Cannabis Social Media Platform
“Your diversified entry into the cannabis industry”
Invest in the World’s Largest Cannabis Social Media and Networking Platform
Few industries in modern times show such extraordinary growth potential as does cannabis. Investors may be rushing in for opportunity, but targeting a great buy has not been easy. Cannabis has emerged as a highly fractionalized industry comprised of numerous small entities, each specialized in growing, supplying or dispensing product within its state boundaries. Hundreds, perhaps thousands of entrepreneurs have entered the space, all seeking their own slice of what’s becoming a very big pie. But big slices won’t come easy.
Over the next six years, the U.S. legal marijuana market is projected to more than double from $12.9 billion in 2019 to $26.3 billion.1
An investment in BudTrader allows you to participate in the cannabis industry. As an online platform, it connects the entire industry from grower to consumer and across state boundaries. BudTrader serves a growing base of two million active subscribers and now ranks as the largest and most active social network of its kind.2
BudTrader seeks new investors to prepare for scaling its operations to a growing national audience and subscriber base. Fifty-five million Americans self-report as having used marijuana recreationally at least once in the prior year, 35 million report regular use.3 As marijuana legalization spreads nationwide, the opportunity for BudTrader to grow its current two million subscriber base is significant. International markets also hold further prospects for growth as cannabis acceptance increases worldwide.
BudTrader’s underlying technology is already in place. Its has been in operation for over 31 months, amassed $2 million in revenues4 in the last two years and was profitable. As legalization trends expand market size, BudTrader intends to keep pace with all market growth, expand proportionately, and become more efficiently profitable. BudTrader’s position in today’s marijuana market presents a growth opportunity for entry- level, pre-IPO participation.
7 Key Reasons to Consider Investing
- Growing IndustryThe cannabis industry is poised for growth as more and more states move to legalize either medically or recreationally. Trends in legalization alone can propel this market to a projected $26.3 billion by 2025.1
- DiversificationOf the hundreds, perhaps thousands of growers, distributors, dispensaries, etc. only a handful are likely to survive and prosper. Most are likely to become fatal casualties in the fierce competition for a piece of this market. BudTrader’s diversified involvement in all things cannabis mitigates this risk.
- A Platform For All Cannabis BusinessesPromotional opportunities for companies operating in the cannabis space remain highly restricted. BudTrader removes these barriers. It provides a marketing platform for any cannabis-related business and connects them to millions of consumers.
- The World’s Largest Cannabis Social CommunityBudTrader has already established a firm base of two million subscribers on its social network, by far the largest of its kind.2 In the United States alone, 55 million persons report having used marijuana in the last year, a 27-fold growth opportunity for BudTrader.3
- Experienced Management TeamBudTrader’s management team has deep roots in the cannabis space. That experience and more important, the connections to leaders both inside and outside the space provides a firm foundation for growth and market dominance.
- User Friendly PlatformBudTrader modeled its social networking technology after the proven successful platform that propelled Facebook to market dominance and immense profitability. End users are predisposed to quickly take advantage of BudTrader’s features.
- Very Limited OpportunityBudTrader is seeking a limited number of pre-IPO investors to be fully prepared for the anticipated growth that can be projected over the next few years. Due to current investor interest in all things cannabis, the opportunity to invest is limited. Investors openings will be closed immediately upon achieving goal. Prompt action is highly recommended.
How to Invest
Step one: Sign-up for
Equifund and review
the educational materials
Step two: Review the
company's offering page
Step three: Click on
the Invest Now button
Step four: Fill out
and sign a form
Client Success Stories
What BudTrader offers is a very open forum for people to exchange ideas, communicate and post ads. It’s been very helpful to us in promoting our business and expanding our network and things like that.
-Irena Raskin, CEO of My Best Bud
About the Company
BudTrader is a marketing and communications platform for the cannabis industry and community. The platform has over two million registered users who can network and post ads for legal cannabis products, services, events, and jobs. BudTrader services over 200,000 cannabis businesses and is available to users in the US, Canada and Puerto Rico.
- BudTrader has grown to more than 2 million registered users and stands as a pillar in the pro-cannabis movement.
- BudTrader has generated $2 million4 in revenue in the last 24 months and plans to aggressively expand its revenues.
- BudTrader added over 1,000 user accounts per day in the last 30 days.
- 2 million users in the US, 100,000 users in Canada, and 3,000 users in Puerto Rico.
- 200,000 businesses rely on BudTrader to start and grow their companies and connect with consumers.
|Offering Type||Price Per Share||Minimum||Valuation (pre-money)|
|Regulation CF||$1.25||$420||$16 million|
BudTrader reaches 750,000 registered users
BudTrader expands to Puerto Rico
BudTrader and NFL conduct NFLPA study
BudTrader expands to Canada
BudTrader reaches 1 million registered users
BudTrader invited to Washington DC to meet Congress and lawmakers to advocate for the Farm Bill and discuss legal cannabis at the federal level
BudTrader launches BudTrader Arcade
BudTrader reports over $2M4 in total revenue trailing 24 months
BudTrader reaches 2 million registered users in 29 states
BudTrader.com announces it is expanding into Missouri to meet demand from newly passed legislation legalizing medical marijuana.
“Missouri offers tremendous potential for BudTrader and the cannabis community. It’s estimated that medical marijuana could generate $100 million in sales here by 2025,” says BudTrader founder and CEO Brad McLaughin. “We’re excited to play a crucial role in helping the industry grow, just like we’ve done in 29 other states.”
Initially, the Missouri Department of Health and Senior Services will allow 60 cultivation facilities, 192 dispensaries, and 86 medical marijuana-infused manufacturing facilities. These licenses will be issued on a blind scoring process and distributed before the end of the year.
