We are raising up to $1.2 million through the sale of up to $1,200,000 of convertible promissory notes (“Offered Notes”). The Offering is being made pursuant to an exemption from registration under Rule 506(c) of Regulation D of Section 402(a)(2) of the Securities Act.
The Offered Notes will pay investors simple annualized interest of 10% and shall be convertible into shares of common stock at a discount of 50% to a Qualified Financing. The Offering is open to accredited investors only, subject to a minimum investment of $20,000. Proceeds will be used for inventory, sales and marketing, further product development and general working capital purposes. We expect the proceeds from the Offered Notes, if the maximum offering is achieved, to be sufficient to operate our business through April 2019. We plan to undertake a follow-on offering in the second quarter of 2019 to raise an additional $1,500,000 (the “Qualified Financing”) for expansion and working capital.
The Offered Notes will automatically convert, principal and interest, upon the closing of the planned Qualified Financing.
Under Rule 506(c), issuers may offer securities through means of general solicitation, provided that:
• all purchasers in the offering are accredited investors,
• the issuer takes reasonable steps to verify their accredited investor status, and
• certain other conditions in Regulation D are satisfied.
This Offering is limited to accredited investors only
An “accredited investor” is:
• a bank, insurance company, registered investment company, business development company, or small business investment company;
• an employee benefit plan (within the meaning of the Employee Retirement Income Security Act) if a bank, insurance company, or registered investment adviser makes the investment decisions, or if the plan has total assets in excess of $5 million;
• a tax exempt charitable organization, corporation or partnership with assets in excess of $5 million;
• a director, executive officer, or general partner of the company selling the securities;
• an enterprise in which all the equity owners are accredited investors;
• an individual with a net worth of at least $1 million, not including the value of his or her primary residence;
• an individual with income exceeding $200,000 in each of the two most recent calendar years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year; or
• a trust with assets of at least $5 million, not formed only to acquire the securities offered, and whose purchases are directed by a person who meets the legal standard of having sufficient knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of the prospective investment.