclosure Schedule will be arranged in paragraphs corresponding to the numbered and lettered paragraphs contained in this Article V.

 

Section 5.1 Organization and Qualification. Skylab is duly organized and validly existing under the laws of the state of Delaware, has the corporate power to carry on its business as presently conducted and as contemplated to be conducted, to own, hold and operate its properties and assets as now owned, held and operated by it, to enter into this Agreement, to carry out the provisions hereof except where the failure to be so organized, existing and, if .applicable, in good standing or to have such authority or power will not, in the aggregate, either (1) have a Material Adverse Effect on Skylab or (ii) materially impair the ability of the Skylab Shareholders each to perform their material obligations under this Agreement. Skylab is duly qualified, licensed or domesticated as a foreign corporation in good standing in each jurisdiction wherein the nature of its activities or its properties owned or leased makes such qualification, licensing or domestication necessary, except where the failure to be so qualified, licensed or domesticated will not have a .Material Adverse Effect. Set forth on Schedule 5.1 is a list of those jurisdictions in which Skylab presently conducts its business or owns, holds and operates its properties and assets.

 

Section 5.2 Subsidiaries. Skylab does not own directly or indirectly, any equity or other ownership interest in any Person.

 

Section 5.3 Articles of Incorporation and Bylaws. True, correct and complete copies of the Organizational Documents of Skylab have been delivered to the Company prior to the execution of this Agreement, and no action has been taken to amend or repeal such Organizational Documents. Skylab is not in violation or breach of any of the provisions of its Organizational Documents, except for such violations or breaches as would not have a Material Adverse Effect.

 

Section 5.4 Authorization and Validity of this Agreement and the Transaction Documents. The recording of the transfer of the Skylab Shares and the delivery of new certificates representing the Skylab Shares registered in the name of Company are within Skylab Apps' corporate powers, have been duly authorized by all necessary corporate action, do not require from the Skylab Board or Skylab Shareholders any consent or approval that has not been validly and lawfully obtained, and require no authorization, consent, approval, license, exemption of or filing or registration with any Governmental Authority, as the case may be, except for those that, if not obtained or made would not have a Material Adverse Effect.

 

 

 

 

Section 5.5 No Violations. None of the execution, delivery or performance by Skylab of this Agreement or any Transaction Document to which Skylab is a party, nor the consummation by Skylab of the transactions contemplated hereby violates any provision of its Organizational Documents, or violates or conflicts with, or constitutes a default (or an event or condition which, with notice or lapse of time or both, would constitute a default) under, or results in'the termination or acceleration of, or results in the creation of imposition of any Lien under, any agreement or instrument to which Skylab is a party or by which Skylab is or will be bound or subject, or violates any Laws.

 

Section 5.6 Binding Obligations. Assuming this Agreement has been duly and validly authorized, executed and delivered by the Company and the Skylab Shareholders, this Agreement is and all agreements or instruments contemplated hereby to which Skylab is a party, will be, duly authorized, executed and delivered by Skylab and are the legal, valid and binding Agreement of Skylab and are enforceable against Skylab in accordance with their respective terms, except as such enforcement is limited by general equitable principles, or by bankruptcy, insolvency and other similar laws affecting the enforcement of creditors rights generally.

 

Section 5.7 Capitalization and Related Matters.

 

(a)          Capitalization. The authorized capital stock of Skylab consists of 40,000,0000 shares of common stock, $.0001 par value each. There are no outstanding or authorized options, warrants, calls, subscriptions, rights (including any preemptive rights or rights of first refusal), agreements or commitments of any character obligating Skylab to issue any stock or any other Equity Securities of Skylab. All issued and outstanding shares of Skylab's capital stock are duly authorized, validly issued, fully paid and non-assessable and have not been issued in violation of any preemptive or similar rights.

 

(b)          No Redemption Requirements. There are no outstanding contractual obligations (contingent or otherwise) of Skylab to retire, repurchase, redeem or otherwise acquire any outstanding shares of capital stock of, or other Equity Securities in, Skylab or to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any other Person.

 

(c)          Due Authorization. The exchange of the Skylab Shares has been duly authorized, and the Skylab Shares have been validly issued and are fully paid and non-assessable.

 

(d)          Shareholders. Exhibit A contains a true and complete list of the names and addresses of the record and beneficial holders of all of the outstanding capital stock of Skylab. No holder of Skylab Shares or any other Equity Security of Skylab or any other Person is entitled to any preemptive right, right of first refusal or similar right as a result of the issuance of the Skylab Shares, the transactions contemplated hereby or otherwise. There is no voting trust, agreement or arrangement among any of the Skylab Shareholders of any capital stock of Skylab affecting the exercise of the voting rights of any such capital stock.

 

Section 5.8 Compliance with Laws; No Defaults. Except as would not have a Material Adverse Effect, the business and operations of Skylab has been and is being conducted in accordance with all applicable Laws and all applicable Orders of all Governmental Authorities. Except as would not have a Material Adverse Effect, Skylab is not, and is not alleged to be, in violation of, or (with or without notice or lapse of time or both) in default under, or in breach of, any term or provision of its Organizational Documents or of any indenture, loan or credit agreement, note, deed of trust, mortgage, security agreement or other material agreement, lease, license or other instrument, commitment, obligation or arrangement to which Skylab is a party or by which any of Skylab's properties, assets or rights are bound or affected. To the knowledge of Skylab, no other party to any material contract, agreement, lease, license, commitment, instrument or other obligation to which Skylab is a party is (with or without notice or lapse of time or both) in default thereunder or in breach of any term thereof. Skylab is not subject to any obligation or restriction of any kind or character, nor is there, to the knowledge of Skylab, any event or circumstance relating to Skylab that materially and adversely affects in any way its business, properties, assets or prospects or that would prevent or make burdensome its performance of or compliance with all or any part of this Agreement or the consummation of the transactions contemplated hereby or thereby.

 

 

 

 

Section 5.9          Certain Proceedings. There is no pending Proceeding . that has been commenced against Skylab and that challenges, or may have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the transactions contemplated by this Agreement. To Skylab's knowledge, no such Proceeding has been threatened.

 

Section 5.10          No Brokers or Finders. Except as disclosed in Schedule 5.10, no Person has, or as a result of the transactions contemplated hereby will have, any right or valid claim against Skylab for any commission, fee or other compensation as a finder or broker, or in any similar capacity.

 

Section 5.11          Title to and Condition of Properties. Skylab owns or holds under valid leases or other rights to use all real property, plants, machinery and equipment necessary for the conduct of the business of Skylab as presently conducted, except where the failure to own or hold such property, plants, machinery and equipment would not have a Material Adverse Effect.

 

Section 5.12          Books And Records. The minute books of Skylab contain accurate and complete records of all meetings held and corporate action taken by, the shareholders, the Skylab Board, and committees of the Skylab Board, and no meeting of any such shareholders, Skylab Board,' or committee has been held for which minutes have not been prepared and are not contained in such minute books. At the Closing Date, all of those books and records will be in the possession of Skylab.

 

Section 5.13          No Undisclosed Liabilities. Except as set forth in Schedule 5.13, Skylab has no liabilities or obligations of any nature (whether known or unknown and whether absolute, accrued, contingent, or otherwise) except for current liabilities incurred in the Ordinary Course of Business.

 

Section 5.14          Taxes.

 

(a)              Except as set forth in, Schedule 5.14 Skylab filed or caused to be filed (on a timely basis since inception of Skylab) all Tax Returns that are or were required to be filed by or with respect to it, either separately or as a member of a group of corporations, pursuant to applicable Laws. Skylab has delivered to Company copies of all such Tax Returns filed since inception of Skylab. Skylab has paid all taxes that have become due pursuant to those Tax Returns or otherwise, or pursuant to any assessment received by Skylab, except such taxes, if any, as are listed in Schedule 5.14 and are being contested in good faith.

 

(b)             The charges, accruals, and reserves with respect to Taxes on the respective books of Skylab are adequate (determined in accordance with GAAP) and are at least equal to Skylab's liability for Taxes. All taxes that Skylab is or was required by Laws to withhold or collect have been duly withheld or collected and, to the extent required, have been paid to the proper Governmental Authority or other Person.

 

(c)          All Tax Returns filed by (or that include on a consolidated basis) Skylab are true, correct, and complete. There is no tax sharing agreement that will require any payment by Skylab after the date of this Agreement.

 

 

 

 

Section 5.15 Contracts: No Defaults.

 

(a)          Schedule 5.15 contains a complete and accurate list of:

 

(i)          each Contract that involves performance of services or delivery of goods or materials by Skylab of an amount or value in excess of $10,000;

 

(ii)         each Contract that involves performance of services or delivery of goods or materials to. Skylab of an amount or value in excess of $10,000;

 

(iii)        each Contract that was not entered into in the Ordinary Course of Business and that involves expenditures or receipts of Skylab in excess of $10,000;

 

(iv)        each lease, rental or occupancy agreement, license, installment and conditional sale agreement, and other Contract affecting the ownership of, leasing of, title. to, use of, or any leasehold or other interest in, any real or personal property (except personal property leases and installment and conditional sales agreements having a value per item or aggregate payments of less than $10,000 and with terms of less than one year)

 

(v)         each licensing agreement or other Contract with respect to patents, trademarks, copyrights, or other intellectual property, including agreements with current or former employees, consultants, or contractors regarding the appropriation or the nondisclosure of any of the Intellectual Property Assets;

 

(vi)        each collective bargaining agreement and other Contract to or with any labor union or other employee representative of a group of employees;

 

(vii)       each joint venture, partnership, and other Contract (however named) involving a sharing of profits, losses, costs, or liabilities by Skylab with any other Person;

 

(viii)      each Contract containing covenants that in any way purport to restrict the business activity of Skylab or any Affiliate of Skylab or limit the freedom of Skylab or any Affiliate of Skylab to engage in any line of business or to compete with any Person;

 

(ix)         each Contract providing for payments to or by any Person based on sales, purchases, or profits, other than direct payments for goods;

 

(x)          each power of attorney that is currently effective and outstanding;

 

(xi)         each Contract entered into other than in the Ordinary Course of Business that contains or provides for an express undertaking by Skylab to be responsible for consequential damages;

 

(xii)        each Contract for capital expenditures in excess of $10,000;

 

(xiii)       each written warranty, guaranty, or other similar undertaking with respect to contractual performance extended by Skylab other than in the Ordinary Course of Business; and

 

(xiv)       each amendment, supplement, and modification (whether oral or written) in respect of any of the foregoing.

