This Form 10-K contains forward-looking statements.
Forward-looking statements are projections of events, revenues, income, future economic performance or management’s plans
and objectives for our future operations. In some cases, you can identify forward-looking statements by terminology such as “may”,
“should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”,
“predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology.
These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks
in the section entitled “Risk Factors” and the risks set out below, any of which may cause our or our industry’s
actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity,
performance or achievements expressed or implied by these forward-looking statements. These risks include, by way of example and
not in limitation:
This list is not an exhaustive list of the
factors that may affect any of our forward-looking statements. These and other factors should be considered carefully, and readers
should not place undue reliance on our forward-looking statements. Forward looking statements are made based on management’s
beliefs, estimates and opinions on the date the statements are made, and we undertake no obligation to update forward-looking statements
if these beliefs, estimates and opinions or other circumstances should change. Although we believe that the expectations reflected
in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.
Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the
forward-looking statements to conform these statements to actual results.
Our financial statements are stated in United
States dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. All references
to “common stock” refer to the common shares in our capital stock.
ITEM 1. BUSINESS.
GENERAL
The following is a summary of some of the information
contained in this document. Unless the context requires otherwise, references in this document to “our Company,” “us,”
“we,” “our,” “TPT Global,” or the “Company” are to TPT Global Tech, Inc.
DESCRIPTION OF BUSINESS
We
are based in San Diego, California, and operate as a Media Content Hub for Domestic and International syndication Technology/Telecommunications
company operating on our own proprietary Global Digital Media TV and Telecommunications infrastructure platform and also provides
technology solutions to businesses domestically and worldwide. We offer Software as a Service (SaaS), Technology Platform as a
Service (PAAS), Cloud-based Unified Communication as a Service (UCaaS) and carrier-grade performance and support for businesses
over our private IP MPLS fiber and wireless network in the United States. Our cloud-based UCaaS services allow businesses of any
size to enjoy all the latest voice, data, media and collaboration features in today's global technology markets. We also operate
as a Master Distributor for Nationwide Mobile Virtual network Operators (MVNO) and Independent Sales Organization (ISO) as a Master
Distributor for Pre-Paid Cellphone services, Mobile phones, Cellphone Accessories and Global Roaming Cellphones.
Jumpstart Our Business Startups Act
We qualify as an “emerging growth
company” as defined in Section 101 of the Jumpstart our Business Startups Act (“JOBS Act”) as we did not have
more than $1,000,000,000 in annual gross revenue and did not have such amount as of December 31, 2018, our last fiscal year.
We may lose our status as an emerging
growth company on the last day of our fiscal year during which (i) our annual gross revenue exceeds $1,000,000,000 or (ii) we issue
more than $1,000,000,000 in non-convertible debt in a three-year period. We will lose our status as an emerging growth company
if at any time we are deemed to be a large accelerated filer. We will lose our status as an emerging growth company on the last
day of our fiscal year following the fifth anniversary of the date of the first sale of common equity securities pursuant to an
effective registration statement.
As an emerging growth company, we may
take advantage of specified reduced reporting and other burdens that are otherwise applicable to generally reporting companies.
These provisions include:
|
-
|
A requirement to have only two years of audited financial statement and only two years of related Management Discussion and Analysis Disclosures:
|
|
-
|
Reduced disclosure about the emerging growth company’s executive compensation arrangements; and
|
|
-
|
No non-binding advisory votes on executive compensation or golden parachute arrangements.
|
As an emerging growth company, we are
exempt from Section 404(b) of the Sarbanes-Oxley Act of 2002 and Section 14A(a) and (b) of the Securities Exchange Act of 1934.
Such sections are provided below:
Section 404(b) of the Sarbanes-Oxley
Act of 2002 requires a public company’s auditor to attest to, and report on, management’s assessment of its internal
controls.
Sections 14A(a) and (b) of the Securities
and Exchange Act, implemented by Section 951 of the Dodd-Frank Act, require companies to hold shareholder advisory votes on executive
compensation and golden parachute compensation.
We have already taken advantage of these
reduced reporting burdens in this Form 10-K, which are also available to us as a smaller reporting company as defined under Rule
12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
As long as we qualify as an emerging
growth company, we will not be required to comply with the requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002 and
Section 14A(a) and (b) of the Securities Exchange Act of 1934.
In addition, Section 107 of the JOBS
Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B)
of the Securities Act of 1933, as amended (the “Securities Act”) for complying with new or revised accounting standards.
We are choosing to irrevocably opt out of the extended transition period for complying with new or revised accounting standards
under Section 102(b)(2) of the JOBS Act.
HISTORY
We were originally incorporated in 1988 in
the state of Florida. TPT Global, Inc., a Nevada corporation formed in June 2014, merged with Ally Pharma US, Inc., a Florida corporation,
(“Ally Pharma”, formerly known as Gold Royalty Corporation) in a “reverse merger” wherein Ally Pharma issued
110,000,000 shares of Common Stock, or 80% ownership, to the owners of TPT Global, Inc. and Ally Pharma changed its name to TPT
Global Tech, Inc. In 2014, we acquired all the assets of K Telecom and Wireless LLC (“K Telecom”) and Global Telecom
International, LLC (“Global Telecom”). Effective January 31, 2015, we completed our acquisition of 100% of the outstanding
stock of Copperhead Digital Holdings, Inc. (“Copperhead Digital”) and Subsidiaries, TruCom, LLC (“TruCom”),
Nevada Utilities, Inc. (“Nevada Utilities”) and CityNet Arizona, LLC (“CityNet”). In October 2015, we acquired
the assets of both Port2Port, Inc. (“Port2Port”) and Digithrive, Inc. (“Digithrive”). Effective September
30, 2016, we
acquired 100% ownership in San Diego Media,
Inc. (“SDM”). In December 2016, we acquired the Lion Phone technology. In October and November 2017, we entered into
agreements to acquire Blue Collar, Inc. (“Blue Collar”), and certain assets of Matrixsites, Inc. (“Matrixsites”)
which we have completed. The Blue Collar transaction closed as of September 1, 2018 and the acquisition of certain assets of Matrixsites
closed on October 31, 2017.
We
are based in San Diego, California, and operate as a Media Content Hub for Domestic and International syndication Technology/Telecommunications
company operating on our own proprietary Global Digital Media TV and Telecommunications infrastructure platform and also provides
technology solutions to businesses domestically and worldwide. We offer Software as a Service (SaaS), Technology Platform as a
Service (PAAS), Cloud-based Unified Communication as a Service (UCaaS) and carrier-grade performance and support for businesses
over our private IP MPLS fiber and wireless network in the United States. Our cloud-based UCaaS services allow businesses of any
size to enjoy all the latest voice, data, media and collaboration features in today's global technology markets. We also operate
as a Master Distributor for Nationwide Mobile Virtual network Operators (MVNO) and Independent Sales Organization (ISO) as a Master
Distributor for Pre-Paid Cellphone services, Mobile phones, Cellphone Accessories and Global Roaming Cellphones.
We anticipate needing
an estimated $16,900,000 in capital to continue our business operations and expansion. We do not have all committed sources for
these additional funds and will need to be obtained through debt or equity placements or a combination of those. As part of this
$16,900,000, we will need to pay a total of $1,600,000 in a Seller loan by April 2019 for the acquisition of the Blue Collar assets
and $4,000,000 to pay a seller note payable as part of the consideration of ViewMe Live technology in 2017, due $2,000,000 from
debt proceeds intended to be obtained from debt proceeds in 2019 and from the second Company public offering intended to be in
2019. We do not have a committed source of those funds.
Our executive offices are located at 501 West
Broadway, Suite 800, San Diego, CA 92101 and the telephone number is (619) 301-4200 We maintain a website at www.tptglobaltech.com,
and such website is not incorporated into or a part of this filing.
CORPORATE STRUCTURE
Our corporate structure is as follows:
CURRENT BUSINESS
Company Overview
Through key acquisitions, in 2015 we launched
wholesale and retail operations in the United States and Internationally. These first acquisitions with their customer bases, Distribution
Channels and Technology are the base for our organic growth strategy opportunities to cross pollinate or sell our planned New Generation,
New Media Technology products and services, Domestically and Internationally.
We, and our related companies and acquisitions,
are seeking to be an innovative Telecom/CUBS (Cloud Unified Businesses Services) as one of the first to combine recurring
Telecom,
Mobile Banking, Media and Data/Cloud Services
revenue under one roof, and then bring all relevant data from those services
into a proprietary information matrix platform capable of delivering a “Daily and Intelligent Dashboard” to our Domestic
and International customers. Such a cohesive combination of services and information from a single provider has been heretofore
nonexistent. We intend to pioneer an integrated communication services and information technology suite, to empower companies with
vital communications services technology, and highly relevant diagnostic information.
To date we have generated revenues primarily
through operating as a Competitive Local Exchange Carrier (“CLEC”) in Arizona. Our primary revenues in 2018 and 2017
are primarily from telecommunications services and products.
Our operating divisions historically have
been those that sell telecommunications services and those that sale telecommunications products. Cloud based services assets
were acquired in 2016 and are intended to be more of a contributing factor to revenues in 2019 and forward.
Our Key Divisions: K Telecom and Global
Telecom- GSM Distribution
K Telecom and Global Telecom are located in
the Northwest of the United States and sell and distribute GSM Cell Phone and Prepaid GSM Services for MVNO’s (Mobile Virtual
Network Operators) through approximately 100 brick and mortar retail store-front locations in Washington and Oregon.
Our TruCom, LLC– CLEC–Phoenix, Arizona
Our TruCom division, a subsidiary of Copperhead
Digital Holdings, LLC, is a Facilities Based Competitive Local Exchange Carrier (CLEC) headquartered in Phoenix, AZ. Founded in
2006 (as Copperhead Digital Carrier) for the purpose of operating a state-of-the-art Fiber Optic Network constructed by and acquired
from Adelphia Communications, TruCom now operates its own carrier class Fiber Optic Network, state-of-the-art Wireless Point-to-Point
network, and Patent Pending proprietary “Bulletproof”
™
technology seamlessly integrating the two.