According to HempStaff, a cannabis recruiting firm in Key Largo, Fl., legalization could create more than 7,000 new jobs in the state.
“Cannabis is the fastest growing industry in the United States. Every time we expand into a new state, we see the same thing. Our platform brings people together and it boosts the local economy. We’re looking forward to helping the cannabis industry thrive in Missouri,” McLaughlin said.
BudTrader is an advertising and networking platform with over two million registered users in the US, Canada and Puerto Rico. It connects cannabis entrepreneurs, consumers, patients and investors and allows them to post and respond to ads for products, services, events, job offers and investment opportunities for free. The company is currently raising money through Equifund CFP to accelerate its growth and support its infrastructure and technology as it expands into states like Missouri. To learn more about and participate in our capital raise, see our offering page http://equifundcfp.com/budtrader
“As the cannabis industry grows, so are we. We have plans to launch in several new states before year end as well as Europe and Australia,” says McLaughlin. “Through Equifund CFP, we have already exceeded over $75,000 in investment commitments in less than three weeks. Our average investment size is nearly double the national average and is proof that states like Missouri truly need a platform like BudTrader.”
What is Equifund CFP?
Equifund CFP allows anyone over the age of 18 to invest in a private company’s securities, debt or SAFE offering, irrespective if they are accredited or non-accredited. Equifund CFP is registered with the U.S. Securities Exchange Commission (SEC) and is a funding portal of the Financial Industry Regulatory Authority (FINRA).
What is an accredited individual?
Broadly speaking, an accredited individual can be one of the following:
- A person who can show an annual income of $200,000 individually or $300,000 jointly with their spouse (and expects to earn the same or more in the future).
- A person who has a net worth more than $1 million individually or jointly with their spouse (excluding their primary residence).
What is a non-accredited individual?
Anyone who does not meet the requirements of an accredited individual is a non-accredited individual.
What is an issuer on Equifund CFP?
An issuer on Equifund CFP is a private company that is looking to raise money through a Regulation Crowdfunding raise exemption. Regulation Crowdfunding sets the rules that administer the offer and sale of securities under new Section 4(a)(6) of the Securities Act of 1933, as amended.
Do I have to pay a fee to join Equifund CFP?
As an investor, it is free to join Equifund CFP.
How can I conduct due diligence on an offering listed with Equifund CFP?
You can conduct due diligence on an offering listed with Equifund CFP by reviewing the issuer’s dedicated offering page. The dedicated page will contain important information about the company and the terms of the subscription agreement. In addition, you may ask the company’s management team important questions in the communication forum.
How much can I invest in an offering listed with Equifund CFP?
If your annual income or net worth is less than $107,000, the investment limit during a 12-month period would be greater of $2200 or would be 5% of your annual income or net worth (whichever is less).
If your annual income and net worth are equal to or above $107,000, the investment limit during a 12-month period would be 10% of your annual income or net worth (whichever is less which should be a maximum of $107,000).
How do I invest in an offering listed with Equifund CFP?
To invest in an offering listed with Equifund CFP, navigate to the offering page and click on the “Invest Now” button. A pop-up window will appear that will ask you to verify that you have reviewed our educational materials, enter your information, Esign a subscription agreement and more. Following, you will receive instructions on how you can send your investment funds to complete your investment commitment. Your investment funds will be held by a third-party escrow agent until the issuer’s offering has closed or break escrow occurs.
*Before you invest in an offering, we strongly recommend that you review our educational materials, consult with an investment advisor and conduct your own due diligence.
What does break escrow mean?
Each offering has a target amount that must be raised before the issuer can access the funds, which is known as break escrow. When the target amount is met, the issuer can break escrow by notifying committed investors that they are closing their offering and will provide the revised early closing date. Once the 48 hours leading up to the new closing date has elapsed, the issuer will review and execute the subscription agreements and Equifund CFP will instruct the third-party escrow agent to release the funds.
Can I cancel my investment commitment?
You can cancel your investment commitment up to 48 hours before the closing of an offering, which can be found on its dedicated page. Once the offering period is within 48 hours of closing, you will not be able to cancel for any reason.
What happens when an issuer makes material changes to the offering terms?
When an issuer makes material changes to the offering terms, you will be notified by Equifund CFP. You must review the material changes and reconfirm your investment commitment within five business days. Otherwise, your investment commitment will be canceled.
Can I still invest in an offering after an issuer meets its funding target before the stated deadline?
In an issuer’s Form C, the company is required to set funding targets and a funding deadline. In addition, the company must outline if they will accept oversubscriptions. This determines whether or not they will allow prospective investors to invest after they’ve met their funding target before the stated deadline. If allowed, you may still be able to make an investment commitment.
What happen when an issuer does not meet its funding target by the stated deadline?
When an issuer does not meet its funding target by the stated deadline, your investment commitment will be refunded to you without deductions or fees. In addition, you will receive an email confirming your investment commitment has been cancelled.
What happens when an issuer’s offering has closed?
When an issuer’s offering has closed, they will review and execute the subscription agreements and have the right to accept or reject your investment commitment. Therefor, your investment commitment is not processed until it is accepted by the issuer.
What happens when an issuer accepts my investment commitment?
When an issuer accepts your investment commitment, you will receive a copy of the countersigned subscription agreement via email. In addition, you will see a record of your investment and what you received in return in your Equifund CFP dashboard.
What are the different types of offerings I can invest in on Equifund CFP?
Below are the different types of offerings that you can invest in on Equifund CFP:
- Common stock offering: Investing in a common stock offering makes you a common stockholder where you own a stake in a company. Owning a stake in the company does not always come with rights, such as voting rights and dividend rights. The company may reserve these rights for preferred stock or other stockholders. Common stock can be purchased or sold through the stock market.