 

(xv)        Schedule 5.15 sets forth reasonably complete details concerning such Contracts, including the parties to the Contracts and the amount of the remaining commitment of Skylab under the Contracts.

 

(b)          Except as set forth in Schedule 5.15:

 

 

 

 

(xvi)      no officer, director or shareholder who owns in excess of five percent (5%) of the capital stock of Skylab (and no Related Person of the foregoing) has nor may it acquire any rights under, any Contract that relates to the business of, or any of the assets owned or used by Skylab; and

 

(xvii)      no officer, director, agent, employee, consultant, or contractor of Skylab is bound by any Contract that purports to limit the ability of such officer, director, agent, employee, consultant, or contractor to (A) engage in or continue any conduct, activity, or practice relating to the business of Skylab, or (B) assign to Skylab or to any other Person any rights to any invention, improvement, or discovery.

 

(c)              Except as set forth in Schedule 5.15, each Contract identified or required to be identified in Schedule 5.15 is in full force and effect and is valid and enforceable in accordance with its terms.

 

(d)             Except as set forth in Schedule 5.15:

 

(xviii)      Skylab is, and at all times since inception has been, in full compliance with all applicable terms and requirements of each Contract under which Skylab has or had any obligation or liability or by which Skylab or any of the assets owned or used by Skylab is or was bound;

 

(xix)      each other Person that has or had any obligation or liability under any Contract under which Skylab has or had any rights is, and at all times since inception has been, in full compliance with all applicable terms and requirements of such Contract;

 

(xx)      no event has occurred or circumstance exists that (with or without notice or lapse of time) may contravene, conflict with, or result in a violation or breach of, or give Skylab or any other Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate, or modify, any Contract; and

 

(xxi)      Skylab has not given to or received from any other Person, at any time since inception, any notice or other communication (whether oral or written) regarding any actual, alleged, possible, or potential violation or breach of, or default under, any Contract.

 

(e)          There are no renegotiations of, attempts to renegotiate or outstanding rights to renegotiate any material amounts paid or payable to Skylab under current or completed Contracts with any Person and no such Person has made written demand for such renegotiation.

 

Section 5.16 Employees.

 

(a)              Schedule 5.16 contains a complete and accurate list of the following information for each employee or director of Skylab, including each employee on leave of absence or layoff status; employer; name; job title; current compensation paid or payable and any change in compensation since May 1, 2017; vacation accrued; and service credited for purposes of vesting and eligibility to participate under Skylab' pension, retirement, profit-sharing, thrift- savings, deferred compensation, stock bonus, stock option, cash bonus, employee stock ownership (including investment credit or payroll stock ownership), severance pay, insurance, medical, welfare, or vacation plan, employee pension benefit plan or employee welfare benefit plan, or any other employee benefit plan or any plan for directors.

 

(b)             No employee or director of Skylab is a party to, or is otherwise bound by, any agreement or arrangement, including any confidentiality, noncompetition, or proprietary rights agreement, between such employee or director and any other Person ("Proprietary Rights Agreement") that in any way adversely affects or will affect (i) the performance of his duties as an employee or director of Skylab, or (ii) the ability of Skylab to conduct its business, including any Proprietary Rights Agreement with Skylab by any such employee or director.

 

 

 

 

Section 5.17 Intellectual Property.

 

(a)          Intellectual Property Assets. The term "Intellectual Property Assets" includes:

 

(i)          Skylab' name, all fictional business names, trading names, registered and unregistered trademarks, service marks, and applications (collectively, "Marks");

 

(ii)         all patents, patent applications, and inventions and discoveries that may be patentable (collectively, "Patents");

 

(iii)        all copyrights in both published works and unpublished works (collectively, "Copyrights");

 

(iv)        all rights in mask works (collectively, "Rights in Mask Works"); and

 

(v)          all know-how, trade secrets, confidential information, customer lists, software, technical information, data, process technology, plans, drawings, and blue prints (collectively, "Trade Secrets"); owned, used, or licensed by Skylab as licensee or licensor.

 

(b)          Agreements. Schedule 5.17 contains a complete and accurate list and summary description, including any royalties paid or received by Skylab, of all Contracts relating to the Intellectual Property Assets to which Skylab is a party or by which Skylab is bound, except for any license implied by the sale of a product and perpetual, paid-up licenses for commonly available software programs with a value of less than $10,000 under which Skylab is the licensee. There are no outstanding and no threatened disputes or disagreements with respect to any such agreement.

 

(c)          Know-How Necessary for the Business.

 

(vi)           The Intellectual Property Assets are all those necessary for the operation of Skylab's business as it is currently conducted or as reflected in the business plan given to Company by Skylab. Skylab is the owner of all right, title, and interest in and to each of the Intellectual Property Assets, free and clear of all liens, security interests, charges, encumbrances, or other adverse claims, and has the right to use without payment to a third party all of the Intellectual Property Assets.

 

(vii)          Except as set forth in Schedule 5.17, all former and current employees of Skylab have executed written Contracts with Skylab that assign to Skylab all rights to any inventions, improvements, discoveries, or information relating to the business of Skylab. No employee of Skylab has entered into any Contract that restricts or limits in any way the scope or type of work in which the employee may be engaged or requires the employee to transfer, assign, or disclose information concerning his work to anyone other than Skylab.

 

(d)          Patents.

 

(viii)          Schedule 5.17 contains a. complete and accurate list and summary description of all Patents. Skylab is the owner of all right, title, and interest in and to each of the Patents, free and clear of all liens, security interests, charges, encumbrances, and other adverse claims.

 

(x)          All of the issued Patents are currently in compliance with formal Laws (including payment of filing, examination, and maintenance fees and proofs of working or use), are valid and enforceable, and are not subject to any maintenance fees or taxes or actions falling due within ninety days after the Closing Date.

 

(x)         No Patent has been or is now involved in any interference, reissue, reexamination, or opposition proceeding.

 

(xi)       All products made, used, or sold under the Patents have been marked with the proper patent notice.

 

 

 

(e)       Trademarks.

 

(xii)     Schedule 5.17 contains a complete and accurate list and summary description of all Marks. Skylab is the owner of all right, title, and interest in and to each of the Marks, free and clear of all liens, security interests, charges, encumbrances, equities, and other adverse claims.

 

(xiii)    All Marks that have been registered with the United States Patent and Trademark Office are currently in compliance with all formal Laws (including tile timely post-registration filing of affidavits of use and incontestability and renewal applications), are valid and enforceable, and are not subject to any maintenance fees or taxes or actions falling due within ninety days after the Closing Date.

 

(xiv)    No Mark has been or is now involved in any opposition, invalidation, or cancellation.

 

(xv)     All products and materials containing a Mark bear the proper federal registration notice where permitted by law.

 

(f)       Copyrights.

 

(xiv)   Schedule 5.17 contains a complete and accurate list and summary description of all Copyrights. Skylab is the owner of all right, title, and interest in and to each of the Copyrights, free and clear of all liens, security interests, charges, encumbrances, equities, and other adverse claims.

 

(xv)     All the Copyrights have been registered and are currently in compliance with formal Laws, are valid and enforceable, and are not subject to any maintenance fees or taxes or actions falling due within ninety days after the date of Closing.

 

(xvi)   All works encompassed by the Copyrights have been marked with the proper copyright notice.

 

(g)       Trade Secrets.

 

(xvii)     With respect to each Trade Secret, the documentation relating to such Trade Secret is current, accurate, and sufficient in detail and content to identify and explain it and to allow its full and proper use without reliance on the knowledge or memory of any individual.

 

(xviii)      Skylab has taken all reasonable precautions to protect the secrecy, confidentiality, and value of its Trade Secrets.

 

(xix)        Skylab has good title and an absolute (but not necessarily exclusive) right to use the Trade Secrets. The Trade Secrets are not part of the public knowledge or literature, and, to Skylab's knowledge, have not been used, divulged, or appropriated either for the benefit of any Person (other than Skylab) or to the detriment of Skylab. No Trade Secret is subject to any adverse claim or has been challenged or threatened in any way.

 

Section 5.18 Certain Payments. Since inception, neither Skylab nor any director, officer, agent, or employee of Skylab, or other Person associated with or acting for or on behalf of Skylab, has directly or indirectly (a) made any contribution, gift, bribe, rebate, payoff, influence payment, kickback, or other payment to any Person, private or public, regardless of form, whether in money, property, or services (i) to obtain favorable treatment in securing business, (ii) to pay for favorable treatment for business secured, (iii) to obtain special concessions or for special concessions already obtained, for or in respect of Skylab or any Affiliate of Skylab, or (iv) in violation of any Law, or (b) established or maintained any fund or asset that has not been recorded in the books and records of Skylab.

 

 

 

 

Section 5.19 Relationships With Related Persons. Except as set forth in Schedule 5.19, no Related Person of Skylab has, or since inception of Skylab has had, any interest in any property (whether real, personal, or mixed and whether tangible or intangible), used in or pertaining to Skylab's business. No Related Person of Skylab is, or since inception of Skylab has owned (of record or as a beneficial owner) an equity interest or any other financial or profit interest in, a Person that has (i) had business dealings or a material financial interest in any transaction with Skylab, or (ii) engaged in competition with Skylab with respect to any line of the products or services of Skylab (a "Competing Business") in any market presently served by Skylab except for less than one percent of the outstanding capital stock of any Competing Business that is publicly traded on any recognized exchange or in the over-the-counter market. Except as set forth in Schedule 5.19, no Related Person of Skylab is a. party to any Contract with, or has any claim or right against, Skylab.

 

Section 5.20 Tax Treatment. Neither Skylab nor any of its Affiliates has taken or agreed to take any action, or is aware of any fact or circumstance, that would prevent the Exchange from qualifying as a reorganization within the meaning of Section 368 of the Code (a "368 Reorganization"). Skylab operates at least one significant historic business line, or owns at least a significant portion of its historic business assets, in each case within the meaning of Treasury Regulation 1.368-1(d).