TruCom offers Phone, Internet, Fiber Optic,
Wireless, Hosted PBX, Wi-Fi, Wi-Max, Engineering, Cabling, Wiring and Cloud services. With a penchant for pushing the envelope,
TruCom has pioneered innovative, hosted firewall and managed MPLS service technologies (SuperCore MPLS™) and was the Industry
first to engineer patent-pending failover services utilizing our own fiber optic and wireless networks to guarantee business continuity
and service uptime. Located in multiple Local Serving Offices and Points of Presence (POP’s) in the primary Data Centers
in the market, TruCom’s extensive Fiber Optic Network runs through the heart of the most densely populated corridors of the
Greater Phoenix Metro Area. Their Wireless Point to Point and Point to Multipoint Network is fed by the infinitely scalable capacity
of the Fiber Optic Network and consists of more than 16 Major Access Points. This footprint not only provides coverage throughout
the metro area, but also spans into outlying Cities, often providing the only carrier grade solution available in the region. TruCom’s
substantial Network Assets, Innovative Service Offerings, and Dedicated Customer Service have driven a substantial increase in
revenue each year over the past several years.
Our Port2Port Assets
We acquired assets that relate to reseller
call termination both domestically and internationally in Dallas Texas of Port2Port. These assets provide approximately 100 Domestic
and international customers and vendors terminating wholesale calls domestically and internationally.
Our San Diego Media Division
San Diego Media, Inc. (“SDM”)(
www.sandiegomedia.com)
is an established Southern California based software engineering and Internet e-commerce marketing services company that provides
enterprise-class integrated solutions for manufacturers, retailers, and distributors focused on developing solutions for companies
seeking online growth and profitability.
Founded in 1999, historically the primary market
offering has been MaxEXP®, a proven stable, productivity-enabling proprietary eCommerce platform, built on open-standards technology
that empowers companies to deploy and manage eCommerce offerings at lower cost and at less time than required to deploy more conventional
high-end solutions — and, we believe, all without sacrificing the essential merchandising functionality, customizability,
extensibility, scalability, security, and performance that much more expensive solutions provide. MaxEXP supports both B2B and
B2C functionality simultaneously which few other eCommerce solutions will provide successfully out-of-the-box.
These early engagements have enabled SDM to
solidify and refine the core SDM technology architecture and to enhance the platform with market-driven merchandising features
and functionality. SDM has made significant R&D investments in operational infrastructure including sophisticated monitoring
systems, comprehensive security, time-tracking, client management tools, and continuous compliance with the demanding payment card
industry (PCI) standards.
SDM has complemented these systems with a full
range of automated and enterprise-class capabilities for fully integrating with customer’s legacy systems, call centers,
fulfillment houses, and other critical business process applications.
SDM has complimented its technologies with
a wider range of professional internet and marketing services that enables client success, to create successful business relationships
over long-term.
As the market has changed through the years
SDM has continued to innovate and expand its strategic and technology development partnerships; these include, MIndTouch, BigCommerce,
Avalara, CPC Strategies, eBridge, Imperva Incapsula, Chris Chase Design. SDM’s newest client is based in Singapore and it
represents its most innovative use of technologies to date.
Blue Collar Production Division
Our production division, Blue Collar
Productions (formerly Blue Collar, Inc.), creates original live action and animated content productions and has produced hundreds
of hours of material for the television, theatrical, home entertainment and new media markets. Mr. Rowen, our CEO of Blue Collar,
works closely with major television networks, cable channels and film studios to produce home entertainment products.
The Documentary film group at Blue Collar
recently completed a film on the cultural impact of
Goodfellas
:
20 Years Later
that featured Martin Scorsese, Robert
DeNiro, Lorraine Bracco, Leonardo DiCaprio and many others. They have also produced a series of film anthologies for Turner Classic
Movies. Blue Collar is currently in production on
Built To Fail,
which is a look at the history of street wear. The film
features Tommy Hilfiger, Russell Simmons and a host of notable street wear designers. They are also in pre-production on
The
29 Club
, a look at notable musicians who all tragically died at age 29;
Memories in Music
, which is an in-depth study
of the impact of memory through music on Alzheimer’s patients and
Faces of Vegas
, an exploration into the culture
of Las Vegas, Nevada.
Blue Collar Productions currently has
the feature film
Looking For Alaska
, based on the John Green novel, producing for Paramount Pictures. The company produced
for a pilot for MTV for a possible series, “My Jam” aired in the Fall of 2016. Blue Collar has also produced two seasons
of “Caribbean’s Next Top Model Season.”
Blue Collar Productions designs branding
and marketing campaigns and has had contracts with some of the world’s largest companies including PepsiCo, Intel, HP, WalMart
and many other Fortune 500 companies. Additionally, they create motion picture, television and home entertainment marketing campaigns
for studios including Sony, DreamWorks, Twentieth Century Fox, Universal Studios, Paramount Studios, and Warner Brothers.
The CEO of this division, Mr. Rowen,
has worked with filmmakers including Steven Spielberg, Ron Howard, Brett Ratner and James Cameron. Mr. Rowen also has very close
working relationships with actors including Tom Hanks, Brad Pitt, Julia Roberts, Robert Downey, Jr., Denzel Washington, Ryan Gosling,
Sofia Vergara, Mariska Hargitay and many others.
Prior to starting Blue Collar Productions,
Mr. Rowen functioned as the head of home entertainment production for DreamWorks SKG from 1997 to 2000. He also serves as the President
of Long Leash Entertainment, an aggregator of entertainment based intellectual property and creator of high-end entertainment content.
Technology Company Overview
Our Company
was formed as the successor of two US Corporations, Ally Pharma US, a Pharmaceutical technology research company founded in 1988
and TPT Global Inc. a Media Content, Voice and Data, Interconnect and International gateway provider. TPT Global Tech is headquartered
in San Diego, California and operates as a holding company for its Media, Smartphone, Network, Content and SaaS (Software as a
Services) domestic and international businesses.
Historically and through key acquisitions we
launched Telecommunications wholesale and retail operations in the United States and Internationally. These first acquisitions
with their Customer Bases, Distribution Channels and Technology are the base for our organic growth strategy and provide opportunities
to cross sell our platforms and New Media Technology products and services Domestically and Internationally.
We operate
as a Media Content Hub for Domestic and International syndication, Technology/Telecommunications company using on our own proprietary
Global Digital Media TV and Telecommunications infrastructure platform and we also provides technology solutions to businesses
worldwide. We offer Software as a Service (SaaS), Technology Platform as a Service (PAAS), Cloud-based Unified Communication as
a Service (UCaaS) and carrier-grade performance and support for businesses over our private IP MPLS fiber and wireless network
in the United States. Our cloud-based UCaaS services allow businesses of any size to enjoy all the latest voice, data, media and
collaboration features in today's global technology markets. We also operate as a Master Distributor for Nationwide Mobile Virtual
Network Operators (MVNO) and Independent Sales Organization (ISO) as a Master Distributor for Pre-Paid Cellphone services, Mobile
phones, Cellphone Accessories and Global Roaming Cellphones.
Our technologies
“Gathers Big Data” to predict our customers’ viewing and spending habits. We then deliver Products and Services
to support that estimated demand and share advertising revenues with our Content, Digital Media and Linear Broadcast Partners worldwide.
Each of
our four divisions contributes to the launch of our global Content delivery platform “ViewMe Live” and creates cross
pollinating revenue opportunities and a closed Global E-commerce Eco environment which we believe will help us execute our short
and long term corporate objectives. Our Content Division which consists of Blue Collar Productions (our TV and Film content Production
company) creates original content and in some cases third party content. Once Content has been produced we will then broadcast
and delivered that content over our proprietary Mobile TV Platform on our proprietary Trucom Telecommunication Network infrastructure
domestically and internationally.
Our corporate
goal is to work within our four in house divisions (Smartphone, Network, Content and SaaS) to launch hardware sales and build a
viewer subscriber base domestically and internationally. This edge device deployment would deliver free Content, free Linear Broadcast
feeds and Social Media features on our Free proprietary Mobile app platform with
the anticipation
to aggregate and showcase our original and third-party Content, Digital Media and Linear broadcast feeds from and too the four
corners of the Globe.
All of
the back technology or features for ViewMe Live have been developed and we anticipate spending an additional $500,000 USD to complete
the front-end features which believe will take approximately 120 days from our funding event.
We have generated revenues in 2018 and 2017,
primarily through operating as a Facilities Based Telecommunications Competitive Local Exchange Carrier (“CLEC”) in
Arizona. The company currently operates an approximate 58 miles Fiber optic ring throughout the greater Phoenix valley offering
such services as Basic Residential Phone service, Basic Business phone service, POT’s lines, Basic Fiber Broadband Internet
services, Wireless Internet Services, Toll Free 800 services, EFax, Erate, Dedicated T-1 Services, Auto Attendant, SIP Trunks,
Mobile and VoiP services. These services will continue for the forseeable future weighted heavily towards offering more Wireless
Internet services and the Fiber Ring will be transformed into a Private Test facility to be offered for rent to businesses needing
a private network to test new products for proof of concept purposes.
We, and our related acquired companies are
seeking to be an innovative Media-Telecom/CUBS (Cloud Unified Businesses Services) company and one of the first to combine recurring Telecom,
Media and Data/Cloud Services revenue under one roof, then bring all relevant data from those services into a proprietary
telecom infrastructure and information matrix platform capable of delivering a “Daily and Intelligent Dashboard” to
our Domestic and International customers. Such a planned cohesive combination of services and information from a single provider
has been heretofore nonexistent. We intend to pioneer an integrate communication services and information technology suites to
empower individuals and companies with vital communications, Smartphone, Network, Content, SaaS (Software as A Service), New Media
Technology products and services, and valuable relevant diagnostic information both Domestically and Internationally.
We are currently able to deliver a live Global
TV Broadcast and Social Media Platform utilizing a Mobile App technology on our proprietary Content Delivery Network. We plan to
expand our Cloud Unified Business Services (CUBS) technology-based business services unifying multiple services from the cloud.
CUBS (Cloud Unified Business Services)
- We are a CUBS provider, acquiring customers and then cross selling additional products and services through our proprietary Wrap
Around Relationship Marketing (WARM) system, intending to make the customers very sticky.
Planned Activities
Big Data & Predictive Analytics
- Our capability to utilize our proprietary aggregation platform to gather data from our hardware and software edge device (End
Users) deployments positions the Company to be a leader in predictive analytics.
Cross-Sales
– Our growth strategy
through complimentary acquisitions may create opportunities to cross and sell its New Generation, New Media technology products
and services to a growing customer base across multiple distribution channels, both domestically and internationally.