It is important to understand that investing in a common stock offering makes you subject to the following risks:
- Minority shareholders have little influence: Minority shareholders are shareholders who owns less than 50% of a company’s total shares. When a vote is held on company matters, they have very little influence on the outcome.
- Lower stake claim: A lower stake claim means if a company faces bankruptcy, debt and/or other financial obligations, common stockholders are last in line to receive their share of any leftover assets (first in line are financial obligations and second are preferred stockholders).
- Down round: A down round means a company has lowered their valuation at a new financing round which will result in the reduced value of your investment.
- Dilution: Dilution means a company has issued additional shares at a new financing round which reduces your ownership percentage.
- Preferred stock offering: Investing in a preferred stock offering makes you a preferred stockholder where you own a stake in a company that typically comes with rights, such as voting rights, dividend rights and conversion rights. Preferred stockholders have a higher stake claim which means if a company faces bankruptcy, debt and/or other financial obligations, they are second in line to receive their share of any leftover assets (first in line are financial obligations). Preferred stock cannot be purchased or sold on the stock market.
- SAFE offering: Investing in a SAFE offering makes you a SAFE holder where your investment gives you the right to receive equity upon a triggering event (until then, you do not own a stake in the company). The triggering event is set by the issuer at their discretion and may be the closing of a new private financing round or sale of the company.
It is important to understand that investing in a SAFE offering makes you subject to the following risks:
- Triggering event may not occur: A triggering event may not occur which means you will not be able to convert your investment into equity. If this occurs, the issuer is not obligated to return your investment.
- Repurchase rights: The issuer may have the right to repurchase your right to receive equity which means your investment will not convert into equity.
- Dissolution rights: The issuer may dissolve and cease operations which means your investment will be impacted in some way.
- Voting rights: The issuer may not offer voting rights which means when a vote is held on company matters, you will not be able to participate.
- Convertible note offering: Investing in a convertible note offering makes you a convertible note holder where your investment can convert into equity or be repaid in cash upon a triggering event (unlike other forms of debt, you have the option to choose). The triggering event is set by the issuer at their discretion and may be the closing of a new private financing round or an initial public offering.
If you choose to convert your investment into equity, the amount of equity that you will receive may depend on the valuation of the company at their next financing round and may include a valuation cap.
It is important to understand that investing in a convertible note offering makes you subject to the following risks:
- Default risk: A default risk means the company may not be able to make any interest or principal payments resulting in the loss of your investment.
- Triggering event may not occur: A triggering event may not occur which means you will not be able to convert your investment into equity.
*Before you invest in an offering, we strongly recommend that you review our educational materials, consult with an investment advisor and conduct your own due diligence.
If I have any questions about an offering or Equifund CFP, who should I contact?
If you have any questions about an offering, we recommend that you navigate to the offering page and contact the company’s management team through the communication forum.
If you have any questions about Equifund CFP’s services or technology, we recommend that you contact us by emailing email@example.com.
Risks & Disclosures
We have a limited operating history upon which you can evaluate our performance, and accordingly, our prospects must be considered in light of the risks that any new company encounters.
We were incorporated under the laws of the State of California on June 30, 2016. We have limited operations and nominal operating revenue to date. We are in the development stage, and its future operations are subject to all of the risks inherent in the establishment of a new business enterprise. The likelihood of the success of our company must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered in connection with the development of an entity in the business of operating an Internet-based cannabis social media marketplace, a BudTrader Delivery App, our cannabis delivery app, and BudTrader TV in the competitive environment in which we operate. There can be no assurance that we will be able to generate revenues, that future revenues will be significant, that any sales will be profitable or that we will have sufficient funds available to complete its marketing and development programs or to market any new products which it may develop. We currently have operating losses, have no substantive source of operating revenue, are unable to self-finance operations, have limited resources, and there can be no assurance that we will be able to develop such revenue sources or that our operations will become profitable, even if we are able to commercialize our products and build brand awareness.
We have incurred operating losses in every quarter since we launched our business and may continue to incur quarterly operating losses, which could negatively affect the value of our company.
We have incurred operating losses in every quarter since we founded our business in 2016, and we may not be able to generate sufficient revenue in the future to generate operating income. We also expect our costs to increase materially in future periods, which could negatively affect our future operating results. We expect to continue to expend substantial financial and other resources on the continued development of our software solutions. The amount and timing of these costs are subject to numerous variables and such initiatives may require additional funding. If we fail to continue to grow the overall business and begin to generate substantive revenue, it could adversely affect our financial condition and results of operations.
We face significant competition for our Internet-based Cannabis Social Media Marketplace, a BudTrader Delivery App, our cannabis delivery app, and BudTrader TV.
The cannabis industry is highly competitive and we compete with a number of other companies that provide similar services to the cannabis industry. Our ability to compete successfully in the case of our Internet-based cannabis social media marketplace, a BudTrader Delivery App, our cannabis delivery app, BudTrader TV, and to manage our planned growth will depend primarily upon the following factors:
- maintaining continuity in our management and key personnel;
- the strength of our brand;
- increasing the productivity of our existing employees;
- effectively marketing and selling our services;
- acquiring new users for our services;
- acquiring new manufacturers, producers, consumers and advertisers on our platforms;
- improving our operational, financial and management controls;
- improving our information reporting systems and procedures; and
- the design and functionality of our services.
Many of our competitors have greater financial, technical, product development, marketing and other resources than we do. These organizations may be better known than we are and may have more customers or users than we do. Our competitors include MassRoots, Leafly, Weedmaps, Bong Appetite, Weediquette, Marijuana Man and other companies we may be unaware of. We cannot provide assurance that we will be able to compete successfully against these organizations, which may lead to lower customer satisfaction, decreased demand for our solutions, loss of market share and reduction of operating profits.