 

Section 5.21 Due Diligence Information. The due diligence information presented to Company by the Skylab Shareholders and Skylab in connection with Company's due diligence investigation of Skylab, including each of the representations, warranties and covenants of Skylab and each Skylab Shareholder in this Agreement, is complete and accurate in all material respects and does not contain any untrue statement of a material fact or omit to state a material fact required to make the statements made, in light of the circumstances under which they were made, not misleading.

 

Section 5.22 Assumptions, Guaranties, etc., of Indebtedness of Other Persons. Skylab has not assumed, guaranteed, endorsed or otherwise be one directly or contingently liable for any material amount of indebtedness of any other Person (including, without limitation, any liability by way of agreement, contingent or otherwise, to purchase, to provide funds for payment, to supply funds to or otherwise invest in the debtor, or otherwise to assure the creditor against loss).

 

Section 5.23 No Material Adverse Effect. Since May 1, 2017 except as set forth in Schedule 5.23: (i) there has been no Material Adverse Effect to the financial condition, or in the results of operations, affairs or prospects of Skylab, whether or not arising in the Ordinary Course of Business; and (ii) there have been no transactions entered into by Skylab, other than those in the Ordinary Course of Business, which are material to Skylab.

 

Section 5.24 No Other Agreement to Sell. Neither Skylab nor any Skylab Shareholder has any legal obligation, absolute or contingent, to any other Person to sell, encumber or otherwise transfer Skylab, Skylab Shares, or Skylab' business (in whole or in part), or effect any merger, consolidation, combination, share exchange, recapitalization, liquidation, dissolution or other reorganization involving Skylab, or to enter into any agreement with respect thereto.

 

Section 5.25 Skylab Board Approval. The Skylab Board has, by unanimous written consent, determined that this Agreement and the transactions contemplated by this Agreement, are advisable and in the best interests of the Skylab Shareholders. The Company represents and warrants to the Skylab Shareholders and Skylab that the statements contained in this Article VI are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Article VI), except as set forth in the Disclosure Schedule. The Disclosure Schedule will be arranged in paragraphs corresponding to the numbered and lettered paragraphs contained in this Article VI.

 

 

 

 

ARTICLE VI.

REPRESENTATIONS AND WARRANTIES OF COMPANY

 

Section 6.1 Organization and Qualification. The Company is duly organized, validly existing and in good standing under the laws of the State of Florida, has all corporate power to carry on their businesses as presently conducted and to own, hold and operate its properties and assets as now owned, held and operated by it, except where the failure to be so organized, existing and in good standing, or to have such authority and power, governmental licenses, authorizations, consents or approvals would not have a Material Adverse Effect. The Company is duly qualified, licensed or domesticated as a foreign corporation in good standing where the nature of its activities or its properties owned, held or operated makes such qualification, licensing or domestication necessary, except where the failure to be so duly qualified, licensed or domesticated and in good standing would not have a Material Adverse Effect

 

Section 6.2 Subsidiaries. Company has no Subsidiaries.

 

Section 6.3 Organizational Documents. True, correct and complete copies of the Organizational Documents of Company has been delivered to Skylab prior to the execution of this Agreement, and no action has been taken to amend or repeal such Organizational Documents. Company is not in violation or breach of any of the provisions of its Organizational Documents, except for such violations or breaches as would not have a Material Adverse Effect.

 

Section 6.4 Authorization. The Company and Company have all corporate power to enter into this Agreement and each of the Transaction Documents to which the Company is a party, to consummate the transactions contemplated by this Agreement and each of the Transaction Documents to which the Company is a party and to perform their respective obligations under this Agreement and each of the Transaction Documents to which the Company is a party. The execution, delivery and performance by the Company of this Agreement and each of the Transaction Documents to which the Company is a party have been duly authorized by all necessary corporate action and do not require from the Company Board or the shareholders of the Company any consent or approval that has not been validly and lawfully obtained. The execution, delivery and performance by the Company of this Agreement and each of the Transaction Documents to which the Company is a party requires no authorization, consent, approval, license, exemption of, or filing or registration with, any Governmental Authority or other Person other than a Schedule 14F Filing and such other customary filings with the Commission for transactions of the type contemplated by this Agreement.

 

Section 6.5 No Violation. Neither the execution nor the delivery by the Company of this Agreement or any Transaction Document to which the Company is a party, nor the consummation or performance by the Company of the transactions contemplated hereby or thereby will, directly or indirectly, (a) contravene, conflict with, or result in a violation of any provision of the Organizational Documents of the Company; (b) contravene, conflict with, constitute a default (or an event or condition which, with notice or lapse of time or both, would constitute a default) under, or result in the termination or acceleration of, or result in the imposition or creation of any Lien under, any agreement or instrument to which Company is a party or by which the properties or assets of Company are bound; (c) contravene, conflict with, or result in a violation of, any Law or Order to which the Company are bound, or any of the properties or assets owned or used by Company, may be subject; or (d) contravene, conflict with, or result in a violation of, the terms or requirements of, or give any Governmental Authority the right to revoke, withdraw, suspend, cancel, terminate or modify, any licenses, permits, authorizations, approvals, franchises or other rights held by Company or that otherwise relate to the business of, or any of the properties or assets owned or used by Company, except, in the case of clause (b); (c), or (d), for any such contraventions, conflicts, violations, or other occurrences as would not have a Material Adverse Effect.

 

 

 

 

Section 6.6 Binding Obligations. Assuming this Agreement and the Transaction Documents have been duly and validly authorized, executed and delivered by the parties thereto other than the Company, this Agreement and each of the Transaction Documents to which the Company is a party are duly authorized, executed and delivered by the Company and constitutes or will constitute the legal, valid and binding obligations of the Company enforceable against the Company in accordance with its terms, except as such enforcement is limited by general equitable principles, or by bankruptcy, insolvency and other similar Laws affecting the enforcement of creditors rights generally.

 

Section 6.7 Securities Laws. Assuming the accuracy of the representations and warranties of the Skylab Shareholders contained in Article IV, the issuance of the Exchange Shares pursuant to this Agreement (a) is exempt from the registration and prospectus delivery requirements of the Securities Act, (b) has been registered or qualified (or are exempt from registration and qualification) under the registration permit or qualification requirements of all applicable state securities Laws, and (c) has been accomplished in conformity with all other applicable United States federal and state securities Laws.

 

Section 6.8 Capitalization and Related Matters.

 

(a)          Capitalization. The authorized capital stock of Company consists of 900,000,000 shares of Company's common stock $.001 par value each, of which 1,256,629 shares are issued and outstanding, Preferred stock, $.001 par value, 750,000,000 shares authorized, 0 shares are issued and outstanding, and Series "A" Preferred Stock, $0.001 par value, 100,000,000 shares designated, 0 shares are issued and outstanding. All issued and outstanding shares of Company Common Stock and Class A convertible preferred stock are duly authorized, validly issued, fully paid and non-assessable, and have not been issued in violation of any preemptive or similar rights. At the Closing Date, Company will have sufficient authorized Company Common Stock and Preferred A Stock to consummate the transactions contemplated hereby. Except as disclosed in the Company's SEC Documents, there are no outstanding options, warrants, purchase agreements, participation agreements, subscription rights, conversion rights, exchange rights or other Equity Securities or contracts that could require Company to issue, sell or otherwise cause to become outstanding any of its authorized but unissued shares of capital stock or any Equity Securities or Equity Securities convertible into, exchangeable for or carrying a right or option to purchase Equity Securities or to create, authorize, issue, sell or otherwise cause to become outstanding any new class of Equity Securities. There are no outstanding shareholders' agreements, voting trusts or arrangements, registration rights agreements, rights of first refusal or other contracts pertaining to the Equity Securities of Company. The issuance of all of the shares of Company Common Stock described in this Section 6.8(a) have been in compliance with United States federal and state securities Laws.

 

(b)          No Redemption Requirements. Except as set forth in the SEC Documents (or in Section 9.10 below), there are no outstanding contractual obligations (contingent or otherwise) of Company to retire, repurchase, redeem or otherwise acquire any Equity Securities of shares of capital stock of, or other Equity Securities of, Company or to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any other Person.

 

 

 

(c)          Due Authorization. The issuance of the Exchange Shares has been duly authorized and, upon delivery to the Skylab Shareholders of certificates therefor in accordance with the terms of this Agreement, the Exchange Shares will have been validly issued and fully paid, and will be non-assessable, have the rights, preferences and privileges specified, will be free of preemptive rights and will be free and clear of all Liens and restrictions, other than Liens created by the Skylab Shareholders and restrictions on transfer imposed by this Agreement and the Securities Act.

 

Section 6.9 Compliance with Laws. Except as would not have a Material Adverse Effect, the business and operations of Company have been and are being conducted in accordance with all applicable Laws and Orders. Except as would not have a Material Adverse Effect, Company has not received notice of any violation (or any Proceeding involving an allegation of any violation) of any applicable Law or Order by or affecting such Company and, to the knowledge of Company, no Proceeding involving an allegation of violation of any applicable Law or Order is threatened or contemplated. Except as would not have a Material Adverse Effect, Company is not subject to any obligation or restriction of any kind or character, nor is there, to the knowledge of Company, any event or circumstance relating to Company that materially and adversely affects in any way its business, properties, assets or prospects or that prohibits Company from entering into this Agreement or would prevent or make burdensome its performance of or compliance with all or any part of this Agreement or the consummation of the transactions contemplated hereby.

 

Section 6.10 Certain Proceedings. There is no pending Proceeding that has been commenced against Company. To the knowledge of Company, no such Proceeding has been threatened.

 

Section 6.11 No Brokers or Finders. No Person has, or as a result of the transactions contemplated hereby will have, any right or valid claim against Company for any commission, fee or other compensation as a finder or broker, or in any similar capacity.

 

Section 6.12 Absence of Undisclosed Liabilities. Except as set forth in SEC Documents or in Schedule 6.12, Company has no debt, obligation or liability (whether accrued, absolute, contingent, liquidated or otherwise, whether due or to become due, whether or not known to Company) arising out of any transaction entered into at or prior to the Closing Date or any act or omission at or prior to the Closing Date. All debts, obligations or liabilities with respect to directors and officers will be cancelled prior to the Closing. Except as set forth in Schedule 6.12, Company has not incurred any liabilities or obligations under agreements entered into in the usual and ordinary course of business since July 15, 2013. Company Balance Sheet provides a true and fair view of the assets and liabilities (whether accrued, absolute, contingent, liquidated or otherwise, whether due or to become due, whether or not known to Company) as at July 15, 2013.