Market Launch
- Through our acquisition
of View-me Live from Matrix, we have acquired the live backend broadcast Network technology for our Global Mobile TV and Social
Media platform. Subject to raising capital ($500,000) from our fund-raising activities we believe we are approximately 120 days
from completing the frontend development component to launch its “View-me Live” Mobile APP delivery platform at an
estimated cost of $500,000 USD.
Liquidity and Capital Resource Needs
|
|
SaaS
|
|
/----------Content------/
|
|
/---------Network--------/
|
|
Phone
|
|
General
|
Initial Proposed Uses of Funds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
San Diego Media
|
|
Blue Collar
|
|
ViewMe Live
|
|
Proposed Acquisition
|
|
Lion Phone 4K Units
|
|
General
|
|
2019 Acq Totals
|
E
st. Build-Out Costs-Complex
|
|
$
|
---
|
|
|
|
---
|
|
|
|
---
|
|
|
|
---
|
|
|
|
---
|
|
|
|
---
|
|
|
$
|
—
|
|
Studio Equip
|
|
|
---
|
|
|
|
---
|
|
|
$
|
400,000
|
|
|
|
---
|
|
|
|
---
|
|
|
|
---
|
|
|
$
|
400,000
|
|
Hardware Manufacturing
|
|
|
---
|
|
|
|
---
|
|
|
|
---
|
|
|
|
---
|
|
|
$
|
500,000
|
|
|
|
---
|
|
|
$
|
500,000
|
|
ViewMe Live Completion
|
|
|
---
|
|
|
|
---
|
|
|
$
|
2,000,000
|
|
|
|
---
|
|
|
|
---
|
|
|
|
---
|
|
|
$
|
2,000,000
|
|
Initial Capx
|
|
$
|
---
|
|
|
$
|
---
|
|
|
$
|
2,400,000
|
|
|
$
|
---
|
|
|
$
|
500,000
|
|
|
$
|
---
|
|
|
$
|
2,900,000
|
|
Cash for Acquisitions
|
|
|
---
|
|
|
|
---
|
|
|
|
---
|
|
|
$
|
3,000,000
|
|
|
|
---
|
|
|
|
---
|
|
|
$
|
3,000,000
|
|
Seller Note Retirement
|
|
$
|
250,000
|
|
|
$
|
1,600,000
|
|
|
$
|
4,000,000
|
|
|
|
---
|
|
|
$
|
400,000
|
|
|
|
---
|
|
|
$
|
6,250,000
|
|
Marketing Budget
|
|
|
---
|
|
|
|
---
|
|
|
$
|
1,000,000
|
|
|
|
---
|
|
|
|
1,000,000
|
|
|
|
250,000
|
|
|
$
|
2,250,000
|
|
General Working Capital
|
|
$
|
100,000
|
|
|
|
---
|
|
|
|
---
|
|
|
|
---
|
|
|
|
---
|
|
|
$
|
2,400,000
|
|
|
$
|
2,500,000
|
|
Real Estate Acquisition
|
|
|
---
|
|
|
|
---
|
|
|
|
---
|
|
|
|
---
|
|
|
|
---
|
|
|
|
---
|
|
|
$
|
---
|
|
Total Project Cost
|
|
$
|
350,000
|
|
|
$
|
1,600,000
|
|
|
$
|
7,400,000
|
|
|
$
|
3,000,000
|
|
|
$
|
1,900,000
|
|
|
$
|
2,650,000
|
|
|
$
|
16,900,000
|
|
Quarter by Quarter Analysis
|
|
SaaS
|
|
/---------------Content-----------/
|
|
Network
|
|
Phone
|
|
General
|
|
Total
|
|
Capital :
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1st
|
|
|
|
---
|
|
|
|
---
|
|
|
|
---
|
|
|
|
$ 500,000
|
|
|
|
---
|
|
|
|
---
|
|
|
$500,000
|
|
2nd
|
|
|
$
|
250,000
|
|
|
$
|
1,600,000
|
|
|
$
|
2,400,000
|
|
|
|
$2,500,000
|
|
|
$
|
900,000
|
|
|
|
---
|
|
|
$7,650,000
|
|
3rd
|
|
|
|
---
|
|
|
|
---
|
|
|
$
|
2,000,000
|
|
|
|
---
|
|
|
|
---
|
|
|
|
---
|
|
|
$2,000,000
|
|
4th
|
|
|
|
---
|
|
|
|
---
|
|
|
$
|
2,000,000
|
|
|
|
---
|
|
|
|
---
|
|
|
|
---
|
|
|
$2,000,000
|
|
Working Capital:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1st
|
|
|
|
---
|
|
|
|
---
|
|
|
|
---
|
|
|
|
---
|
|
|
$
|
---
|
|
|
|
$400,000
|
|
|
$400,000
|
|
2nd
|
|
|
|
$100,000
|
|
|
|
---
|
|
|
$
|
100,000
|
|
|
|
---
|
|
|
$
|
350,000
|
|
|
$
|
1,250,000
|
|
|
$1,800,000
|
|
3rd
|
|
|
|
---
|
|
|
|
---
|
|
|
$
|
450,000
|
|
|
|
---
|
|
|
$
|
350,000
|
|
|
$
|
500,000
|
|
|
$1,300,000
|
|
4th
|
|
|
|
---
|
|
|
|
---
|
|
|
$
|
450,000
|
|
|
|
---
|
|
|
$
|
300,000
|
|
|
$
|
500,000
|
|
|
$1,250,000
|
|
|
|
|
$
|
350,000
|
|
|
$
|
1,600,000
|
|
|
$
|
7,400,000
|
|
|
$
|
3,000,000
|
|
|
$
|
1,900,000
|
|
|
$
|
2,650,000
|
|
|
$16,900,000
|
|
|
Projected Capital Phases
|
Private Placement (negotiations pending)
|
|
06/30/2019
|
|
$
|
16,900,000
|
|
|
|
|
|
$
|
16,900,000
|
|
QUARTERLY BUDGET
|
|
|
|
|
|
2019
|
|
|
|
|
|
|
1
st
Qtr
|
|
2
nd
Qtr
|
|
3rd Qtr
|
|
4th Qtr
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
SaaS
|
|
|
|
—
|
|
|
$
|
250,000
|
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
250,000
|
|
|
WC
|
|
|
|
—
|
|
|
$
|
100,000
|
|
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
100,000
|
|
|
Content
|
|
|
|
—
|
|
|
$
|
4,000,000
|
|
|
|
$
|
2,000,000
|
|
|
$
|
2,000,000
|
|
|
$
|
8,000,000
|
|
|
WC
|
|
|
|
—
|
|
|
$
|
100,000
|
|
|
|
$
|
450,000
|
|
|
$
|
450,000
|
|
|
$
|
1,000,000
|
|
|
Network
|
|
|
$
|
500,000
|
|
|
$
|
2,500,000
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,000,000
|
|
|
Phone
|
|
|
|
—
|
|
|
$
|
900,000
|
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
900,000
|
|
|
WC
|
|
|
|
—
|
|
|
$
|
350,000
|
|
|
|
$
|
350,000
|
|
|
$
|
300,000
|
|
|
$
|
1,000,000
|
|
|
General
|
|
|
$
|
400,000
|
|
|
$
|
1,250,000
|
|
|
|
$
|
500,000
|
|
|
$
|
500,000
|
|
|
$
|
2,650,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
900,000
|
|
|
$
|
9,450,000
|
|
|
|
$
|
3,300,000
|
|
|
$
|
3,250,000
|
|
|
$
|
16,900,000
|
|
RECENT ACQUISITIONS OF OPERATING DIVISIONS/SUBSIDIARIES
Blue Collar Production Division
Our production division, Blue Collar
Productions (formerly Blue Collar, Inc.), creates original live action and animated content productions and has produced hundreds
of hours of material for the television, theatrical, home entertainment and new media markets. Mr. Rowen, our CEO of Blue Collar,
works closely with major television networks, cable channels and film studios to produce home entertainment products.
The Documentary film group at Blue Collar
recently completed a film on the cultural impact of
Goodfellas
:
20 Years Later
that featured Martin Scorsese, Robert
DeNiro, Lorraine Bracco, Leonardo DiCaprio and many others. They have also produced a series of film anthologies for Turner Classic
Movies. Blue Collar is currently in production on
Built To Fail,
which is a look at the history of street wear. The film
features Tommy Hilfiger, Russell Simmons and a host of notable street wear designers. They are also in pre-production on
The
29 Club
, a look at notable musicians who all tragically died at age 29;
Memories in Music
, which is an in-depth study
of the impact of memory through music on Alzheimer’s patients and
Faces of Vegas
, an exploration into the culture
of Las Vegas, Nevada.
Blue Collar Productions currently has
the feature film
Looking For Alaska
, based on the John Green novel, producing for Paramount Pictures. The company produced
for a pilot for MTV for a possible series, “My Jam” aired in the Fall of 2016. Blue Collar has also produced two seasons
of “Caribbean’s Next Top Model Season.”
Blue Collar Productions designs branding
and marketing campaigns and has had contracts with some of the world’s largest companies including PepsiCo, Intel, HP, WalMart
and many other Fortune 500 companies. Additionally, they create motion picture, television and home entertainment marketing campaigns
for studios including Sony, DreamWorks, Twentieth Century Fox, Universal Studios, Paramount Studios, and Warner Brothers.
The CEO of this division, Mr. Rowen,
has worked with filmmakers including Steven Spielberg, Ron Howard, Brett Ratner and James Cameron. Mr. Rowen also has very close
working relationships with actors including Tom Hanks, Brad Pitt, Julia Roberts, Robert Downey, Jr., Denzel Washington, Ryan Gosling,
Sofia Vergara, Mariska Hargitay and many others.
Prior to starting Blue Collar Productions,
Mr. Rowen functioned as the head of home entertainment production for DreamWorks SKG from 1997 to 2000. He also serves as the President
of Long Leash Entertainment, an aggregator of entertainment based intellectual property and creator of high-end entertainment content.