The forecasts of market growth included in our business plan and investor presentations may prove to be inaccurate, and even if the markets in which we compete achieve the forecasted growth, we cannot assure you our business will grow at similar rates, if at all.
Growth forecasts are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate. The forecasts in our business plan and investor presentations may prove to be inaccurate. Even if these markets experience the forecasted growth described in our business plan, we may not grow our business at similar rates, or at all. Our growth is subject to many factors, including our success in implementing our business strategy, which is subject to many risks and uncertainties. Accordingly, the forecasts of market growth included in our business plan should not be taken as indicative of our future growth.
In order for the Company to compete and grow, it must attract, recruit, retain and develop the necessary personnel who have the needed experience.
Recruiting and retaining highly qualified personnel is critical to our success. These demands may require us to hire additional personnel and will require our existing management personnel to develop additional expertise. We face intense competition for personnel. The failure to attract and retain personnel or to develop such expertise could delay or halt the development and commercialization of our product candidates. If we experience difficulties in hiring and retaining personnel in key positions, we could suffer from delays in product development, loss of customers and sales and diversion of management resources, which could adversely affect operating results. Our consultants and advisors may be employed by third parties and may have commitments under consulting or advisory contracts with third parties that may limit their availability to us.
Our business is subject to a variety of U.S. and international laws, rules, policies and other obligations regarding data protection.
We are subject to federal, state and international laws relating to the collection, use, retention, security and transfer of personally identifiable information. In many cases, these laws apply not only to third-party transactions, but also to transfers of information between us and other parties with which we may develop commercial relations. Several jurisdictions have passed recent laws in this area, and other jurisdictions are considering imposing additional restrictions. These laws continue to develop and may be inconsistent from jurisdiction to jurisdiction. Complying with emerging and changing international requirements may cause us to incur substantial costs or require us to change our business practices. Noncompliance could result in penalties or significant legal liability.
Our privacy policies and practices concerning the use and disclosure of data will be posted on our website. Any failure by us or other parties with whom we do business to comply with our posted privacy policies or with other federal, state or international privacy-related or data protection laws and regulations could result in proceedings against us by governmental entities or others, which could have a material adverse effect on our business, results of operations and financial condition.
Our company may not be able to effectively manage its growth or improve its operational, financial, and management information systems, which could have a material adverse effect on our business, results of operations, and financial condition.
In the near term, our company intends to expand the scope of its operations activities significantly. If our company is successful in executing its business plan, it will experience growth in its business that could place a significant strain on its business operations, finances, management and other resources. The factors that may place strain on its resources include, but are not limited to, the following:
- The need for continued development of financial and information management systems;
- The need to manage strategic relationships and agreements with manufacturers, producers, consumers, advertisers and partners; and
- Difficulties in hiring and retaining skilled management, technical, and other personnel necessary to support and manage the business.
Additionally, the strategy of our company could produce a period of rapid growth that may impose a significant burden on its administrative and operational resources. Its ability to effectively manage growth will require our company to substantially expand the capabilities of its administrative and operational resources and to attract, train, manage, and retain qualified management and other personnel. There can be no assurance that our company will be successful in recruiting and retaining new employees, or retaining existing employees.
Our company cannot provide assurances that its management will be able to manage this growth effectively. Its failure to successfully manage growth could result in its sales not increasing commensurately with capital investments or could otherwise have a material adverse effect on the business, results of operations, and financial condition of our company.
Assertions by third parties of infringement, misappropriation or other violation by us of their intellectual property rights could result in significant costs and substantially harm our business and operating results.
In recent years, there has been significant litigation involving intellectual property rights in many technology-based industries. Any infringement, misappropriation or related claims, whether or not meritorious, is time-consuming, diverts technical and management personnel and is costly to resolve. As a result of any such dispute, we may have to develop non-infringing technology, pay damages, enter into royalty or licensing agreements, cease providing our products or take other actions to resolve the claims. These actions, if required, may be costly or unavailable on terms acceptable to us. Any of these events could result in increases in operating expenses, limit our product offerings or result in a loss of business.
We may not be able to protect our intellectual property rights.
We regard our trademarks, service marks, copyrights, patents, trade secrets, proprietary technologies, domain names and similar intellectual property as important to our success. We rely on trademark, copyright and patent law, trade secret protection and confidentiality agreements with our employees, vendors, customers and others to protect our proprietary rights. We have sought and are working to possibly obtain patent protection for our delivery technologies. Many of the trademarks that we use contain words or terms having a somewhat common usage and, as a result, we may have difficulty registering them in certain jurisdictions. We have not yet obtained registrations for our most important marks. If other companies have registered or have been using in commerce similar trademarks for products similar to ours, we may have difficulty in registering, or enforcing an exclusive right to use, our marks.
There can be no assurance that our efforts to protect our proprietary rights will be sufficient or effective, that any pending or future patent and trademark applications will lead to issued patents and registered trademarks in all instances, that others will not develop or patent similar or superior technologies, products, or that our patents, trademarks and other intellectual property will not be challenged, invalidated, misappropriated or infringed by others. Additionally, the intellectual property laws and enforcement practices of other countries in which our product is or may in the future be offered may not protect our products and intellectual property rights to the same extent as the laws of the United States. If we are unable to protect our intellectual property from unauthorized use, our brand image may be harmed and our business and results of operations may suffer.
We will need additional financing to execute our business plan, which we may not be able to secure on acceptable terms, or at all.