 

Section 6.13 Changes. Except as set forth in the SEC Documents, Schedule 6.13 or in Section 9.9 below, Company has, since May 1, 2017, conducted its business in the ordinary course and has not:

 

(a)          Non-Ordinary Course Transactions. Entered into any transaction other than in the Ordinary Course of Business, except for this Agreement.

 

(b)          Adverse Changes. Suffered or experienced any change in, or affecting, its condition (financial or otherwise), properties, assets, liabilities, business, operations, results of operations or prospects other than changes, events or conditions in the Ordinary Course of Business, none of which would have a Material Adverse Effect;

 

 

 

 

(c)          Loans. Made any loans or advances to any Person;

 

(d)          Liens. Created or permitted to exist any Lien on any material property or asset of Company, other than Permitted Liens;

 

(e)          Capital Stock. Issued, sold, disposed of or encumbered, or authorized the issuance, sale, disposition or encumbrance of, or granted or issued any option to acquire any shares of its capital stock or any other of its securities or any Equity Security, or altered the term of any of its outstanding securities or made any change in its outstanding shares of capital stock or its capitalization, whether by reason of reclassification, recapitalization, stock split, combination, exchange or readjustment of shares; stock dividend or otherwise;

 

(f)          Dividends. Declared, set aside, made or paid any dividend or other distribution to any of its shareholders;

 

(g)          Material Contracts. Terminated or modified any Material Company Contract, except for termination upon 'expiration in accordance with the terms thereof;

 

(h)          Claims. Released, waived or cancelled any claims or rights relating to or affecting Company in excess of $10,000 in the aggregate or instituted or settled any Proceeding involving in excess of $10,000 in the aggregate;

 

(i)          Discharge of Liabilities. Paid, discharged or satisfied any claim, obligation or liability in excess of $10,000 in the aggregate, except for claims, obligations or liabilities incurred prior to the date of this Agreement in the Ordinary Course of Business;

 

(j)          Indebtedness. Created, incurred, assumed or otherwise become liable for any Indebtedness in excess of $10,000 in the aggregate, other than professional fees relating to the SEC Documents or the transactions contemplated hereby;

 

(k)          Guarantees. Guaranteed or endorsed in a material amount any obligation or net worth of any Person;

 

(l)          Acquisitions. Acquired the capital stock or other securities or any ownership interest in, or substantially all of the assets of, any other Person;

 

(m)          Accounting. Changed its method of accounting or the accounting principles or practices utilized in the preparation of its financial statements, other than as required by GAAP;

 

(n)          Agreements. Except as set forth in the SEC Documents, Schedule 6.13 or in Section 9.9 below, entered into any agreement, or otherwise obligated itself, to do any of the foregoing.

 

Section 6.14 Material Contracts.

 

(a)          Except to the extent filed with the SEC Documents, Company has made available to Skylab, prior to the date of this Agreement, true, correct and complete copies of each written Material Company Contract, including each amendment, supplement and modification thereto.

 

(b)          Absence of Defaults. Each Material Company Contract is a valid and binding agreement of Company and, to the knowledge of Company, the other parties thereto; each such

 

 

(c)          Real Property Holding Company. Company is not and has not been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code at any time during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.

 

(d)          No Tax Allocation or Sharing Agreements. Company is not a party to any Tax allocation or sharing agreement. Company (a) has not been a member of a Tax Group filing a consolidated income Tax Return under Section 1501 of the Code (or any similar provision of state, local or foreign law), and (b) has no liability for Taxes for any Person under Treasury Regulations Section 1.1502-6 (or any similar provision of Law) as a transferee or successor, by contract or otherwise.

 

(e)          No Other Tax Related Agreements. Company is not a party to any agreement, contract or arrangement for services that would result, individually or in the aggregate, in the payment of any amount that would not be deductible by reason of Section 162(m), 280G or 404 of the Code. Company is not a "consenting corporation" within the meaning of Section 341(f) of the Code. Company does not have any "tax-exempt bond financed property" or "tax-exempt use property" within the meaning of Section 168(g) or (h), respectively of the Code. Company does not have any outstanding closing agreement, ruling request, request for consent to change a method of accounting, subpoena or request for information to or from a Governmental Authority in connection with any Tax matter. During the last two years, Company has not engaged in any exchange with a related party (within 'the meaning of Section 1031(±) of the Code) under which gain realized was not recognized by reason of Section 1031 of the Code.

 

Section 6.15 Material Assets. The financial statements of Company set forth in the Company Balance Sheet reflect the material properties and assets (real and personal) owned or leased by Company.

 

Section 6.16 Insurance. Company has made available to Skylab, prior to the date of this Agreement, true, correct and complete copies of any insurance policies maintained by Company on their properties and assets. Except as would not have a Material Adverse Effect, all of such policies (a) taken together, provide adequate insurance coverage for the properties, assets and operations of each Company for all risks normally insured against by a Person carrying on the same business as such Company, and (b) are sufficient for compliance with all applicable Laws and Material Company Contracts. Except as would not have a Material Adverse Effect, all of such policies are valid, outstanding and in full force and effect and, by their express terms, will continue in full force and effect following the consummation of the transactions contemplated by this Agreement. Except as set forth in the SEC Documents or Schedule 6.18, Company has not received (x) any refusal of coverage or any notice that a defense will be afforded with reservation of rights, or (y) any notice of cancellation or any other indication that any insurance policy is no longer in full force or effect or will not be renewed or that the issuer of any policy is not willing or able to perform its obligations thereunder. All premiums due on such insurance policies on or prior to the date hereof have been paid. There are no pending claims with respect to Company or its properties or assets under any such insurance policies, and there are no claims as to which the insurers have notified Company that they intend to deny liability. There is no existing default under any such insurance policies.

 

 

 

 

Section 6.17 Litigation; Orders. Except as set forth in the SEC Documents or Schedule 6.19 there is no Proceeding (whether federal, state, local or foreign) pending or, to the knowledge of Company, threatened against or affecting Company or Company's properties, assets, business or employees. To the knowledge of Company, there is no fact that might result in or form the basis for Material Company Contract is in full force and effect. Except as would not have a Material Adverse Effect, Company is not in breach or default of any Material. Company Contract to which it is a party and, to the knowledge of Company, no other party to any Material Company Contract is in breach or default thereof. Except as would not have a Material Adverse Effect, no event has occurred or circumstance exists that (with or without notice or lapse of time) would (a) contravene, conflict with or result in a violation or breach of, or become a default or event of default under, any provision of any Material Company Contract or (b) permit Company or any other Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate or modify any Material Company Contract. Company has not received notice of the pending or threatened cancellation, revocation or termination of any Material Company Contract to which it is a party. There are no renegotiations of, or attempts to renegotiate, or outstanding rights to renegotiate any material terms of any Material Company Contract.

 

Section 6.18 Employees.

 

(a)          Company has no employees, independent contractors or other Persons providing research or other services to it. Except as would not have a Material Adverse Effect, Company is and has been in full compliance with all Laws regarding employment, wages, hours, benefits, equal opportunity, collective bargaining, the payment of Social Security and other taxes, occupational safety and health and plant closing. Company is not liable for the payment of any compensation, damages, taxes, fines, penalties or other amounts, however designated, for failure to comply with any of the foregoing Laws.

 

(b)          No director, officer or employee of Company is a party to, or is otherwise bound by, any Contract (including any confidentiality, noncompetition or proprietary rights agreement) with any other Person and each employee of Company is employed on an at-will basis.

 

Section 6.19 Tax Returns and Audits.

 

(a)          Tax Returns. The Company has filed all Tax Returns required to be filed by or on behalf of Company and has paid all Taxes of Company required to have been paid (whether or not reflected on any Tax Return). Except as set forth in the SEC Documents, (a) no Governmental Authority in any jurisdiction has made a claim, assertion or threat to Company that Company is or may be subject to taxation by such jurisdiction; (b) there are no Liens with respect to Taxes on Company's property or assets other than Permitted Liens; and (c) there are no Tax rulings, requests for rulings, or closing agreements relating to Company for any period (or portion of a period) that would affect any period after the date hereof.

 

(b)          No Adjustments or Changes. Neither Company nor any other Person on behalf of Company (a) has executed or entered into a closing agreement pursuant to Section 7121 of the Code or any predecessor provision thereof or any similar provision of Law; or (b) has agreed to or is required to make any adjustments pursuant to Section 481(a) of the Code or any similar provision of Law.

 

(c)          No Disputes. There is no pending audit, examination, investigation, dispute, Proceeding or claim with respect to any Taxes of Company, nor is any such claim or dispute pending or contemplated, nor is there any basis for any such dispute, Proceeding or claim. Company has delivered to Skylab true, correct and complete copies of all Tax Returns, if any, examination reports and statements of deficiencies assessed or asserted against or agreed to by Company since its inception and any and all correspondence with respect to the foregoing.

 

 

 

 

any such Proceeding. Company is not subject to any Orders.

 

Section 6.20 Licenses. Except as would not have a Material Adverse Effect, Company possesses from the appropriate Governmental Authority all licenses, permits, authorizations, approvals, franchises and rights that are necessary for Company to engage in its business as currently conducted and to permit Company to own and use its properties and assets in the manner in which it currently owns and uses such properties and assets (collectively, " Company Permits"). Company has not received notice from any Governmental Authority or other Person that there is lacking any license, permit, authorization, approval, franchise or right necessary for Company to engage in its business as currently conducted and to permit Company to own and use its properties and assets in the manner in which it currently owns and uses such properties and assets. Except as would not have a Material Adverse Effect, Company Permits are valid and in full force and effect. Except as would not have a Material Adverse Effect, no event has occurred or circumstance exists that may (with or without notice or lapse of time): (a) constitute or result, directly or indirectly, in a violation of or a failure to comply with any Company Permit; or (b) result, directly or indirectly, in the revocation, withdrawal, suspension, cancellation or termination of, or any modification to, any Company Permit. Company has not received notice from any Governmental Authority or any other Person regarding: (a) any actual, alleged, possible or potential contravention of any Company Permit; or (b) any actual, proposed, possible or potential revocation, withdrawal, suspension, cancellation, termination of, or modification to, any Company Permit. All applications required to have been filed for the renewal of such Company. Permits have been duly filed on a timely basis with the appropriate Persons, and all other filings required to have been made with respect to such Company Permits have been duly made on a timely basis with the appropriate Persons. All Company Permits are renewable by their terms or in the ordinary course of business without the need to comply with any special qualification procedures or to pay any amounts other than routine fees or similar charges, ail of which have, to the extent due, been duly paid.