Our Business Methods
Centralized Platform and New Generation
Network
We are now operating a next-generation broadband
network reselling other companies’ networks on a wholesale arbitrage basis (buying and reselling other companies’ capacity)
on our centralized VIVO Platform. We are interconnected to U.S. and International carriers to date. Once funded, we intend to deploy
our own in-country networks in the targeted emerging markets. This will enable us to be able to provide better quality termination
and increase our operating margins. We believe our platform will produce substantial operational cost savings. Because of our pricing
advantage, we are able to offer our clients products and services at an attractive pricing structure, creating a strong competitive
advantage. Based on our low network operating costs and low-cost infrastructure, we believe we may penetrate emerging markets with
little network build-out and at a reasonable price. Management believes that our service offerings will be well received in emerging
markets based on existing relationships and pricing structure, which will enable us to set the industry standard with little competition.
Once we establish in-country networks, we will
be able to market Phones, Networks, Content and SaaS products targeted to specific subgroups that coincide with the country/region
where we have a network in place or a strategic partnership network in place.
Use of Incumbent Networks
Under formal agreements we can privately brand
and resell incumbent carriers’ underlying broadband networks, while deploying our own Wimax/Wi-Fi/GSM service plans and mobile
handsets.
As a true value add, our VIVO billing platform
allows us to manage the billing and routing, offering our customers a seamless, branded network from anywhere we maintain a relationship.
By way of incumbent operator networks, we can sell and market to retail and wholesale customers without the high infrastructure
costs associated with deploying our own network. If and when the revenues justify the cost of constructing our own network, we
plan to investigate adding a wireless Broadband/ GSM network, and transfer our customer base in a final step to reduce costs of
goods sold long-term.
Wholesale Termination
Wholesale termination is the reselling of excess
network capacity on a reciprocal basis to other telecom carriers both domestically and internationally. Due to the large number
of carrier relationships we have in the US and abroad, we believe we can immediately increase our wholesale termination in each
country in which we have a license to operate. This wholesale activity generates additional cash flow immediately if successfully
implemented. Wholesale termination is a low risk, low margin business.
Service Description
Our next-generation wireless Broadband/GSM
network relies on non-line-of-sight technology. This will provide a level of performance comparable to that delivered by evolving
Worldwide Interoperability of Microwave Access (WiMAX) standards. The cost advantage equates to substantial reductions of fixed
costs as compared to building traditional, legacy, and switched networks.
Our products and marketing strategy unifies
the various features available in today’s telecommunication environment including:
|
·
|
Significant international broadband capacity
|
|
·
|
High quality VoIP communication
|
|
·
|
Cellular/GSM and Wi-Fi wireless convergence
|
|
·
|
IPTV, Content Applications and Financial Services Products
|
|
·
|
Remote network management
|
|
·
|
Sophisticated Prepaid, Wholesale and Retail billing
|
|
·
|
CRM management; and Intranet Build-out, back office management and reporting.
|
Our Business Segments
Our business segment consists generally of
providing strategic, legacy and data integration products and services to small, medium and enterprise business, wholesale and
governmental customers, including other communication providers. Our strategic products and services offered to these customers
include our collocation, hosting, broadband, VoIP, information technology and other ancillary services. Our services offered to
these customers primarily include local and long-distance voice, inducing the sale of unbundled network elements (“UNEs”),
switched access and other ancillary services. Our product offerings include the sale of telecommunications equipment located on
customers’ premises and related products and professional services, all of which are described further below.
Our products and services include local and
long-distance voice, broadband, Ethernet, collocation, hosting (including cloud hosting and managed hosting), data integration,
video, network, public access, VoIP, information technology and other ancillary services.
We offer our customers the ability to bundle
together several products and services. For example, we offer integrated and unlimited local and long-distance voice services.
Our customers can also bundle two or more services such as broadband, video (including through our strategic partnerships), voice
services. We believe our customers value the convenience and price discounts associated with receiving multiple services through
a single company.
Most of our products and services are provided
using our telecommunications network, which consists of voice and data switches, copper cables, fiber-optic cables and other equipment.
Described in greater detail below are our key products and services.
K Telecom and Global Telecom- GSM Distribution
K Telecom and Global Telecom are located in
the Northwest of the United States and sell and distribute GSM Cell Phone and Prepaid GSM Services for MVNO’s (Mobile Virtual
Network Operators) through approximately 100 brick and mortar retail store-front locations in Washington and Oregon.
TruCom, LLC– CLEC–Phoenix, Arizona
Our TruCom division, a subsidiary of Copperhead
Digital Holdings, LLC, is a Facilities Based Competitive Local Exchange Carrier (CLEC) headquartered in Phoenix, AZ. Founded in
2006 (as Copperhead Digital Carrier) for the purpose of operating a state-of-the-art Fiber Optic Network constructed by and acquired
from Adelphia Communications, TruCom now operates its own carrier class Fiber Optic Network, state-of-the-art Wireless Point-to-Point
network, and Patent Pending proprietary “Bulletproof”
™
technology seamlessly integrating the two.
TruCom offers Phone, Internet, Fiber Optic,
Wireless, Hosted PBX, Wi-Fi, Wi-Max, Engineering, Cabling, Wiring and Cloud services. TruCom offers hosted firewall and managed
MPLS service technologies (SuperCore MPLS™).
The company currently operates an approximate
58 miles Fiber optic ring throughout the greater Phoenix valley offering such services as Basic Residential Phone service, Basic
Business phone service, POT’s lines, Basic Fiber Broadband Internet services, Wireless Internet Services, Toll Free 800 services,
EFax, Erate, Dedicated T-1 Services, Auto Attendant, SIP Trunks, Mobile and Voip services.
Port2Port Division
Assets for reseller call termination both domestically
and internationally in Dallas Texas. These assets provide approximately 100 Domestic and international customers and vendors terminating
wholesale calls domestically and internationally.
San Diego Media
San Diego Media, Inc. (“SDM”)(
www.sandiegomedia.com)
is an established Southern California based software engineering and Internet e-commerce marketing services company that provides
enterprise-class integrated solutions for manufacturers, retailers, and distributors focused on developing solutions for companies
seeking online growth and profitability. The primary market offering has been MaxEXP®, a proven stable, productivity-enabling
proprietary eCommerce platform, built on open-standards technology that empowers companies to deploy and manage eCommerce offerings
at lower cost and at less time than required to deploy more conventional high-end solutions.
Media Content
We operate
as a Media Content Hub for Domestic and International syndication, Technology/Telecommunications company using on our own proprietary
Global Digital Media TV and Telecommunications infrastructure platform and we also provides technology solutions to businesses
worldwide. We offer Software as a Service (SaaS), Technology Platform as a Service (PAAS), Cloud-based Unified Communication as
a Service (UCaaS) and carrier-grade performance and support for businesses over our private IP MPLS fiber and wireless network
in the United States. Our cloud-based UCaaS services allow businesses of any size to enjoy all the latest voice, data, media and
collaboration features in today's global technology markets. We also operate as a Master Distributor for Nationwide Mobile Virtual
Network Operators (MVNO) and Independent Sales Organization (ISO) as a Master Distributor for Pre-Paid Cellphone services, Mobile
phones, Cellphone Accessories and Global Roaming Cellphones.
Our technologies
“Gathers Big Data” to predict our customers’ viewing and spending habits. We then deliver Products and Services
to support that estimated demand and share advertising revenues with our Content, Digital Media and Linear Broadcast Partners worldwide.
Each of
our four divisions contributes to the launch of our global Content delivery platform “ViewMe Live” and creates cross
pollinating revenue opportunities and a closed Global E-commerce Eco environment which we believe will help us execute our short
and long term corporate objectives. Our Content Division which consists of Blue Collar Productions (our TV and Film content Production
company) creates original content and in some cases third party content. Once Content has been produced we will then broadcast
and delivered that content over our proprietary Mobile TV Platform on our proprietary Trucom Telecommunication Network infrastructure
domestically and internationally.
CUBS (Cloud Unified Business Services)
–
We
are a CUBS provide
r
(Cloud
Unified Businesses Services) company and one of the first to combine recurring Telecom, Media and Data/Cloud Services revenue
under one roof, then bring all relevant data from those services into a proprietary telecom infrastructure and information matrix
platform capable of delivering a “Daily and Intelligent Dashboard” to our Domestic and International customers. Such
a planned cohesive combination of services and information from a single provider has been heretofore nonexistent. We intend to
pioneer an integrate communication services and information technology suites to empower individuals and companies with vital communications,
Smartphone, Network, Content, SaaS (Software as A Service), New Media Technology products and services, and valuable relevant diagnostic
information both Domestically and Internationally.
We are currently able to deliver a live
Global TV Broadcast and Social Media Platform utilizing a Mobile App technology on our proprietary Content Delivery Network. We
plan to expand our Cloud Unified Business Services (CUBS) technology-based business services unifying multiple services from the
cloud.
Blue Collar Production Division
Our production division, Blue Collar Productions
(formerly Blue Collar, Inc.), creates original live action and animated content productions. Blue Collar creates original live
action and animated content and has produced hundreds of hours of material for the television, theatrical, home entertainment and
new media markets.
CORPORATE ORGANIZATION CHART
RECENT DEVELOPMENTS
We agreed to a JV, Technology Licensing and
Product distribution agreement with New Orbit Technologies Mexico. New Orbit Technology is controlled by Stephen J. Thomas Founder,
CEO & Chairman TPT Global Tech. The two companies will share net profits 50% from the distribution and sale of TPT Global Tech
products and services in Mexico. New Orbit Technology Mexico will focus on Smartphone Technology distribution, Digital Media Products
and Renewable Energy projects in the country of Mexico. Under the laws in Mexico, New Orbit must be majority owned by Mexican citizens.
We intend to create a collaboration between TPT Global Tech and New Orbit Mexico whereby our products and services are distributed
to Mexico through the New Orbit venture. We believe New Orbit Mexico can be the primary distribution partner for TPT Global Tech
products and services in Mexico.
SpeedConnect Asset Acquisition
On April 3, 2019, the Company initiated
the acquisition of substantially all of the assets of SpeedConnect LLC (“SpeedConnect”) for $2 million, including the
assumption of all contracts and liabilities pertinent to operations. SpeedConnect was founded in 2002 by its CEO John Arthur Ogren
and is in its 17
th
year of operations as a national, predominantly rural, wireless telecommunications residential and
commercial Internet Service Provider (ISP). The
acquisition is expected to be completed by
the end of April 2019. SpeedConnect’s primary business model is subscription based, monthly reoccurring revenues, from wireless
delivered, high-speed Internet connections utilizing its company built and owned national network. SpeedConnect also resells third-party
satellite Internet, DSL Internet, IP telephony and DISH TV products. Mr. Ogren will stay on as the CEO of SpeedConnect for TPTG
for the next two years.