We will require additional financing in the near and long term to fully execute our business plan. Our success depends on our ability to raise such additional financing on reasonable terms and on a timely basis. Conditions in the economy and the financial markets may make it more difficult for us to obtain necessary additional capital or financing on acceptable terms, or at all. If we cannot secure sufficient additional financing, we may be forced to forego strategic opportunities or delay, scale back or eliminate further development of our goals and objectives, operations and investments or employ internal cost savings measures.
We plan to implement new lines of business or offer new products and services within existing lines of business.
There are substantial risks and uncertainties associated with these efforts, particularly in instances where the markets are not fully developed. In developing and marketing new lines of business and/or new products and services, we may invest significant time and resources. Initial timetables for the introduction and development of new lines of business and/or new products or services may not be achieved, and price and profitability targets may not prove feasible. We may not be successful in introducing new products and services in response to industry trends or developments in technology, or those new products may not achieve market acceptance. As a result, we could lose business, be forced to price products and services on less advantageous terms to retain or attract clients, or be subject to cost increases. As a result, our business, financial condition or results of operations may be adversely affected.
Security breaches and improper access to or disclosure of our data or user data, or other hacking and phishing attacks on our systems, could harm our reputation and adversely affect our business.
Many industries are prone to cyber-attacks, including ours, with third parties seeking unauthorized access to our data or users’ data. Any failure to prevent or mitigate security breaches and improper access to or disclosure of our data or user data could result in the loss or misuse of such data, which could harm our business and reputation and diminish our competitive position. In addition, computer malware, viruses, and hacking and phishing attacks by third parties have become more prevalent in many industries and may occur on our systems in the future. Such attacks may cause interruptions to the products we provide, degrade our customers’ experience, cause customers to lose confidence in our products, or result in financial harm to us. Our efforts to protect our company data or the information we receive may also be unsuccessful due to software bugs or other technical malfunctions, employee error or malfeasance, government surveillance, or other factors. In addition, third parties may attempt to fraudulently induce employees or users to disclose information in order to gain access to our data or our customers’ data. Although we have developed systems and processes that are designed to protect our data and customer data and to prevent data loss and other security breaches, we cannot assure you that such measures will provide absolute security.
A failure to protect the integrity and security of our customers’ information could expose us to litigation, materially damage our reputation and harm our business. Furthermore, the unanticipated costs of protecting against such a failure could adversely affect our results of operations.
Our business involves the collection and use of confidential information of our customers and vendors. We cannot assure you that our efforts to protect this confidential information will be successful. If any compromise of this information security were to occur, we could be subject to legal claims and government action, experience an adverse effect on our reputation and need to incur significant additional costs to protect against similar information security breaches in the future, each of which could adversely affect our financial condition, results of operations and growth prospects. In addition, because of the critical nature of data security, any perceived breach of our security measures could cause existing or potential customers not to order our products and could harm our reputation.
The Company’s success depends on the experience and skill of the board of directors, the management team, its executive officers and key employees.
In particular, the Company is dependent on Bradley McLaughlin and Angus Stone Douglass to execute the business strategy and business plan, and to manage any employees and consultants. As the Company grows, a corporate body of knowledge will be produced and taught to other employees in order to facilitate growth. As this happens, any change in management’s ability to operate the business due to disability, illness, or for any other reason, would cause a significant loss in production capability, which would have a material adverse effect on the Company’s business and prospects.
The Company has or intends to enter into employment agreements with Bradley McLaughlin and Angus Stone Douglass although there can be no assurance that it will do so or that they will continue to be employed by the Company for a particular period of time. The loss any of the founders could harm the Company’s business, financial condition, cash flow and results of operations.
Although dependent on certain key personnel, we do not have any key man life insurance policies on any such people.
We are dependent on on Bradley McLaughlin and Angus Stone Douglass in order to conduct our operations and execute our business plan, however, we have not purchased any insurance policies with respect to those individuals in the event of their death or disability. Therefore, if either of them were to die or become disabled, we will not receive any compensation to assist with such person’s absence. The loss of either such person could negatively affect our company and its operations.
Changes in government regulation could adversely impact our business.
The media industry is subject to extensive legislation and regulation at the federal and local levels and, in some instances, at the state level. Additionally, our ads are also subject to regulation, and additional regulation is under consideration. Many aspects of such regulation are currently the subject of judicial and administrative proceedings, legislative and administrative proposals, and lobbying efforts by us and our competitors. Legislation under consideration could entirely rewrite our principal regulatory statute, and the FCC and/or Congress may attempt to change the classification of or change the way that our ads are regulated and/or change the framework under which broadcast signals are carried, remove the copyright compulsory license and changing rights and obligations of our competitors. We expect that court actions and regulatory proceedings will continue to refine our rights and obligations under applicable federal, state and local laws, which cannot be predicted. Modifications to existing requirements or imposition of new requirements or limitations could have an adverse impact on our business.
In addition, since our media operations are focused on the cannabis industry, we may become subject to various federal, state and local laws affecting the possession, consumption, production, supply and sale of cannabis and/or changes in these laws may negatively affect our business and operations. The Federal Food and Drug Administration, the Federal Drug Enforcement Agency and equivalent state agencies regulate all aspects of cannabis and the advertising and representations made by businesses in the sale of cannabis or cannabis-related products. The inability of our company to fully comply with these regulations, particularly as they evolve and are subject to varying degrees of regulatory oversight and discretion, would have material adverse effect on the business, reputation, results of operations, and financial condition of our company.
We face additional risks related to the Cannabis Industry.