 

Section 6.21 Interested Party Transactions. Except as set forth in Schedule 6.21, no officer, director or shareholder of Company or any Affiliate or "associate" (as such term is defined in Rule 405 under the Securities Act) of any such Person, has or has had, either directly or indirectly, (1) an interest in any Person which (a) furnishes or sells services or products which are furnished or sold or are proposed to be furnished or sold by Company, or (b) purchases from or sells or furnishes to, or proposes to purchase from, sell to or furnish any Company any goods or services; or (2) a beneficial interest in any contract or agreement to which Company is a party or by which it may be bound or affected.

 

Section 6.22 Governmental Inquiries. The Company has provided to Skylab a copy of each material written inspection report, questionnaire, inquiry, demand or request for information received by Company from any Governmental Authority, and Company's response thereto, and each material written statement, report or other document filed by Company with any Governmental Authority.

 

Section 6.23 Bank Accounts and Safe Deposit Boxes. Company does not use a deposit or financial account, a lock box, or a safety deposit box, in its business as presently conducted.

 

Section 6.24 Intellectual Property. Company does not own, use or license any Intellectual Property in its business as presently conducted, except as set forth in the SEC Documents. None of the Intellectual Property, if any, owned by Company infringes on the rights of any person. Adverse Effect, Company owns good and marketable title to, or holds under valid leases or other rights to use, all real property, plants, machinery, equipment and other personal property necessary for the conduct of its business as presently conducted, free and clear of all Liens, except Permitted Liens. The material buildings, plants, machinery and equipment necessary for the conduct of the business of Company as presently conducted are structurally sound, are in good operating condition and repair and are adequate for the uses to which they are being put, and none of such buildings, plants, machinery or equipment is in need of maintenance or repairs, except for ordinary, routine maintenance and repairs that are not material in nature or cost.

 

 

 

 

Section 6.25 SEC Documents & Financial Statements. The Company has filed all reports required to be filed by it under the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the three (3) years preceding the date hereof (the foregoing materials being collectively referred to herein as the "SEC Documents") and is current with respect to its Exchange Act filing requirements. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission promulgated thereunder, and none of the SEC Documents, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statement therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Documents comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing, were prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto, or, in the case of unaudited statements as permitted by Form 10-QSB adopted by the Commission), and fairly present in all material respects (subject in the case of unaudited statements, to normal, recurring audit adjustments) the financial position of Company as at the dates thereof and the results of its operations and cash flows for the periods then ended. Company is not aware of any facts which would make Company Common Stock ineligible for quotation on the OTC Bulletin Board.

 

Section 6.26 Stock Option Plans; Employee Benefits.

 

(a)          Stock Option Plans. Company has no stock option plans providing for the grant by Company of stock options to directors, officers or employees.

 

(b)          Employee Benefit Plans. Company has no employee benefit plans or arrangements covering its present and former employees or providing benefits to such persons in respect of services provided Company.

 

Section 6.27 Environmental and Safety Matters. Except as set forth in the SEC Documents and except as would not have a Material Adverse Effect, Company has at all times been and is in compliance with all Environmental Laws applicable to Company. There are no Proceedings pending or threatened against Company alleging the violation of any Environmental Law or Environmental Permit applicable to Company or alleging that Company is a potentially responsible party for any environmental site contamination. Neither this Agreement nor the consummation of the transactions contemplated by this Agreement shall impose any obligations to notify or obtain the consent of any Governmental Authority or third Persons under any Environmental Laws applicable to Company.

 

Section 6.28 Money Laundering Laws. The operations of the Company and Company are and have been conducted at all times in compliance with applicable financial rccordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all Governmental Authorities, and the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any Governmental Authority (collectively, the "Money Laundering Laws") and no Proceeding involving the Company or Company with respect to the Money Laundering Laws is pending or, to the knowledge of the Company or Company, threatened.

 

Section 6.29 Board Approval. The Company and Company Board, at a meeting duly called and held, has determined that this Agreement and the transactions contemplated by this Agreement are advisable and in the best interests of Company's shareholders.

 

 

 

 

ARTICLE VII.

COVENANTS

 

Section 7.1 Rule 144 Reporting. With a view to making available to the Company's shareholders the benefit of certain rules and regulations of the Commission which may permit the sale of the Company Common Stock to the public without registration, from and after the Closing Date, the Company agrees to make and keep public information available, as those terms are understood and defined in Rule 144; and file with the Commission, in a timely manner, all reports and other documents required of the Company under the Exchange Act.

 

Section 7.2 Notice of Developments. From and after the execution of this Agreement, each party will give prompt written notice to the other party of any material adverse development causing a breach or likely breach of any of its covenants in this Agreement.

 

Section 7.3 Access. From and after the execution of this Agreement, each party will provide to each other party and such party's employees, agents, representative and advisors (including counsel and accountants (collectively, "Representatives"), complete access to all information necessary to complete its due diligence review and to cooperate fully with such party in connection with its due diligence review, in each case as specified in this Agreement.

 

ARTICLE VIII.

CONDITIONS PRECEDENT OF COMPANY

 

The Company's obligation to acquire the Skylab Shares and to take the other actions required to be taken by Company at the Closing Date is subject to the satisfaction, at or prior to the Closing Date, of each of the following conditions (any of which may be waived by Company, in whole or in part):

 

Section 8.1 Accuracy of Representations. The representations and warranties of Skylab and the Skylab Shareholders set forth in this Agreement or in the Disclosure Schedule or in any certificate delivered pursuant hereto that are not qualified as to materiality shall be true and correct in all material respects at and as of the Closing Date except to the extent a representation or warranty is expressly limited by its terms to another date. The representations and warranties of Skylab and the Skylab Shareholders set forth in this Agreement or in the Disclosure Schedule or any certificate delivered pursuant hereto that are qualified as to materiality shall be true and correct in all respects at and as of the Closing Date, except to the extent a representation or warranty is expressly limited by its terms to another date.

 

Section 8.2 Performance by Skylab and the Skylab Shareholders. All of the covenants and obligations that Skylab and Skylab Shareholders are required to perform or to comply with pursuant to this Agreement (considered collectively), and each of these covenants and obligations (considered individually), must have been duly performed and complied with in all material respects. Each document required to be delivered by Skylab arid the Skylab Shareholders pursuant to this Agreement must have been delivered.

 

 

 

 

Section 8.3 No Force Majeure Event. There shall not have been any delay, error, failure or interruption in the conduct of the business of Skylab, or any loss, injury, delay, damage, distress, or other casualty, due to force majeure, including but not limited to (a) acts of God; (b) fire or explosion; (c) war, acts of terrorism or other civil unrest; or (d) national emergency.

 

Section 8.4 Officer's Certificate. Skylab will have delivered to the Company a certificate executed by an officer of Skylab, certifying the satisfaction by Skylab of each of the conditions specified in Sections 8.1 through 8.3 and 8.6 through 8.9.

 

Section 8.5 Skylab Shareholders' Certificate. The majority Skylab Shareholder will have delivered to the Company a certificate executed by such Skylab Shareholder, certifying the satisfaction of the conditions of the Skylab Shareholders specified in Sections 8.1, 8.2, 8.6, 8.7, & 8.8.

 

Section 8.6 Consents. All material consents, waivers, approvals, authorizations or orders required to be obtained, and all filings required to be made, by Skylab and/or the. Skylab Majority Shareholder for the authorization, execution and delivery of this Agreement and the consummation by them of the transactions contemplated by this Agreement, shall have been obtained and made by Skylab or the Skylab Shareholders, as the case may be, except where the failure to receive such consents, waivers, approvals, authorizations or orders or to make such filings would not have a Material Adverse Effect on Skylab or the Company.

 

Section 8.7 Documents. Skylab and the Skylab Shareholders shall have delivered to the Company at the Closing (a) share certificates evidencing the number of Skylab Shares held by each Skylab Shareholder (as set forth in Exhibit A), along with executed share transfer forms transferring such Skylab Shares to the Company together with a certified copy, if required, of a board resolution of Skylab approving the registration of the transfer of such shares to Company (subject to Closing); (b) each of the Transaction Documents to which Skylab and/or the Skylab Shareholders is a party, duly executed; (c) a Secretary's Certificate, dated as of the Closing Date certifying attached copies of (I) the Organizational Documents of Skylab, (ii) the resolutions of the Skylab Board approving this Agreement and the transactions contemplated hereby; and (iii) the incumbency of each authorized officer of Skylab signing this Agreement and any other agreement or instrument contemplated hereby to which Skylab is a party; (d) a Certificate of Good Standing of Skylab; and (e) and such other documents as the Company may reasonably request for the purpose of (i) evidencing the accuracy of any of the representations and warranties of Skylab and the Skylab Shareholders pursuant to Section 8.1, (ii) evidencing the performance of, or compliance by Skylab and the Skylab Shareholders with, any covenant or obligation required to be performed or complied with by Skylab or the Skylab Shareholders, as the case may be, (iii) evidencing the satisfaction of any condition referred to in this Article VIII, or (iv) otherwise facilitating the consummation or performance of any of the transactions contemplated by this Agreement.

 

Section 8.8 No Proceedings. There must not have been commenced or threatened by any third party against the Company, Skylab or any Skylab Shareholder, or against any Affiliate thereof, any Proceeding (which Proceeding remains unresolved as of the Closing Date) (a) involving any challenge to, or seeking damages or other relief in connection with, any of the transactions contemplated by this Agreement, or (b) that may have the effect of preventing, delaying, making illegal, or otherwise interfering with any of the transactions contemplated by this Agreement.

 

 

 

 

Section 8.9 No Claim Regarding Stock Ownership or Consideration. There shall not have been made or threatened by any Person any claim asserting that such Person (a) is the holder of, or has the right to acquire or to obtain beneficial ownership of the Skylab Shares or any other stock, voting, equity, or ownership interest in, Skylab, or (b) is entitled to all or any portion of the Company Shares.

 

ARTICLE IX.