SpeedConnect is a privately-held
Broadband
Wireless
Access
(BWA)
provider.
Today,
SpeedConnect is one
of
the
nation’s
largest rural wireless
broadband Internet providers which serves over 25
,000
residential and commercial
wireless
broadband Internet customers, in Arizona, Idaho, Illinois, Iowa, Michigan,
Montana, Nebraska,
South
Dakota and
Texas.
SpeedConnect is a full-service ISP. The company’s
Frankenmuth Michigan back office is run by company employees, and includes, network management, network monitoring and maintenance,
significant allocations of registered address in public IP4 and IP6 space, employee based customer service, installation services,
automated resources and application based scheduling and tracking, paper, ACH, credit card, and email billing, warehousing, fulfillment,
integrated customer premise provisioning, walled garden collections and customer self-restarts, bandwidth usage tracking, integrated,
secure, and deep financial and operations dash board reporting, collections, accounting, payables, owned and licensed backhaul,
intelligent bandwidth management, consumption rated billing, customer payment portals, and all wrapped in a mature, first hit on
all search engines, Internet Brand. The company today services 25,000 residential and commercial Internet customers over its 220-cellular
tower foot-print across 10 Midwestern States.
Today’s urban ISP landscape is highly
competitive and dominated by some of the world’s largest going concerns. Names like Comcast, AT&T, Cox, Charter and DISH
are household words. Home Internet service has become synonymous with Cable. However, this is limited to the high-density top 100
markets. Beyond that the competition becomes more small licensed free wireless providers and satellite. Wire-line providers, unless
backed with government subsidies, do not build beyond 15 homes per street mile. SpeedConnect services both rural and non-rural
areas, and historically has done well in both market places, however the margins are improved in the more rural areas due to reduced
voluntary and involuntary customer attrition.
SpeedConnect’s key suppliers include
but are not limited to; Great Lakes Data Systems, Juniper, ZTE, Huawei, Cisco, Sandvine, American Tower, SBA Tower, Crown Castle,
CenturyLink, SuddenLink, South Dakota Networks, 123 dot net, Genesee Telephone, Air Advantage Fiber, Iron Mountain, ConVergence,
CDW, Talley, Tessco, Bursma Electronics, DragonWave, Ceragon Networks, Telrad, Arris, AP, APD, Plante Morran, Fifth Third, Sprint
and others.
CORPORATE MARKETING STRATEGY
Our corporate strategy in expanding our
operations and potential product and service streams is as follows.
MARKETING OBJECTIVE:
Establish our brand as a competitive service
and product provider in the communications industry.
ADVERTISING OBJECTIVE:
To create top of mind brand awareness
and emotional relevance resulting: TPT Global Tech, Inc. being the preferred and requested product line of products in the industry.
SALES & MERCHANDISING OBJECTIVES:
Our distributor will use direct selling
efforts. Their efforts will be supported with our marketing, advertising, and merchandising programs. The primary task will be
to increase the sales through retail channels.
PURSUE BRAND RECOGNITION THROUGHOUT THE
UNITED STATES
The first marketing objective must be
to refine our brand and secure our place in the minds of the consumers. This will be accomplished through the execution of an integrated
branding, identity and services marketing programs. The goals for this segment will be an enhanced brand identity, a brand applications
and a digital assets suite.
MARKETING STRATEGY
Our plan includes a direct sales program targeting
businesses, small business and home office users of communications. The direct sales efforts will be supported with third party
marketing integration. To further enhance the sales process, we will offer an offering program including services and product sheets,
coupons, point of sale materials (banners, shelf talkers, and end cap displays and danglers) and internet marketing programs.
Based on the above benefit scenarios, we plan to seize the following
opportunities:
-
Build superior brand recognition and become recognized as a category
leader.
-
Expand the US distribution into all states.
-
Establish distribution internationally.
-
Establish and manage a knowledgeable team of account executives
with industry experience.
-
Create a retail merchandising program that will build a strong
market share.
The purpose of our marketing efforts is to
move the product sales from their current position into the rapid growing “popularity” stage. Our strategy includes
the following marketing programs: Branding; Merchandising; Direct; Display Advertising; Media; Public Relations; Publicity; Events;
Investor Relations; Metrics Dashboard; and, Personal Sales. Our objective is to gain the sales momentum required to reach the “brand
preference” stage of product growth as soon as possible. This is the stage where we plan sales grow at a steady and stabilized
pace.
THE DIRECT MARKETING PROGRAM
A complete direct marketing program including
direct mail, blast email and URLs may be used to introduce the products to new customers and secure leads for the sales team. We
plan to employ the services of a database marketing company to leverage techniques to target prospective clients and reinforce
product messages throughout the selling process. This process will commence with the modeling of our existing customer data and
the analysis of the results using sophisticated analytic tools. Cross-channel marketing will be utilized in conjunction with the
direct marketing including social marketing. Our focus of this marketing medium will be relevance and timing, which only this medium
can provide full control over and the ability to fully quantify the results.
THE MEDIA MARKETING PROGRAM
We intend to test several media options to
determine which, if any, effectively drive sales and sales leads. The mediums being consider include outdoor advertising, both
static and mobile, magazine ads, and radio spots. Other media to be explored are direct mail post cards and emails to opt in viewers.
THE PUBLIC RELATIONS/PUBLICITY PROGRAM
We plan to employ the services of a public
relations firm to build a corporate profile to keep the name and the services and products in front of consumers. A third-party
PR firm will be responsible for writing and publishing press releases, coordinating event marketing and managing investor relations.
We employ marketing, sales and customer service
personnel on an as needed basis for specific events to build brand awareness. We use a range of marketing strategies and tactics
to build our brand and increase sales, including point-
of-sale materials, event sponsorship, in-store
and on premise promotions, public relations, and a variety of other traditional and non-traditional marketing techniques to support
the sales of all of our products.
We believe that a marketing mix of event promotions,
social media, print advertising in local media and internet advertising providing information and samples of our products at social
events is a strategy that may help increase sales.
TARGET CUSTOMER
We plan to profile our existing customers and
create a sophisticated data model to mathematically and statistically identify our “ideal” customer. Further the model
will be used to learn exactly how the target customer wishes to be communicated with and marketed to.
THE INTERNATIONAL MARKET
We plan to market our product internationally.
Many of the current products offered by us have features for the international community. This will be a secondary but strong focus
by our marketing team.
EXPERIENCED MANAGEMENT
Our senior management team has over 30 years
of experience in the various consumer product industries and has a proven track record of creating value both organically and through
strategic acquisitions. Our management intends to utilize the best available and fit-for-purpose technology and experienced contractors
to improve production and expand distribution.
CORPORATE STRATEGY
Our Goals
Our primary goal is to continue to grow our
business by improving value to our current customers and vendors. In providing a high-quality network we intend to continue to
grow our business. Additionally, we intend to purchase established telecommunications and technology companies that will immediately
generate and increase traffic (revenue) to our Company’s retail and wholesale network. Companies that we are strategically
aligned with have in their core business synergistic retail products and services that include, but are not limited to, Telecom
Cloud Services Media, Merchant Services/Mobile Banking, Cloud Services and Media (e.g. credit/debit card processing, check/ACH
payment processing, ecommerce/merchant processing, web hosting, voice, data, GSM/Wi-Fi Mobile, Mobile Money Transfers, IPTV, VOD
and Live Mobile Broadcasting, Prepaid Calling Card and PIN-less Prepaid services). If we acquire a strategic partner as a subsidiary,
we believe we will have the ability to aggregate their analogous technology platforms onto our proprietary Software Access System
operating platform for integration and efficiency.
We intend to work our media to accelerate cohesively
in the mobile technology sectors: LIVE Broadcast, Video on Demand (VOD) Apps, and Digital Video Magazine (DVM) Apps. While “white
labeling” our technologies as SaaS, our primary focus is what we believe is the first Global Cyber LIVE Mobile TV broadcast
network, ViewMe Live. The ViewMe Live Network™ is a 24-hour LIVE worldwide mobile TV network, delivered via iOS and Android
apps. The ViewMe Live Network™ presents a diversity of Linear Broadcast Channels (Domestically and International), coupled
with Social Media Platforms with combined functions that compete with some of the largest and most powerful Digital Media platforms,
to connected audiences who live a mobile-centric life.
DEVELOPMENT FLOW CHART
Network Services
Domestic and Global Telecommunications offerings
include: Mobile TV, Phone, Internet, Fiber Optic, Wireless, Hosted PBX, Wi-Fi, Wi-Max, Engineering, Cabling, Wiring and Cloud services.
Our telecommunications division has pioneered innovative, hosted firewall and managed MPLS service technologies (SuperCore MPLS)
and was the Industry first to engineer patent-pending Bulletproof™ failover services utilizing our own fiber optic and wireless
networks to guarantee business continuity and service uptime.
As
a retail and business media and telecommunications provider operating a high
-speed
Fiber Optic Network and Wireless Network in
the USA
at a cost competitive rate
for
new technologies,
we are
growing our
operations through sales of our
core
voice & data connectivity products to small
and midsized business clients.
We have
a growth strategy through acquisitions in order
to increase regional operations and deploy more technologies to niche & underserved markets. Unified Cloud Services, Unified
Communications (UC) or Unified Communications/Collaboration (UCC) has been a topic of interest to users looking to evolve from
a disorderly combination of media, voice, email and message communications to something more structured. Our goal is to target
existing and new small and medium businesses (“SMBs”) to transition their older voice system businesses,
expand
their software collaboration offerings, and most recently build cloud service offerings.
Cloud solution gives our customers
the flexibility to support a myriad of mobile devices as part of their hardware strategy, whether it's launching a bring-your-own-device
initiative, implementing a one-to-one program or equipping SMBs with mobile computing carts full of tablets, netbooks, or notebooks
in a secured environment.