As a company focused on the cannabis industry, our company faces all of the risks that are unique to operating in this emerging industry. Federal law prohibits the use of cannabis, and our business is dependent on the growth of the cannabis industry. If the current, or a future, federal administration adopts policies promoting the stricter enforcement of federal law, our business would be materially adversely affected. In addition, the cannabis industry is extremely speculative. Although a number of states have decriminalized cannabis to varying degrees and other states have created exemptions specifically for medical cannabis, it remains fully illegal in 18 states (as of January 2019). Additionally, in most states the cultivation of cannabis for personal use continues to be prohibited. Active enforcement of these state laws could have a material adverse effect on our business, operations and prospects. In addition, although we do not cultivate, dispense or sell cannabis or any derivatives of the cannabis plant, it is possible that we may be accused by federal or state agencies of violating certain laws or regulations that involve cannabis as a result of the promotion through our media platforms of those companies that do cultivate, dispense or sell cannabis. An adverse finding could have a material adverse impact on our business, operations and prospects.
Our ability to grow our business depends on state and federal laws pertaining to the cannabis industry.
Continued development of the medical-use cannabis industry depends upon continued legislative authorization of cannabis at the state level. The status quo of, or progress in, the regulated medical-use cannabis industry is not assured and any number of factors could slow or halt further progress in this area. While there may be ample public support for legislative action permitting the manufacture and use of cannabis, numerous factors impact the legislative process. For example, states that voted to legalize medical and/or adult-use cannabis in the November 2016 election cycle have seen significant delays in the drafting and implementation of regulations related to the industry. In addition, burdensome regulation at the state level could slow or stop further development of the medical-use cannabis industry, such as limiting the medical conditions for which medical cannabis can be recommended by physicians for treatment, restricting the form in which medical cannabis can be consumed, imposing significant registration requirements on physicians and patients or imposing significant taxes on the growth, processing and/or retail sales of cannabis, which could have the impact of dampening growth of the cannabis industry and making it difficult for cannabis businesses to operate profitably in those states.
FDA regulation of medical-use cannabis and the possible registration of facilities where medical-use cannabis is grown could negatively affect the medical-use cannabis industry and our financial condition.
Should the federal government legalize cannabis for medical-use, it is possible that the U.S. Food and Drug Administration, or the FDA, would seek to regulate it under the Food, Drug and Cosmetics Act of 1938. Additionally, the FDA may issue rules and regulations including certified good manufacturing practices, or cGMPs, related to the growth, cultivation, harvesting and processing of medical cannabis. Clinical trials may be needed to verify efficacy and safety. It is also possible that the FDA would require that facilities where medical-use cannabis is grown register with the FDA and comply with certain federally prescribed regulations. In the event that some or all of these regulations are imposed, we do not know what the impact would be on the medical-use cannabis industry, including what costs, requirements and possible prohibitions may be enforced. If manufacturers and distributers are unable to comply with the regulations or registration as prescribed by the FDA, this could negatively impact our financial condition.
We derive most of our revenues from the sale of advertising, and a decrease in overall advertising expenditures could lead to a reduction in the amount of advertising that companies are willing to purchase and the price at which they purchase it.
Expenditures by advertisers tend to be cyclical and have become less predictable in recent years, reflecting domestic and global economic conditions. If the economic prospects of advertisers or current economic conditions worsen, such conditions could alter current or prospective advertisers’ spending priorities. In particular, advertisers in certain industries that are more susceptible to weakness in domestic and global economic conditions, such as beauty, fashion and retail and food, account for a significant portion of our advertising revenues, and weakness in these industries could have a disproportionate negative impact on our advertising revenues. Declines in consumer spending on advertisers’ products due to weak economic conditions could also indirectly negatively impact our advertising revenues, as advertisers may not perceive as much value from advertising if consumers are purchasing fewer of their products or services. As a result, our advertising revenues are less predictable.
The SEC is monitoring the cannabis industry and may halt or prevent the Offering or sale of our securities due to the bad acts of others.
On May 16, 2014, the SEC’s Office of Investor Education and Advocacy issued an Investor Alert to warn investors about potential risks involving investments in marijuana-related companies. The SEC noted an increase in the number of investor complaints regarding marijuana-related investments. The SEC issued temporary trading suspensions for the common stock of five different marijuana-related companies. Due to the stigma created by the bad acts of others in the industry, the SEC may halt trading and offerings in all marijuana-related companies which would have a material adverse effect on our ability to raise capital and our business.
We operate in a turbulent market populated by businesses that are highly volatile.
The US market for cannabis products is highly volatile. While we believe that it is an exciting and growing market, many companies involved in cannabis products and services used to be involved in illegal activities, some still are, and many of them operate in unconventional ways. Some of these differences which represent challenges to us include not keeping appropriate financial records, inexperience with business contracts, not having access to customary business banking relationships, not having quality manufacturing relationships, and not having customary distribution arrangements. Any one of these challenges, if not managed well, could materially adversely impact our business.
Many cannabis activities, products, and services still violate law.
The legal patchwork to which cannabis companies are subject is still evolving and frequently uncertain. While we believe that anti-cannabis laws are softening and that the trend is toward legalization of cannabis products, many states and the US government still view some or all cannabis activity as illegal. Notwithstanding this uncertainty we intend to do our best to engage in activities that are unambiguously legal and to use what influence we have with our affiliates for them to do the same. But we will not always have control over those companies with whom we do business and there is a risk that we could suffer a substantial and material loss due to routine legal prosecution. Similarly, many jurisdictions have adopted so-called “zero tolerance” drug laws. If our, or our affiliates’ activities related to cannabis activities, products, and services are deemed to violate one or more federal or state laws, we may be subject to civil and criminal penalties, including fines, for aiding and abetting those activities through the provision of our software products.
Reductions in marketing sales or sales of our services will have an adverse effect on our profitability and ability to generate cash to fund our business plan.