CONDITIONS PRECEDENT OF COMPANY AND THE S KYLAB SHAREHOLDERS

 

Skylab and the Skylab Shareholders' obligation to transfer the Skylab Shares and the obligations of Skylab to take the other actions required to be taken by Skylab in advance of or at the Closing Date are subject to the satisfaction, at or prior to the Closing Date, of each of the following conditions (any of which may be waived by Skylab and the Skylab Shareholders jointly, in whole or in part):

 

Section 9.1 Accuracy of Representations. The representations and warranties of the Company set forth in this Agreement or in the Disclosure Schedule or in any certificate delivered pursuant hereto that are not qualified as to materiality shall be true and correct in all material aspects at and as of the Closing Date except to the extent a representation or warranty is expressly limited by its terms to another date. The representations and warranties of the Company set forth in this Agreement or in the Disclosure Schedule or in any certificate delivered pursuant hereto that are qualified- as to materiality shall be true and correct in all respects at and as of the Closing Date, except to the extent a representation or warranty is expressly limited by its terms to another date.

 

Section 9.2 Performance by the Company.

 

(a)          All of the covenants and obligations that the Company are required to perform or to comply with pursuant to this Agreement (considered collectively), and each of these covenants and obligations (considered individually), must have been performed and complied with in all respects.

 

(b)          Each document required to be delivered by the Company pursuant to this Agreement must have been delivered.

 

Section 9.3 No Force Majeure Event. There shall not have been any delay, error, failure or interruption in the conduct of the business of the Company, or any loss, injury, delay, damage, distress, or other casualty, due to force majeure including but not limited to (a) acts of God; (b) fire or explosion; (c) war, acts of terrorism or other civil unrest; or (d) national emergency.

 

Section 9.4 Certificate of Officer. The Company will have delivered to Skylab a certificate, dated the Closing Date, executed by an officer of the Company, certifying the satisfaction of the conditions specified in Sections 9.1, 9.2, 9.3, 9.9 and 9.10.

 

Section 9.5 Consents. All material consents, waivers, approvals, authorizations or orders required to be obtained, and all filings required to be made, by the Company for the authorization, execution and delivery of this Agreement and the consummation by it of the transactions contemplated by this Agreement, shall have been obtained and made by the Company , except where the failure to receive such consents, waivers, approvals, authorizations or orders or to make such filings would not have a Material Adverse Effect on Skylab or the Company.

 

 

 

 

Section 9.6 Documents. Company must have caused the following documents to be delivered to Skylab and/or the Skylab Shareholders:

 

(a)          Share certificates evidencing Company's portion of the Exchange Shares (as set forth in Exhibit A);

 

(b)          a Secretary's Certificate, dated as of the Closing Date certifying attached copies of (A) the Organizational Documents of the Company, (B) the resolutions of the Company Board approving this Agreement and the transactions contemplated hereby; and (C) the incumbency of each authorized officer of the Company signing this Agreement and any other agreement or instrument contemplated hereby to which the Company is a party;

 

(c)          a Certificate of Good Standing of the Company;

 

(d)          each of the Transaction Documents to which the Company is a party, duly executed; and

 

(e)          such other documents as Skylab may reasonably request for the purpose of (1) evidencing the accuracy of any representation or warranty of Company pursuant to Section 9.1, (ii) evidencing the performance by the Company of, or the compliance by the Company with, any covenant or obligation required to be performed or complied with by, the Company, (iii) evidencing the satisfaction of any condition referred to in this Article IX, or (iv) otherwise facilitating the consummation of any of the transactions contemplated by this Agreement.

 

Section 9.7. No Proceedings. Since the date of this Agreement, there must not have been commenced or threatened against Company, or against any Affiliate thereof, any Proceeding (which Proceeding remains unresolved as of the Closing Date) (a) involving any challenge to, or seeking damages or other relief in connection with, any of the transactions contemplated hereby, or (b) that may have the effect of preventing, delaying, making illegal, or otherwise interfering with any of the transactions contemplated hereby.

 

Section 9.8 No Claims Regarding Stock Ownership. There shall not have been made or threatened by any Person any claim asserting that such Person is the holder of, or has the right to acquire or to obtain beneficial ownership of Company Common Stock or any other stock, voting, equity, or ownership interest in Company.

 

ARTICLE X.

TERMINATION

 

Section 10.1 Termination. This Agreement may be terminated at any time prior to the Closing Date:

 

(a)          by mutual written agreement of the parties;

 

(b)          by Company, if Skylab or any Skylab Shareholder has committed a material breach of any provision of this Agreement that has not been cured within thirty (30) days of written notice of such material breach;

 

(c)          by Skylab or any Skylab Shareholder, if Company has committed a material breach of any provision of this Agreement that has not been cured within thirty (30) days of written notice of such material breach;

 

(d)          by any party hereto, if an order, decree, ruling, judgment or injunction has been entered by any Governmental Authority of competent jurisdiction permanently restraining, enjoining or otherwise limiting, or prohibiting the consummation of the transaction, contemplated by this Agreement and such order, decree, ruling, judgment or injunction has become final and non-appealable; or

 

 

 

 

(e) automatically without any action by any party, if the Closing has not occurred on or before August 1, 2017.

 

Section 10.2 Effect of Termination. If this Agreement is terminated as provided in Section 10.1, then all further obligations under this Agreement shall terminate and no party hereto shall have any liability in respect of the termination of this Agreement; provided, however, that the confidentiality obligations of each party described in Section 12.3 will survive any such termination; provided further that no such termination will relieve any party from liability for any breach of any representation, warranty, covenant or agreement set forth in this Agreement prior to such termination and in the event of such breach, the parties to this Agreement shall be entitled to exercise any and all remedies available under law or equity in accordance with this Agreement and, if such termination resulted from a breach of any covenant in this Agreement by the breaching party(ies), the non-breach party(ies) shall be entitled to be reimbursed by the breaching party(ies) for any and all reasonable out-of-pocket expenses incurred by such non-breaching part(ies) in connection with this Agreement, the transactions contemplated hereby and/or such breach of covenant.

 

ARTICLE XI.

INDEMNIFICATION; REMEDIES

 

Section 11.1 Survival. All representations, warranties, covenants, and obligations in this Agreement shall expire on the first (1st) anniversary of the date this Agreement is executed (the "Survival Period"). The right to indemnification, payment of Damages or other remedy based on such representations, warranties, covenants, and obligations will not be affected by any investigation conducted with respect to, or any knowledge acquired (or capable of being acquired) at any time, whether before or after the execution and delivery of this Agreement, with respect to the accuracy or inaccuracy of or compliance with, any such representation, warranty, covenant, or obligation. The waiver of any condition based on the accuracy of any representation or warranty, or on the performance of or compliance with any covenant or obligation, will not affect the right to indemnification, payment of Damages, or other remedy based on such representations, warranties, covenants, and obligations.

 

Section 11.2 Indemnification by the Skylab Shareholders. From and after the execution of this Agreement until the expiration of the Survival Period, each of the Skylab Shareholders shall indemnify and hold harmless the Company (the "Company Indemnified Parties") from and against any Damages arising, directly or indirectly, from or in connection with:

 

(a)          Any misrepresentation or breach of warranty made by Skylab or the Skylab Shareholders in this Agreement or in any certificate delivered by Skylab or the Skylab Shareholders pursuant to this Agreement;

 

(b)          any breach by Skylab or the Skylab Shareholders of any covenant or obligation of Skylab or the Skylab Shareholders in this Agreement required to be performed by Skylab or the Skylab Shareholders on or prior to the Closing Date; or

 

(c)          any and all Damages against Skylab or the Skylab Shareholders, occurring on or prior to the Closing Date.

 

Section 11.3 Limitations on Liability. No Company Indemnified Party shall be entitled to indemnification pursuant to Section 10.2, unless and until the aggregate amount of Damages to all Company Indemnified Parties with respect to such matters under Section 10.4 exceeds $10,000, at which time, the Company Indemnified Parties shall be entitled to indemnification for the total amount of such Damages in excess of $10,000.

 

 

 

 

Section 11.4 Determining Damages. Materiality qualifications to the representations and warranties of Skylab and the Skylab Shareholders shall not be taken into account in determining the amount of Damages occasioned by a breach of any such representation and warranty for purposes 6f determining whether the aggregate damage threshold set forth in Section 10.3 has been met.

 

ARTICLE XII.

GENERAL PROVISIONS

 

Section 12.1 Expenses. Except as otherwise expressly provided in this Agreement, each party to this Agreement will bear its respective expenses incurred in connection with the preparation, execution, and performance of this Agreement and the transactions contemplated by this Agreement, including all fees and expenses of agents, representatives, counsel, and accountants. In the event of termination of this Agreement, the obligation of each party to pay its own expenses will be subject to any rights of such party arising from a breach of this Agreement by another party.

 

Section 12.2 Public Announcements. The Company shall promptly, but no later than three (3) days following the execution of this Agreement by Company and Skylab, issue a press release disclosing the transactions contemplated hereby. Prior to the Closing Date, Skylab and the Company shall consult with each other in issuing any other press releases or otherwise making public statements or filings and other communications with the Commission or any regulatory agency or stock market or trading facility with respect to the transactions contemplated hereby, and neither party shall issue any such press release or otherwise make any such public statement, filings or other communications without the prior written consent of the other, which consent shall not be unreasonably withheld or delayed, except that no prior consent shall be required if such disclosure is required by law, in which case the disclosing party shall provide the other party with prior notice of such public statement, filing or other communication and shall incorporate into such public statement, filing or other communication the reasonable comments of the other party.

 

Section 12.3 Confidentiality.

 

(a)          Subsequent to the date of this Agreement, the Company, the Skylab Shareholders and Skylab will maintain in confidence, and will cause their respective directors, officers, employees, agents, and advisors to maintain in confidence, any written, oral, or other information obtained in confidence from another party in connection with this Agreement or the transactions contemplated by this Agreement, unless (i) such information is already known to such party or to others not bound by a duty of confidentiality or such information becomes publicly available through no fault of such party, (ii) the use of such information is necessary or appropriate in making any required filing with the Commission, or obtaining any consent or approval required for the consummation of the transactions contemplated by this Agreement, or (iii) the furnishing or use of such information is required by or necessary or appropriate in connection with legal proceedings.