Scalability and Cost Efficiency
Our proprietary Software Access System platform
currently runs our global operations. In short, it does this by connecting our customer base with the most profitable vendor route
while calculating least cost routing, analyzing route quality, and respecting “dipping” protocols. Based on the demand,
we have the ability to scale to meet the needs of our customers. Comparable “off the shelf” software systems in the
marketplace can cost in the hundreds of thousands of dollars just to purchase, not to mention expensive service contracts, which
may continue in perpetuity
after the original purchase. Our proprietary
platform, in which we have invested and have developed over several years, allows us to operate a global network with better efficiency
which we believe differentiates us from other competitors in the marketplace.
We believe our competitive advantages are:
|
·
|
Our products and services are 90% ready to launch globally
|
|
·
|
We offer 3-15 seconds latency Cellular – 1-5 on Wi-Fi
|
|
·
|
We offer Proprietary Optimizing / Stabilizing software
|
|
·
|
We offer Multi-Channel LIVE and Video on Demand worldwide
|
|
·
|
We offer Patent Pending real time dynamic failover solution called Bulletproof™
|
|
·
|
We have 57 route miles of fiber optic network meshed with a microwave canopy in Phoenix, Arizona
|
|
·
|
We offer our own proprietary voice switching and management platform running least cost routing and real time financial analytics
|
|
·
|
We have over 175 existing USA and International Telephone companies already interconnected to our telecom switches. These customers and vendors are ready made strategic technology distribution partners for our Telecom, Media, and Cloud Services products
|
|
·
|
We offer a Patent Pending Full HD Naked Eye 3D Smartphone
|
Our Strategy
Our business, marketing, and sales strategy
is structured around:
|
·
|
Pursuing selective, strategic, distribution relationships combined with cash positive acquisitions to build immediate revenue streams and increase our Company’s network footprint.
|
|
·
|
Utilize the expanded network to offer our Company’s service thereby increasing marginal revenues through the low risk offering of wholesale termination and prepaid services through existing distribution channels, retail stores and E-Commerce both domestically and internationally.
|
|
·
|
Pursuing markets within countries where there is a lower concentration of communications services that will result in initial higher pricing and potential for gross profit.
|
|
·
|
Providing low cost, pricing leading VoIP/GSM value added services through our Company’s next-generation centralized software platform and network.
|
|
·
|
Partnering and developing joint ventures with incumbent networks or government agencies to penetrate local emerging markets in order to build and operate Intranet Network Infrastructures that would move data over a secured network servicing government buildings and agencies, including police, military, hospitals and schools.
|
Our Intended Marketing Plan and Product Roll Out for 2019
|
·
|
Satellite radio syndication simulcast with over 25 million domestic U.S. listeners
|
|
·
|
Connected TV partner with over 18 million viewers worldwide.
|
|
·
|
Airline entertainment partnership with over 12 million international viewers.
|
|
·
|
Supported by an international public relations firm.
|
|
·
|
Comprehensive social media marketing campaign involving popular bloggers and podcasters
|
Our sales and marketing approach to our business
and consumer customers emphasizes customer-oriented sales, marketing and service. Our marketing plans include marketing our products
and services primarily through direct sales representatives, inbound call centers, local retail stores, telemarketing and third
parties, including retailers, satellite television providers, door to door sales agents and digital marketing firms. We support
our distribution with digital marketing, direct mail, bill inserts, newspaper and television advertising, website promotions, public
relations activities and sponsorship of community events and sports venues.
Similarly, our sales and marketing
approach to our business customers includes a commitment to provide comprehensive communications and IT solutions for
business, wholesale and governmental customers of all sizes, ranging from small offices to select enterprise customers. We
strive to offer our business customers stable, reliable, secure and trusted solutions. Our marketing plans include marketing
our products and services primarily through digital advertising, direct sales representatives, inbound call centers,
telemarketing and third parties, including telecommunications agents, system integrators, value-added resellers and other
telecommunications firms. We support our distribution through digital advertising, events, television advertising, website
promotions and public relations.
Marketing Designs
We have designed our services and products
offered to be:
|
·
|
Portable.
We offer the ability to access our network from anywhere within our coverage area without being restricted to a specific location.
|
|
·
|
Simple.
Our services are easy to install. After connecting our modem to an ATA or computer and a power source, our wireless broadband service is immediately available and requires no software installation.
|
|
·
|
Fast.
We offer speeds that typically exceed legacy cellular networks and are competitive with fixed broadband offerings.
|
|
·
|
A Good Value.
We generally price our services competitively because our costs to build and operate our network are significantly lower than the networks operated by many of our competitors.
|
With the popularity
of social media, people are demanding fast broadband connectivity on an increasingly mobile basis. We believe that our services
meet this demand and will market this in our efforts to increase our subscriber growth rate.
OUR COMPANY STRENGTHS
We believe the following
competitive strengths enable us to meet the demand for simple, reliable and portable wireless broadband connectivity:
·
First mover.
We are the first company we are aware of to launch a Global Cyber Mobile TV and Social Media Network that incorporates
functional feature of the largest Digital Media companies in the world.
·
High barriers to entry.
Our issued and pending patents, as well as our proprietary Media platforms and Naked Eye 3D technology
trade secrets give us a strong intellectual property position that we believe creates a significant barrier to entry for potential
competitors.
·
Broad range of applications for our platform.
This allows us to build a deep new product pipeline that creates multiple
paths to build a large and profitable business.
·
Multi-billion-dollar addressable market.
U.S. digital advertising revenues rose to $26.2 billion in the third quarter of
2018, solidifying 2018’s claim as the highest-spending first three quarters on record, according to the latest
IAB Internet Advertising Revenue Report released today by
IAB
and prepared by PwC
US. Digital spend for Q3 2018 estimates increased 20.6 percent over Q3 2017. In total, marketers spent $75.8 billion during 2018’s first
three quarters—22 percent more than they had spent during the same period a year ago.
https://iab.com/wp-content/uploads/2019/02/IAB_Internet-Ad-Revenue-Report-Q3-2018_2019-02-14_FINAL-1.pdf
·
Diverse revenue streams including Digital Media partnerships.
We anticipate generating significant revenue from our Digital
Media platforms. Our Linear Broadcast partners will play a large part in generating revenues from the sale of mobile and social
media advertising.
·
Strong senior leadership team.
Our founders and senior leaders have experience in building and operating several companies
in our business areas. We have phone, network, content, SaaS, product development, and commercialization experience that has enabled
us to establish market leadership positions for the companies where we previously were employed.
·
Differentiated Services.
We believe our service is unique because of our combination of our Worldwide Operational Platform,
Worldwide Affiliates, Cutting Edge Technology, Portability, Simplicity and Speed to Market with a competitive domestic and International
Price Structure. We believe this combination of factors differentiates our subscriber’s experience when compared to broadband
services provided by DSL, cable modem, wireless third-generation or 3G, networks.
·
Strong Spectrum Position.
We use unlicensed and licensed spectrum (in Arizona), which avoids radio frequency interference
that hinders competitors using non-licensed spectrum, such as WiFi network operators. Access to spectrum is a fundamental barrier
to entry for the delivery of high-quality wireless communications. Through our partnerships, we believe that we have access to
the second largest spectrum position in our band within the United States.
·
Advanced, Scalable Technology
.
Because we intend to design our own software and equipment, we can refine our product
development roadmap to meet our subscriber’s needs. We believe our NLOS, IP-based Ethernet architecture and compression
technology confers competitive advantages since it simplifies both network deployment and customer use while supporting a broad
range of potential premium services.
·
Efficient Economic Model.
We believe our individual market economic model is characterized by low fixed capital and operating
expenditures relative to other wireless and wire line broadband service providers. We believe our individual market model is highly
scalable and replicable across our markets. As our capabilities evolve, we expect to generate incremental revenue streams from
our subscriber base by developing and offering premium products and services.
·
Experienced Management Team.
Stephen J. Thomas, our Founder, Chairman, and Chief Executive Officer, has been an active
entrepreneur, operator and investor in the industry for more than 17 years in VoIP and wireless communications industry.
He previously served as Director of Network Optimization
/
Validation for WorldxChange, Inc. and CEO and President of New
Orbit Communications, Inc., which focused on International Operator Services in United States, Mexico, El Salvador and Guatemala.
FUTURE
PLANS
Lion Smart
Phone Product
We are currently
seeking a manufacturer for our Lion Smart Phone. Our Management believes our patent pending Lion smart phone is the first
Full
HD Naked Eye 3D
smart phone ever launched in the United States. Lion Universe’s mobile 3D technology is patent pending.
The smart phone will be distributed through our wholly-owned subsidiary K-TEL, in their existing brick and mortar distribution
channel in the Northwest expanding into other areas. It is anticipated that a national and international roll out will soon follow.
TPTW is building industry leading personal cellular phones designed for a wide appeal. With a business model built on innovation
and progress starting with the Lion Phone technology, we intend to produce high-quality and easy-to-use cellular phones. Our Lion
Phone was designed for consumers looking for portable and affordable cutting-edge technology. Our first-generation
phones come
equipped with full high definition resolution screen for better viewing. We believe this Full HD Naked Eye 3D smart Phone is perfect
for watching movies, playing games, even editing photos or videos.
Whether that
is looking at photos, playing music, emailing or surfing the web, our management believes consumers want more from their phones.
We believe our Lion Phone raises the bar for cellular phones. For the first time ever, cellular users can enjoy quality 3D viewing
with the naked eyes no glasses required enjoying full high definition video with smooth playback.
Our Management
believes consumers have been waiting for a way to watch their favorite movies in 3D, with the convenience of their phone and gamers
can have the leisure of playing their games without taking all head gear with them. Our Lion Universe Technology strives to give
customers the best possible experience with our Full HD Naked Eye 3D smart phone in the US and Global markets.
We intend to
market this phone in 2019.
Mobile Device
Viewer Market Expansion
In general,
viewers are consuming more content via mobile TV distribution, while rapidly abandoning expensive subscriptions from standard
satellite TV and cable networks. The rise of high-quality content on low-cost platforms, such as mobile devices, continues to
negatively impact the standard TV industry. The media business is being forced to evolve and adjust to massive disruptions in
content distribution methods. Traditional media models are functionally broken and will continue to be disrupted by technology,
which is driven by the needs of the younger generation. The future of media is dependent on new technology platforms. These platform
models (e.g. smart TV, connected TV boxes, mobile TV devices) are the future of content distribution. Google, through YouTube,
has changed the face of video content distribution. Amazon continues to disrupt the book industry. Apple has redefined music and
application distribution. And Microsoft is continuing to change the engagement model and distribution of content through its Xbox
TV game console.