The following factors, among others, could affect continued market acceptance and profitability of our future products:
- the introduction of competitive services;
- changes in consumer preferences among cannabis products;
- changes in consumer perception about trendy products;
- changes in consumer perception regarding the healthfulness of cannabis products;
- the level and effectiveness of our marketing efforts;
- any unfavorable publicity regarding our services or similar services;
- any unfavorable publicity regarding our brand;
- litigation or threats of litigation with respect to our services;
- any changes in government policies and practices related to our services, and markets;
- regulatory developments affecting the marketing or use of our services;
- new science or research that disputes the healthfulness of cannabis; and
- adverse decisions or rulings limiting our ability to promote the benefits of cannabis.
Adverse developments with respect sales of cannabis would indirectly reduce our user base and profitability and have a material adverse effect on our ability to maintain profitability and achieve our business plan.
We plan to obtain insurance that may not provide adequate levels of coverage against claims.
We plan to obtain insurance customary for businesses of our size and type. However, there are types of losses we may incur that cannot be insured against or that we believe are not economically reasonable to insure. Such losses could have a material adverse effect on our business and results of operations.
Establishing, maintaining, extending and expanding our reputation and brand image are essential to our business success.
We plan to establish, maintain, extend, and expand our brand image through marketing investments, including advertising and consumer promotions. Increasing attention on marketing could adversely affect our brand image. It could also lead to stricter regulations and greater scrutiny of marketing practices. Existing or increased legal or regulatory restrictions on our advertising, consumer promotions and marketing, or our response to those restrictions, could limit our efforts to maintain, extend and expand our brands. Moreover, adverse publicity about regulatory or legal action against us could damage our reputation and brand image, undermine our customers’ confidence and reduce long-term demand for our products, even if the regulatory or legal action is unfounded or not material to our operations.
In addition, our success in establishing, maintaining, extending, and expanding our brand image depends on our ability to adapt to a rapidly changing media environment. We increasingly rely on social media and online dissemination of advertising campaigns. The growing use of social and digital media increases the speed and extent that information or misinformation and opinions can be shared. Negative posts or comments about us, our brands or products marketed on our platform or on social or digital media, whether or not valid, could seriously damage our brands and reputation. If we do not establish, maintain, extend and expand our brand image, then our financial condition and results of operations could be adversely affected.
Affiliates of our company, including officers, directors and existing stockholder of our company, may invest in this Offering and their funds will be counted toward our achieving the Minimum Amount.
There is no restriction on our affiliates, including its officers, directors and existing stockholders, investing in the Offering. As a result, it is possible that if we have raised some funds, but not reached the Minimum Amount, affiliates can contribute the balance so that there will be a closing. The Minimum Amount is typically intended to be a protection for investors and gives investors confidence that other investors, along with them, are sufficiently interested in the Offering and our company and its prospects to make an investment of at least the Minimum Amount. By permitting affiliates to invest in the offering and make up any shortfall between what non-affiliate investors have invested and the Minimum Amount, this protection is largely eliminated. Investors should be aware that no funds other than their own and those of affiliates investing along with them, may be invested in this Offering.
We intend to use some of the proceeds from the Offering for unspecified working capital.
This means that we have ultimate discretion to use this portion of the proceeds as we see fit and have chosen not to set forth any specific uses for you to evaluate. The net proceeds from this Offering will be used for the purposes, which our management deems to be in our best interests in order to address changed circumstances or opportunities. As a result of the foregoing, our success will be substantially dependent upon our discretion and judgment with respect to application and allocation of the net proceeds of this Offering. We may choose to use the proceeds in a manner that you do not agree with and you will have no recourse. A use of proceeds that does not further our business and goals could harm our company and its operations and ultimately cause you to lose all or a portion of your investment.
We are subject to income taxes as well as non-income-based taxes, such as payroll, sales, use, value-added, net worth, property and goods and services taxes, in both the U.S. and foreign jurisdictions.
Significant judgment is required in determining our provision for income taxes and other tax liabilities. In the ordinary course of our business, there are many transactions and calculations where the ultimate tax determination is uncertain. Although we believe that our tax estimates are reasonable: (i) there is no assurance that the final determination of tax audits or tax disputes will not be different from what is reflected in our income tax provisions, expense amounts for non-income based taxes and accruals; and (ii) any material differences could have an adverse effect on our financial position and results of operations in the period or periods for which determination is made.
We are not subject to Sarbanes-Oxley regulations and lack the financial controls and safeguards required of public companies.
We do not have the internal infrastructure necessary, and are not required, to complete an attestation about our financial controls that would be required under Section 404 of the Sarbanes-Oxley Act of 2002. There can be no assurance that there are no significant deficiencies or material weaknesses in the quality of our financial controls. We expect to incur additional expenses and diversion of management’s time if and when it becomes necessary to perform the system and process evaluation, testing and remediation required in order to comply with the management certification and auditor attestation requirements.
Our securities will not be freely tradable until one year from the initial purchase date. Although our securities may be tradable under federal securities law, state securities regulations may apply, and each Purchaser should consult with his or her attorney.
You should be aware of the long-term nature of this investment. There is not now and likely will not be a public market for our securities. Because our securities have not been registered under the Securities Act or under the securities laws of any state or non-United States jurisdiction, our securities have transfer restrictions and cannot be resold in the United States except pursuant to Rule 501 of Regulation CF. It is not currently contemplated that registration under the Securities Act or other securities laws will be effected. Limitations on the transfer of our securities may also adversely affect the price that you might be able to obtain for our securities in a private sale. Purchasers should be aware of the long-term nature of their investment in the Company. Each Purchaser in this Offering will be required to represent that it is purchasing the Shares for its own account, for investment purposes and not with a view to resale or distribution thereof.