 

(b)          In the event that any party is required to disclose any information of another party pursuant to Section (ii) or (iii) of Section 12.3(a), the party requested or required to make the disclosure (the "disclosing party") shall provide the party that provided such information (the "providing party") with prompt notice of any such requirement so that the providing party may seek a protective order or other appropriate remedy and/or waive compliance with the provisions of this Section 12.3. If, in the absence of a protective order or other remedy or the receipt of a waiver by the providing party, the disclosing party is nonetheless, in the opinion of counsel, legally compelled to disclose the information of the providing party, the disclosing party may, without liability hereunder, disclose only that portion of the providing party's information which such counsel advises is legally required to be disclosed, provided that the disclosing party exercises its reasonable efforts to preserve the confidentiality of the providing party's information, including, without limitation, by cooperating with the providing party to obtain an appropriate protective order or other relief assurance that confidential treatment will be accorded the providing party's information.

 

 

 

 

(c)          If the transactions contemplated by this Agreement are not consummated, each party will return or destroy as much of such written information as the other party may reasonably request.

 

Section 12.4 Notices. All notices, consents, waivers, and other communications under this Agreement must be in writing and will be deemed to have been duly given when (a) delivered by hand (with written confirmation of receipt), (b) sent by telecopier (with written confirmation of receipt), or (c) when received by the addressee, if sent by a nationally recognized overnight delivery service (receipt requested), in each case to the appropriate addresses and telecopier numbers set forth below (or to such other addresses and telecopier numbers as a party may designate by written notice to the other parties):

 

If to Company:

Skylab USA, Inc.

5600 Avenida Encinas, Suite 140C

Ft. Lauderdale, FLA 92008

 

If to Skylab or the Skylab Shareholders:

Skylab Apps Inc.

5600 Avenida Encinas, Suite 140C

Carlsbad, CA 92008

 

Section 12.5 Further Assurances. The parties agree (a) to furnish upon request to each other such further information, (b) to execute and deliver to each other such other documents, and (c) to do such other acts and things, all as the other party may reasonably request for the purpose of carrying out the intent of this Agreement and the documents referred to in this Agreement.

 

Section 12.6 Waiver. The rights and remedies of the parties to this Agreement are cumulative and not alternative. Neither the failure nor any delay by any party in exercising any right, power, or privilege under this Agreement or the documents referred to in this Agreement will operate as a waiver of such right, power, or privilege, and no single or partial exercise of any such right, power, or privilege will preclude any other or further exercise of such right, power, or privilege or the exercise of any other right, power, or privilege. To the maximum extent permitted by applicable law, (a) no claim or right arising out of this Agreement or the documents referred to in this Agreement can be discharged by one party, in whole or in part, by a waiver or renunciation of the claim or right unless in writing signed by the other party; (b) no waiver that may be given by a party will be applicable except in the specific instance for which it is given; and (c) no notice to or demand on one party will be deemed to be a waiver of any obligation of such party or of the right of the party giving such notice or demand to take further action without notice or demand as provided in this Agreement or the documents referred to in this Agreement.

 

 

 

 

Section 12.7 Entire Agreement; Modification. This Agreement supersedes all prior agreements among the parties with respect to its subject matter and constitutes (along with the documents referred to in this Agreement) a complete and exclusive statement of the terms of the agreement among the parties with respect to its subject matter. This Agreement may not be amended except by a written agreement executed by all of the parties.

 

Section 12.8 Assignment; Successors; and Third Party Beneficiaries. No party may assign any of its rights under this Agreement without the prior consent of the other parties. Subject to the preceding sentence, this Agreement will apply to, be binding in all respects upon, and inure to the benefit of and be enforceable by the respective successors and permitted assigns of the parties. Except as set forth in Section 7.1, nothing expressed or referred to in this Agreement will be construed to give any Person other than the parties to this Agreement any legal or equitable right, remedy, or claim under or with respect to this Agreement or any provision of this Agreement. This Agreement and all of its provisions and conditions are for the sole and exclusive benefit of the parties to this Agreement and their successors and assigns.

 

Section 12.9 Severability. If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of the Agreement will remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.

 

Section 12.10 Section Headings: Construction. The headings of Sections and Articles in this Agreement are provided for convenience only and will not affect its construction or interpretation, All references to "Section", "Sections", "Article" or "Articles" refer to the corresponding Section, Sections, Article, or Articles of this Agreement. All word used in this Agreement will be construed to be of such gender or number as then circumstances require. Unless otherwise expressly provide, the word "including" does not limit the preceding words or terms.

 

Section 12.11 Governing Law. This Agreement will be governed by the laws of the State of California without regard to conflicts of law principles. Each party hereby irrevocably waives personal service of process and consents to being served in any such suit, action, or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. The parties hereby waive all rights to a trial by jury. If either party shall commence an action or proceeding to enforce any provisions of this Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its reasonable attorneys' fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.

 

Section 12.12 Attorney Review. The Parties acknowledges that this Agreement will have important legal consequences and imposes significant requirement on each Party. Accordingly, the Parties acknowledge that they have retained legal counsel to review this Agreement and that each Party has been provided with adequate time to obtain such review.

 

Section 12.13 No Other Representations. Except for the representations and warranties contained in this Agreement, neither Party shall rely on any other representations, warranties, promises, claims or any other disclosures other than those expressly made in this Agreement.

 

 

 

 

Section 12.14 Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement.

 

IN WITNESS WHEREOF, the parties have executed and delivered this Share Exchange Agreement as of the date first written above.

 

SKYLAB USA, INC. ("Company")

 

/s/ Boris Nayflish

By: Boris Nayflish

Its: Director and Secretary

 

 

 

SKYLAB APPS INC. ("Skylab")

 

/s/ Dean Grey

Dean Grey, Sole Director and President

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SKYLAB USA, INC. and SKYLAB APPS, INC.

 

SHARE EXCHANGE AGREEMENT

 

EXHIBITS & SCHEDULES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXHIBIT A

 

SHARE EXCHANGE TABLE WITH LIST OF SHAREHOLDERS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

#	NAME	ADDRESS	SSN	Skylab Ap Shares	Restriction	Price Per Share in $	% Owned	Affiliate	Skylab USA Exchange Shares
1	2003 David & Sarah Vanderveen Family Trust			50,000	Restricted	$0.20	0.15%		36,334
2	Albert & Monica Bae			153,260	Restricted	$0.20	0.45%		111,372
3	Albert Bae			50,000	Restricted	$0.20	0.15%		36,334
4	Albert Chen			10,000	Restricted	$0.20	0.03%		7,267
5	Alex McCarthy			50,000	Restricted	$0.20	0.15%		36,334
6	Alex Wong			68,805	Restricted	$0.20	0.20%		50,000
7	Alexi Ohre			84,374	Rule 144	$0.20	0.25%		61,314
8	Andrew Murphy			1,000,000	Rule 144	$0.20	2.91%		726,690
9	Andrew Phillip Hartman			250,000	Rule 144	$0.20	0.73%		181,672
10	Andy Dellenbach			25,000	Rule 144	$0.20	0.07%		18,167
11	Bartlett Consulting Group, LLC			350,000	Rule 144	$0.20	1.02%		254,341
12	Bill Harris			635,319	Rule 144	$0.20	1.85%		461,680
13	Boris Nayflish			500,000	Rule 144	$0.20	1.45%	YES	363,345
14	Brittany Doster			126,562	Rule 144	$0.20	0.37%		91,971
15	Bruno Barbieri			218,750	Rule 144	$0.20	0.64%		158,963
16	Bryan Farris			1,660,500	Rule 144	$0.20	4.83%		1,206,669
17	Dan Kosage			25,000	Rule 144	$0.20	0.07%		18,167
18	Daniel H. Adler			50,000	Rule 144	$0.20	0.15%		36,334
19	David Vanderveen			313,906	Rule 144	$0.20	0.91%		228,112
20	DBRP Holdings, LTD			4,981,500	Rule 144	$0.20	14.48%	YES	3,620,006
21	Dean Grey			14,619,046	Rule 144	$0.20	42.49%	YES	10,623,518
22	Dennis Gardner			17,201.	Rule 144	$0.20	0.05%		12,500
23	DIRT Enterprises LLLP			100,000	Rule 144	$0.20	0.29%		72,669
24	DJA LLLP			100,000	Rule 144	$0.20	0.29%		72,669
25	Doug Sutton			25,000	Rule 144	$0.20	0.07%		18,167
26	Dr. Michael Orian			100,000	Rule 144	$0.20	0.29%		72,669
27	Ferris Thompson			25,000	Rule 144	$0.20	0.07%		18,167
28	Fresh Notion			70,000	Rule 144	$0.20	0.20%		50,868
29	Fresh Notion Financial Services			130,000	Rule 144	$0.20	0.38%		94,470
30	George Plsek			133,333	Rule 144	$0.20	0.39%		96,892
31.	Glen Rogers			25,000	Rule 144	$0.20	0.07%		18,167
32	Goldman Investments Group			1,720,128	Rule 144	$0.20	5.00%		1,250,000
33	Greg Rex			25,000	Rule 144	$0.20	0.07%		18,167
34	Heather Hollander			37,500	Rule 144	$0.20	0.11%		27,251
35	Jasmine Bacchus			100,000	Rule 144	$0.20	0.29%		72,669
36	Jeremy Wong			500,000	Rule 144	$0.20	1.45%		363,345
37	Jill Hosafros			2,500	Rule 144	$0.20	0.01%		1,817
38	John Blaisure			75,000	Rule 144	$0.20	0.22%		54,502
39	Jonathan Segal			383,312	Rule 144	$0.20	1.11%		278,549
40	Joseph Daniel Kosage			75,000	Rule 144	$0.20	0.22%		54,502
41	Karen Reffner			10,000	Rule 144	$0.20	0.03%		7,267
42	Kyle McCarthy			50,000	Rule 144	$0.20	0.15%		36,334
43	Lauren Nicole Peters			40,625	Rule 144	$0.20	0.12%		29,522
44	Leopoldo Enrique Alcala			130,000	Rule 144	$0.20	0.38%		94,470
45	Leopoldo Enrique Alcala			670,000	Rule 144	$0.20	1.95%		486,882
46	Lewis Humer Jr.			100,000	Rule 144	$0.20	0.29%		72,669

 

 