We believe mobile
delivery has a growing appeal to advertisers and subscribers. As brands continue to shift budgets to mobile advertising, they
must reassess their approach to customer acquisition to ensure they continue to reach potential customers effectively. It
is predicted that mobile advertising will account for 30.5% of global advertising expenditure in 2020, up from 19.2% in 2017.
Expenditure on mobile advertising will total US$187bn in 2020, more than twice the US$88bn spent on desktop advertising,
and just US$5bn behind the US$192bn spent on television advertising. At the current rate of growth, mobile advertising
will comfortably overtake television in 2021.
As internet
users switch from desktop to mobile devices – and new users go straight to mobile – online advertising is
making the same switch. Advertising on mobile devices is rising at a meteoric rate and is taking market share from most
other media. Mobile adspend grew 35% in 2017, and we expect it to grow at an average rate of 21% a year to 2020. https://www.zenithmedia.com/insights/global-intelligence-issue-06-2018/mobile-share-of-advertising-market-to-exceed-30-in-2020/
Content
Mining Plan
Once our planned
SaaS media applications, smart phones and tablets are launched into the domestic and international markets, content analytics
or marketing data will be gathered from these devices. The data generated from these applications and devices will give us an
advantage insight into our subscribers viewing and buying habits. Once data has been scrubbed of personally identifying information,
we plan to be able to create original or lease content from broadcast partners to service what our analytics are telling us to
produce (or license), with the intent on moving us closer towards predictive analytics. Predictive analytics is being able to
predict what our customer likes based on their viewing habits and then produce that content targeted to our subscriber and then
“push” that new (or licensed) content to them.
Our ViewMe
Live Technology Plan
We offer VML
technology for which we plan to expand marketing. We believe SaaS ViewMe Live (VML) could become a leading Digital Media Mobile
TV technology platform in the business-to-business and business-to-
consumer markets.
Our proprietary software platform can reach a worldwide audience of approximately one billion mobile viewers. VML addresses global
mobile distribution of LIVE and Video on Demand (“VOD”) content as a white label Software as a Service (“SaaS”).
VML OTT live
streaming technology is similar to what you see with satellite TV such as Dish Network and DirecTV, as well as cable companies.
Almost all currently existing live streaming cannot do live broadcast streaming at this level and usually has anywhere from 1
minute to 10 minute delays or continuous buffering, never loading the video. With VML, there is the ability to have “worldwide”
access for a live streaming event equal to standard television broadcasting with tens of millions of simultaneous users. We believe
that VML is the first technology to be able to achieve this level of live streaming. In emerging countries that do not have fiber,
cable and satellite TV, access to VML is simple and cost effective, as long as there is a cellular connection on a 3G network
or higher (regardless of provider)[1]. VML aims to provide uninterrupted live streaming on mobile devices without buffering, crashes,
pixilation, or audio and video syncing issues. One practical application of this technology is that a viewer can move from a Wi--Fi
connection to a 3G connection without interruption. VML has a unique user interface with multi--channel access and built-in social
media, and we believe it is unlike anything currently on the market. VML also has the capability to do a Live Linear Broadcast
with VOD.VML’s technology has the potential to reduce web content pirating since high quality TV broadcast is now easily
accessed worldwide on mobile devices.
Currently, we
believe we are the only company that does all the above in the industry and we believe VML has the potential to expand our technologies
and applications even further.
[1] Subject
to the laws and regulations of each country.
The hottest
technology in the over the top (“OTT”) market and the biggest challenge in the OTT market is “Live Linear Channel
Broadcasting” and “Live Event Broadcasting” to equal standard television broadcasting on cable and satellite
TV. This type of technology is superior to video on demand (VOD) streaming technology in both acquisition and delivery. The growth
of OTT video delivery has been significant. In the past year alone, OTT has grown to $35 billion in global revenue, with $17 billion
coming from emerging markets source Digital TV Research. ViewMe Live (“VML”) has many technology advantages including:
Artificial Intelligence (“AI”); the ability to simultaneously access millions of users simultaneously with virtually
no latency equivalent to standard television broadcasting; global distribution (without interruption) on cellular and Wi--Fi;
and a fully interactive menu user interface and worldwide advertising brokers in place.
VML’s
content delivery network (“CDN”) can potentially reach tens of millions of mobile devices (tablets and smartphones)
and has the potential to scale to one billion video streams globally. It loads content within seconds, not only for Wi-Fi, but
also more importantly, on cellular networks that are 3G and higher. VML’s core technology is fully developed and is able
to support clients on a turnkey native mobile app in less than 60 days. We have already achieved major milestones as the world’s
largest private conduit build out for global deployment of LIVE and VOD streaming content. Our OTT live streaming technology is
unique and proprietary. Here are some highlights on how VML can help from telecommunication companies to TV station broadcasters
to digital film libraries.
VML has the
ability to create a “Master Network Mobile App” that can allow for a multiple channel build out, each with its own
unique Pay Per View charge (optional). This means a company can have a live event channel per country with a different price per
user based on the economics of that country. VML has unlimited channel build out (e.g. a company could have 50 channels or 1000
channels). Any telecommunications company can have professional looking displays and user interfaces for mobile with VML, similar
to what the large telecommunications companies provide. A Master Network App also allows a network to expand into other categories
by country (e.g. additional sports categories for various sports by country). Expansion can focus on audience aggregation for
sports and other forms of entertainment categories. Pay-Per View is an option for these expanded categories as well. We have built-in
worldwide ad brokers for pre---roll commercial ads so that revenue can be generated as soon as possible. There is also potential
to upsell to existing advertisers and sponsors and it can be brand specific by country.
Our differentiation
from webstreaming
We are not a
website-based video streaming technology. VML is strictly a native mobile app focused on video streaming technology for mobile
platforms. We are not a dashboard-based video content company where users
upload content;
we are a complete turnkey SaaS application. A survey released in May 2015, sponsored by Level 3 Communications, stated, “Offering
both VOD and Live Linear channels will be critical for OTT providers to entice new prospects and gain market share. This trend
is a critical one. For existing OTT providers, offering a VOD service may not be enough to maintain, much less grow, market share.”
The trend towards adding live linear channel content has the potential to become “table stakes” in the OTT game over
the next several years, with both breaking news and live sports content leading the way in terms of interest for OTT service providers
adding live linear channels.
SaaS White
Label
We plan
to white label our suite of SaaS technologies for yearly licensing and monthly maintenance fees. The prospective user base for
the SaaS White Label Suite is extensive as there are more than 200,000 TV broadcasters worldwide alone, and many of them are seeking
to migrate to the vast mobile video streaming market space. The sizeable population of potential SaaS clients includes standard
television broadcasters in every country, direct marketing companies, low-powered antenna broadcasters (such as universities and
churches), IPTV broadcasters, and large content (film and TV) providers that are seeking to further monetize their properties
for worldwide syndication.
The SaaS
suite includes full app development on Apple iOS, Google Android and Roku connected boxes, user interface (menu system), advertising
broker network for pre---roll commercial ads (from date of launch), 24/7 LIVE monitoring of inbound and outbound signals, data
analytics, seamless updating to all platforms, Amazon web service (AWS) blade servers, and coverage up to the first 20 million
streams. The white label product is offered to stand--alone.
User
Interface
In a preprogrammed
live linear broadcast application, viewers have free access via a
p
laylist
b
y
cat
e
g
o
ry a
n
d
have the ability to
“catc
h
--
up
”
w
ith
wh
at t
h
ey
m
ay
h
ave
m
iss
e
d
in t
h
e LI
V
E
b
r
oad
cast,
regar
d
l
e
ss
o
f
its
o
riginal air
d
ate.
Th
e
vide
o
-
on
-
d
e
m
a
n
d
(
VOD
) feature provides the opportunity to access a
dd
iti
on
al
vi
ewe
rs a
n
d
m
on
etiz
e
past content. After several years in development, we believe that VML has a significant
first to market
advantage
and that no other companies currently have a comparable commercialized offering.
VML has
also been developed and customized for the mobile streaming technology of Viki, a Korean Pop TV content provider. Ten months post--launch,
Viki reached 50 million installed apps for mobile devices and attracted 22 million users in approximately 200 countries. This
rapid scalability was one factor in Viki’s acquisition by Rakuten for $200 million.
Our
Plan for Strategic Partnering with Telecommunication & Media Companies
Currently
in the world, viewers usually need to have a contract with a cable provider (e.g. AT&T, Cox, Xfinity, Spectrum, or Cablevision
in the U.S.) or satellite TV provider (e.g. DirecTV and
D
ISH
N
et
wo
rk
in the U.S.) a
n
d
b
e in ra
n
ge
o
f a r
e
si
den
tial
o
r
bu
si
ne
ss
W
i-Fi to
b
e a
b
le
to
w
atch
o
v
e
r
t
h
e t
o
p (
OT
T)
content on a connected TV device, website or mobile access. VML is capable of offering a nearly unlimited number of channels to
mobile users virtually anywhere and everywhere, with global reach, far exceeding two U.S. satellite companies (DirecTV and DISH
Network), which have 500+ channels each and are only available in the U.S.
We believe
VML will immediately appeal to any channel that is currently on DirecTV and DISH Network for global mobile linear broadcast participation,
simply because these platforms are only available in the U.S. market.
VML
can
p
r
o
vi
d
e
lo
w
--
powe
r
e
d
TV st
a
ti
on
s
(after
f
oun
d in c
hu
rc
he
s
a
n
d
un
iv
e
rsiti
e
s),
al
on
g
w
ith
h
igh--
powe
r
e
d
stations, the ability to reach the entire global market. Other potential users are owners of libraries of digitized content, and
LIVE event venues such as music concerts, sporting events, festivals, beauty pageants, summer and winter Olympic Games, award
shows, red carpet events, trade shows and conventions. Enthusiasts can produce their own show in any area and could launch their
own channels for travel, food, spirits, sports, outdoor recreation, retro TV shows, children, cartoons, comedy, drama, reality,
education, automobiles, health, corporations, shopping, soap opera, game shows, dating, religion, etc., providing extensive possibilities
for media expansion. Content providers will not be limited by the major TV networks and film studios for distribution rights.