Neither the Offering nor the Securities have been registered under federal or state securities laws, leading to an absence of certain regulation applicable to us.
No governmental agency has reviewed or passed upon this Offering, our company or any Securities of our company. We also have relied on exemptions from securities registration requirements under applicable state securities laws. Investors, therefore, will not receive any of the benefits that such registration would otherwise provide. Prospective investors must therefore assess the adequacy of disclosure and the fairness of the terms of this Offering on their own or in conjunction with their personal advisors.
No Guarantee of Return on Investment
There is no assurance that a Purchaser will realize a return on its investment or that it will not lose its entire investment. For this reason, each Purchaser should read the Form C and all Exhibits carefully and should consult with its own attorney and business advisor prior to making any investment decision.
A majority of our company is owned by a small number of owners.
Prior to the Offering, our company’s current owners of 20% or more beneficially own up to 55.10% of our company. Subject to any fiduciary duties owed to our other owners or investors under California law, these owners may be able to exercise significant influence over matters requiring owner approval, including the election of directors or managers and approval of significant company transactions, and will have significant control over our management and policies. Some of these persons may have interests that are different from yours. For example, these owners may support proposals and actions with which you may disagree. The concentration of ownership could delay or prevent a change in control of our company or otherwise discourage a potential acquirer from attempting to obtain control of the Company, which in turn could reduce the price potential investors are willing to pay for our company. In addition, these owners could use their voting influence to maintain the Company’s existing management, delay or prevent changes in control of our company, or support or reject other management and board proposals that are subject to owner approval.
We have the right to extend the Offering deadline.
We may extend the Offering deadline beyond what is currently stated herein. This means that your investment may continue to be held in escrow while we attempt to raise the Minimum Amount even after the Offering deadline stated herein is reached. Your investment will not be accruing interest during this time and will simply be held until such time as the new Offering deadline is reached without our company receiving the Minimum Amount, at which time it will be returned to you without interest or deduction, or until we receive the Minimum Amount, at which time it will be released to us to be used as set forth herein. Upon or shortly after release of such funds to us, the Shares will be issued and distributed to you.
Your ownership of the shares will be subject to dilution.
If we conduct subsequent Offerings of Common Stock, issue shares pursuant to a compensation or distribution reinvestment plan or otherwise issues additional shares, investors who purchase Shares in this Offering who do not participate in those other stock issuances will experience dilution in their percentage ownership of our company’s outstanding shares. Furthermore, shareholders may experience a dilution in the value of their shares depending on the terms and pricing of any future share issuances (including the shares being sold in this Offering) and the value of the our assets at the time of issuance.
The Securities will be equity interests in our company and will not constitute indebtedness.
The Securities will rank junior to all existing and future indebtedness and other non-equity claims on our company with respect to assets available to satisfy claims on the Company, including in a liquidation of our company. Additionally, unlike indebtedness, for which principal and interest would customarily be payable on specified due dates, there will be no specified payments of dividends with respect to the Securities and dividends are payable only if, when and as authorized and declared by us and depend on, among other matters, our historical and projected results of operations, liquidity, cash flows, capital levels, financial condition, debt service requirements and other cash needs, financing covenants, applicable state law, federal and state regulatory prohibitions and other restrictions and any other factors our board of directors deems relevant at the time. In addition, there is no limit on the amount of debt or other obligations we may incur in the future. Accordingly, we may incur substantial amounts of additional debt and other obligations that will rank senior to the Shares, which are the most junior securities of our company.
There can be no assurance that we will ever provide liquidity to Purchasers through either a sale of our company or a registration of the Shares.
There can be no assurance that any form of merger, combination, or sale of our company will take place, or that any merger, combination, or sale would provide liquidity for Purchasers. Furthermore, we may be unable to register the Shares for resale by Purchasers for legal, commercial, regulatory, market-related or other reasons. In the event that we are unable to effect a registration, Purchasers could be unable to sell their Shares unless an exemption from registration is available.
The offering price in this Offering may not represent the value of our Shares.
The price of the Shares being sold in this Offering has been determined based on a number of factors and does not necessarily bear any relationship to our book value, assets, operating results or any other established criteria of value. Prices for our Shares may not be indicative of the fair market value of our Shares now or in the future.
Management has discretion over proceeds of this Offering.
We expect to use the net proceeds of this Offering, over time, for general corporate purposes, including working capital. However, we have no current specific plans for the net proceeds of this Offering other than as outlined in the use of proceeds section of this offering statement. As a result, our management will have the discretion to allocate the net proceeds to uses that investors may not deem desirable. There can be no assurance that the net proceeds can or will be invested to yield a significant return.
We do not anticipate paying any cash dividends for the foreseeable future.
We currently intend to retain future earnings, if any, for the foreseeable future, to repay indebtedness and to support our business and planned growth strategies. We do not intend in the foreseeable future to pay any dividends to holders of our Shares.
In addition to the risks listed above, businesses are often subject to risks not foreseen or fully appreciated by the management. It is not possible to foresee all risks that may affect us. Moreover, we cannot predict whether we will successfully effectuate our current business plan. Each prospective Purchaser is encouraged to carefully analyze the risks and merits of an investment in the Shares and should take into consideration when making such analysis, among other, the Risk Factors discussed above.
October 1, 2018
October 1, 2018
October 1, 2018
October 30, 2018
October 1, 2018
September 25, 2017
These individuals are current shareholders of P5 Systems and may or may not publicly reference their participation as stakeholders.
No promoters have been compensated for this offering. Equifund CFP is entitled to 7% of the gross money raised in the offering and 7% of the total shares of common stock.
- The two million is reflective of the 2017 and 2018 CPA reviewed financials.