47	Lisa Pennington			50,000	Rule 144	$0.20	0.15%		36,334
48	Lorrie Edelbute			100,000	Rule 144	$0.20	0.29%		72,669
49	Maira Barriga			34,403	Rule 144	$0.20	0.10%		25,000
50	Martha E. Martin			25,000	Rule 144	$0,20	0.07%		18,167
51	Matthew Winkle			10,000	Rule 144	$0.20	0.03%		7,267
52	Melissa Sutherland			37,500	Rule 144	$0.20	0,11%		27,251
53	Michael S. Jaffe			65,653	Rule 144	$0.20	0.19%		47,709
54	Michael S. Jaffe			317,659	Rule 144	$0,20	0.92%		230,840
55	Mikefilsaime.com, Inc.			150,000	Rule 144	$0.20	0.44%		109,003
56	Mind Movies, LLC			150,000	Rule 144	$0.20	0.44%		109,003
S7	Patrick Daly			18,750	Rule 144	$0.20	0.05%		13,625
58	Paul Becker			50,000	Rule 144	$0.20	0.15%		36,334
59	Rich Van Every			20,000	Rule 144	$0.20	0.06%		14,534
60	Robert Burns			25,000	Rule 144	$0.20	0.07%		18,167
61	Ronald William Kosage			100,000	Rule 144	$0.20	0.29%		72,669
62	Sasha Treviso			25,000	Rule 144	$0.20	0.07%		18,167
63	Sean Farris			10,000	Rule 144	$0,20	0.03%		7,267
64	SML Avvocati PC			100,000	Rule 144	$0.20	0.29%		72,669
65	Stephen E. Wolf			150,000	Rule 144	$0.20	0.44%		109,003
66	Steve Dolan			10,000	Rule 144	$0.20	0.03%		7,267
67	Tahoe Industries			344,026	Rule 144	$0.20	1.00%		250,000
68	Talon Partnerships & Events, LLC (Mike Pine)			400,000	Rule 144	$0.20	1.16%		290,676
69	Tobias Nergarden			338,956	Rule 144	$0.20	0.99%		246,316
70	Tony Cerqueria			130,000	Rule 144	$0.20	0.38%		94,470
71	Vincent Ramos			153,875	Rule 144	$0.20 ,	0.45%		111,819
			TOTAL [A]     32,682,443			TOTAL [B]     23,750,000
			Ratio = [A] /[B]     1.3761 to 1			I/O AFTER EXCHANGE   25,000,000

 

 

 

 

EXHIBIT B

 

SHORT FORM SHARE EXCHANGE AGREEMENT

 

MINORITY SHAREHOLDERS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SCHEDULES

 

SHARE EXCHANGE AGREEMENT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Schedule 5.13 No Undisclosed Liabilities

 

Case was filed against Skylab Apps, Inc. in U.S. District Court, Southern District of California (San Diego) on 5/26/2017 in the amount of $221,000 claiming breach of contract by failing to pay plaintiff for software development services. Skylab management does not believe they have a case and at this point have not been formally served.

 

Schedule 5.14 Taxes

 

2016 Federal and California State in Process at June 1, 2017
$1,600 State Tax Payable on Balance Sheet

 

Schedule 5.15 Contracts: no defaults

 

(i)       Contracts at June 1, 2017

 

CLIENT NAME	CONTRACT DATE	TERMS	CONTRACTED AMOUNT	TOTAL PAID TO DATE	MONTHLY LICENSING FEE
The Cheer App	7/28/2016	2 year	$50,000.00	$50,000	$300
Skylab Medical	4/30/2016	2 year	60,000.00	60,000	300.00
Blowbunny/Beauty Bomb	10/11/2016	NA	1,500.00	1,500.00	0.00
Allysian	3/28/16	NA	630,648.00	554,452.00	1,500.00
Centerpointe	11/30/16	2 years	135,000.00	110,000.00	0.00
'Good Lovin'	2/10/17	2 years	10,500.00	10,500.00	300.00
Trilogy Game	2/10/17	2 years	85,000.00	50,000.00	300.00
Mindmovies	03/08/2017	2 years	12,000.00	12,000.00	300.00
Better Planet
Paper	01/01/2017	2 years	60,000.00	40,000.00	300.00
TUG	03/10/2017	2 years	25,000.00	25,000.00	300.00
Christy Whitman	12/10/2016	2 years	15,000.00	15,000.00	300.00
Russell Brunson	05/08/2017	2 Years	10,000.00	10,000.00	300.00
Jack Canfield	02/15/2017	2 years	30,400.00	7,500.00	300.00
Gravity	01/31/2017	2 Years	15,000.00	10,000.00	300.00
ABC College
Planning	02/08/2017	2 Years	20,000.00	20,000.00	300.00
Poison Ivy	02/08/2017	2 years	15,000.00	15,000.00	300.00
URBN	12/09/2016	2 years	19,000.00	19,000.00	0.00
Revive	2/17/2017	2 years	20,000.00	10,000.00	300.00

 

 

 

 

Stork	4/25/17	2 years	15,000.00	0.00	300.00
Trunited	10/10/2016	NA	50,000.00	50,000.00	300.00
XS Energy/Aiticor	09/08/2016	NA	70,000.00	70,000.00	0.00
Amway	8/12/2015	NA	15,000.00	15,000.00	0.00
Diet App	NA	NA	50,000.00	0.00	0.00
Give	12/14/2015	NA	12,500.00	12,500.00	0.00
The Dance App	NA	NA	50,000.00	0.00	0.00
		TOTALS	$1,476,548	$1,167,452	$6,300

 

(ii)       NA

(iii)      NA

(iv)      Make Lease March 1, 2017 — 38 month lease for Commercial Office Space

a.    Year 1- $8,200

b.    Year 2 - $8,487

c.    Year 3 - $8,784

(v)      All Contractors and Consultants have NDA's in place.

(vi)     NA

(vii)    NA

(viii)   Cheer has one year from public launch, exclusivity in the Cheer space

           Greenlife has a one year exclusive in the cannabis industry from the date of public launch

           SkyMedical has a one year exclusive for the concierge medicine

(ix)      We have a sales commission plan for all sales personnel and we have an ambassador referral plan for outside referrals

(x) NA

(xi) NA

(xii) NA — Furniture, not signed

(xiii) NA

(xiv) NA

(xv) TRUE

(xvi) Yes

(xvii) Yes

(xviii) YES

(xix) YES

(xx) YES

(xxi) YES

 

 

Schedule 5.16 Employees

 

At June 1, no employees. This is a complete list of current and pending Contractors on June 1, 2017.

 

Contractors at June 1, 2017
Name	Start Date	Department	Payable	Paid
In House
Dean Grey	09/15	Chief Executive Officer	$15,000	$6,000
Patrick Daly	01/17	Chief Financial Officer	$8,500	$6,000
George Plsek	03/17	Chief Technology Officer	$6,500	$0
Ferris Thompson	06/17	Chief Revenue Officer	17,500	$0
Andy Dellenbach	06/17	Chief Sales Officer	17,500	$0
Lauren Peters	12/16	Chief Product Officer	$5,000	$5,000
Bryan Farris	09/15	VP of Development	$5,000	$5,000
Leo Alcala	09/15	Lead Designer	$7,000	$7,000
Brittany Doster	09/15	Skylab Stylist	$3,583	$3,583
Alexi Ohre	09/15	Developer PM & QA	$2,800	$2,800
Steven Wolf	11/16	Sales & Marketing	$4,500	$4,500
Heather Hollander	12/16	Client Engagement	$5,000	$5,000
Matthew Frouin	02/17	Intern - Design an Assistant	$750	$750
Russell Burns	05/17	Intern - Developer API	$1,000	$1,000
			$64,633	$45,633
Developers
Diego Aguilera	11/16	Developer - API	$3,000	$3,000
Kevin Arce	05/16	Developer - API	$2,000	$2,000
Maurico Reyes	4/17	Developer - API	$5,600	$5,600
Mateo Perez	05/16	Developer - Web	$800	$800
Max Rondon	01/17	Developer - Web	$5,600	$5,600
Hugo Garcia	05/16	Developer - Web	$700	$700
Vincent Villalta	10/16	Developer - iOS	$3,500	$3,500
Prem Dayal	11/16	Developer - iOS	$2,500	$2,500
Jose Arce	09/16	Developer - Android	$2,500	$2,500
Daniel Sierra	01/17	Developer - Android	$2,000	$2,000
			$28,200	$28,200

 

 

Schedule 5.17 Agreements Intellectual Property

 

(vii)   no exceptions

 

(viii)  Provisional Patent Filed April 7, 2017 EFS ID: 28871631, Application #62483292 Dynamic Computing Systems, Method and Process

 

(xii) No Trademarks

 

(xvi) No Copyrights

 

(xix) Trade Secrets — Yes

 

Schedule 5.19 Relationship with Related Persons

 

(i)       Dean Grey has ownership in the following clients of Skylab:

a.

Cheer Life 30%

b.

Dance App 30%

c.

The Green Life — 24%

d.

Skylab Medical — 30%

e.

Allysian — 2%

f.

Good Lovin — 1%

g.

Gravity (VAR) — 5%

h.

Silver Surfer (Vendor) — Dean Grey does consulting for Silver Surfer

i.

Dean Grey advanced the company $11,570.20 (See account due to/due from) that amount was paid back during the calendar year ended 12/31/2016.

 

Schedule 5.23 No Material Adverse Effect

 

(i)        None

(ii)       None

 

 

 

 

 

 

 

 

Exhibit 23.1

 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

We hereby consent to the use in this Registration Statement on Form S-1 of our report dated July 24, 2018 relating to the audited consolidated financial statements for the year ending December 31, 2017 of Skylab Apps, Inc.

 

We also consent to the reference to our Firm under the caption "Experts" in the Registration Statement.

 

/s/ L&L CPAS, PA

L&L CPAS, PA

September 10, 2018

Exhibit 23.2

 

 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors and Stockholders

Skylab USA, Inc.

 

We hereby consent to the use in this Registration Statement on Form S-1 of Skylab USA, Inc. of our report dated December 4, 2017, relating to our audit of the financial statements of Skylab Apps, Inc. as of and for the years ended December 31, 2016 and 2015 appearing in the Prospectus, which is part of this Registration Statement. We also consent to the reference to our firm under the caption “Experts” in such Prospectus.

 

Dave Banerjee, CPA, an Accountancy Corporation

 

Dave Banerjee CPA, an Accountancy Corporation

Woodland Hills, CA

September 10, 2018