We have targeted Telecommunication
and Media Company Opportunities to offer:
|
·
|
Turn
key mobile app for telecommunication and media companies for immediate distribution of TV broadcasts on terrestrial, cable
and satellite for free or as subscription.
|
|
·
|
Turn
key mobile app for
free or pay per view
live events.
|
|
·
|
Turn
key mobile app for digital libraries of content providers.
|
|
·
|
Reseller
program with territorial rights.
|
|
·
|
Worldwide
analytics on mobile TV content provided to help with target marketing for products and services.
|
|
·
|
Transitions
to the automotive industry car play systems.
|
|
·
|
Option
to p
re---load
M
aster
N
et
wo
rk
Ap
p
o
n tel
e
c
o
mm
un
icati
o
n
c
o
m
p
a
ny’s
m
o
bile de
v
ices
s
u
ch as s
m
art phones and tablets.
|
|
·
|
P
re-load
t
h
e SaaS
wh
ite la
b
el
clie
n
ts
o
n tel
e
c
o
mm
un
icati
o
n
c
o
m
p
a
n
y
m
o
bile
d
evices.
|
Geo
Fencing Available (The ability to offer broadcast territories by region or regional Networks)
Our Plan to Act as
a Reseller with Territorial Rights
–
|
·
|
Value Added Reseller
(VAR) to telecommunication and media companies.
|
|
·
|
Exclusive rights
for a country or region for reselling the white label opportunity.
|
|
·
|
Offer to Telecommunication
and media companies OTT digital content as a channel or network.
|
|
·
|
Offer 1 to 1000
channels by territory.
|
|
·
|
Approach
emerging markets as capital resources permit.
|
Our business is subject to a number
of risks of which you should be aware before making an investment decision. These risks are discussed more fully in the “Risk
Factors” section of this prospectus immediately following this the summary.
PLAN OF OPERATIONS
Our Capital
Budget for the next 12 months
Liquidity and Capital
Resource Needs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SaaS
|
|
/----------Content------/
|
|
/---------Network--------/
|
|
Phone
|
|
General
|
Initial Proposed Uses of Funds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
San
Diego Media
|
|
Blue
Collar
|
|
ViewMe
Live
|
|
Proposed
Acquisition
|
|
Lion
Phone 4K Units
|
|
General
|
|
2019
Acq Totals
|
E
st. Build-Out Costs-Complex
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
—
|
|
Studio Equip
|
|
|
|
|
|
|
|
|
|
$
|
400,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
400,000
|
|
Hardware Manufacturing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
500,000
|
|
|
|
|
|
|
$
|
500,000
|
|
ViewMe Live Completion
|
|
|
|
|
|
|
|
|
|
$
|
2,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,000,000
|
|
Initial Capx
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,400,000
|
|
|
$
|
—
|
|
|
$
|
500,000
|
|
|
$
|
—
|
|
|
$
|
2,900,000
|
|
Down Payment Cash for Acquisitions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,000,000
|
|
|
|
|
|
|
|
|
|
|
$
|
3,000,000
|
|
Seller Note Retirement
|
|
$
|
250,000
|
|
|
$
|
1,600,000
|
|
|
$
|
4,000,000
|
|
|
|
|
|
|
|
400,000
|
|
|
|
|
|
|
$
|
6,250,000
|
|
Marketing Budget
|
|
|
|
|
|
|
|
|
|
$
|
1,000,000
|
|
|
|
|
|
|
|
1,000,000
|
|
|
|
250,000
|
|
|
$
|
2,250,000
|
|
General Working Capital
|
|
$
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,400,000
|
|
|
$
|
2,500,000
|
|
Real Estate Acquisition
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
—
|
|
Total Project Cost
|
|
$
|
350,000
|
|
|
$
|
1,600,000
|
|
|
$
|
7,400,000
|
|
|
$
|
3,000,000
|
|
|
$
|
1,900,000
|
|
|
$
|
2,9650,000
|
|
|
$
|
16,900,000
|
|
CYBER RISKS
Like other large
telecommunications companies, we are a constant target of cyber-attacks of varying degrees, which has caused us to spend increasingly
more time and money to deal with increasingly sophisticated attacks. Some of the attacks may result in security breaches, and
we periodically notify our customers, our employees or the public of these breaches when necessary or appropriate. None of these
resulting security breaches to date have materially adversely affected our business, results of operations or financial condition.
We rely on several
other communications companies to provide services or products for our offerings. We may lease a significant portion of our core
fiber network from our competitors and other third parties. Many of these leases will lapse in future years. Our future ability
to provide services on the terms of our current offerings will depend in part upon our ability to renew or replace these leases,
agreements and arrangements on terms substantially similar to those currently in effect.
For additional
information regarding our systems, network, cyber risks, capital expenditure requirements and reliance upon third parties, see
"Risk Factors."
COMPETITION,
COMPETITORS, REGULATION AND TAXATION
Competition
General
We compete in
a rapidly evolving and highly competitive market, and we expect intense competition to continue. In addition to competition from
larger national telecommunications providers, we are facing increasing competition from several other sources, including cable
and satellite companies, wireless providers, technology companies, cloud
companies, broadband
providers, device providers, resellers, sales agents and facilities-based providers using their own networks as well as those
leasing parts of our network. Technological advances and regulatory and legislative changes have increased opportunities for a
wide range of alternative communications service providers, which in turn have increased competitive pressures on our business.
These alternate providers often face fewer regulations and have lower cost structures than we do. In addition, the communications
industry has, in recent years, experienced substantial consolidation, and some of our competitors in one or more lines of our
business are generally larger, have stronger brand names, have more financial and business resources and have broader service
offerings than we currently do.
Wireless telephone
services are a significant source of competition with our legacy carrier services. It is increasingly common for customers to
completely forego use of traditional wireline phone service and instead rely solely on wireless service for voice services. We
anticipate this trend will continue, particularly as our older customers are replaced over time with younger customers who are
less accustomed to using traditional wireline voice services. Technological and regulatory developments in wireless services,
Wi-Fi, and other wired and wireless technologies have contributed to the development of alternatives to traditional landline voice
services. Moreover, the growing prevalence of electronic mail, text messaging, social networking and similar digital non-voice
communications services continues to reduce the demand for traditional landline voice services. These factors have led to a long-term
systemic decline in the number of our wireline voice service customers.
The Telecommunications
Act of 1996, which obligates carriers to permit competitors to interconnect their facilities to the carrier's network and to take
various other steps that are designed to promote competition, imposes several duties on a carrier if it receives a specific request
from another entity which seeks to connect with or provide services using the carrier's network. In addition, each carrier is
obligated to (i) negotiate interconnection agreements in good faith, (ii) provide nondiscriminatory "unbundled"
access to all aspects of the carrier's network, (iii) offer resale of its telecommunications services at wholesale rates
and (iv) permit competitors, on terms and conditions (including rates) that are just, reasonable and nondiscriminatory, to
colocate their physical plant on the carrier's property, or provide virtual colocation if physical colocation is not practicable.
Current FCC rules require carriers to lease a network element only in those situations where competing carriers genuinely would
be impaired without access to such network elements, and where the unbundling would not interfere with the development of facilities-based
competition.
As a result
of these regulatory, consumer and technological developments, carriers also face competition from competitive local exchange carriers,
or CLECs, particularly in densely populated areas. CLECs provide competing services through reselling a carrier’s local
services, through use of a carrier's unbundled network elements or through their own facilities.
Technological
developments have led to the development of new products and services that have reduced the demand for our traditional services,
as noted above, or that compete with traditional carrier services. Technological improvements have enabled cable television companies
to provide traditional circuit-switched telephone service over their cable networks, and several national cable companies have
aggressively marketed these services. Similarly, companies providing VoIP services provide voice communication services over the
Internet which compete with our traditional telephone service and our own VoIP services. In addition, demand for our broadband
services could be adversely affected by advanced wireless data transmission technologies being deployed by wireless providers
and by certain technologies permitting cable companies and other competitors to deliver faster average broadband transmission
speeds than ours.
Similar to us,
many cable, technology or other communications companies that previously offered a limited range of services are now offering
diversified bundles of services, either through their own networks, reselling arrangements or joint ventures. As such, a growing
number of companies are competing to serve the communications needs of the
same customer
base. Such activities will continue to place downward pressure on the demand for and pricing of our services.
As customers
increasingly demand high-speed connections for entertainment, communications and productivity, we expect the demands on our network
will continue to increase over the next several years. To succeed, we must continue to invest in our networks or engage partners
to ensure that they can deliver competitive services that meet
these increasing
bandwidth and speed requirements. In addition, network reliability and security are increasingly important competitive factors
in our business.
Additional
information about competitive pressures is located under the heading “Risk Factors.”
Competitors
In connection
with providing strategic services to our business customers, which includes our small, medium and enterprise business, wholesale
and governmental customers, we compete against other telecommunication providers, as well as other regional and national carriers,
other data transport providers, cable companies, CLECs and other enterprises, some of whom are substantially larger than us. Competition
is based on price, bandwidth, quality and speed of service, promotions and bundled offerings. In providing broadband services,
we compete primarily with cable companies, wireless providers, technology companies and other broadband service providers. We
face competition in Ethernet based services in the wholesale market from cable companies and fiber-based providers.
Our competitors
for providing integrated data, broadband, voice services and other data services to our business customers range from small to
mid-sized businesses. Due to the size of some of these companies, our competitors may be able to offer more inexpensive solutions
to our customers. To compete, we focus on providing sophisticated, secure and performance-driven services to our business customers
through our infrastructure.
The number of
companies providing business services has grown and increased competition for these services, particularly with respect to smaller
business customers. Many of our competitors for strategic services are not subject to the same regulatory requirements as we are
and therefore they are able to avoid significant regulatory costs and obligations.
Government
Regulation
Overview
As discussed
further below, our operations are subject to significant local, state, federal and foreign laws and regulations.
We are subject
to the significant regulations by the FCC, which regulates interstate communications, and state utility commissions, which regulate
intrastate communications. These agencies (i) issue rules to protect consumers and promote competition, (ii) set the rates that
telecommunication companies charge each other for exchanging traffic, and (iii) have traditionally developed and administered
support programs designed to subsidize the provision of services to high-cost rural areas. In most states, local voice service,
switched and special access services and interconnection services are subject to price regulation, although the extent of regulation
varies by type of service and geographic region. In addition, we are required to maintain licenses with the FCC and with state
utility commissions. Laws and regulations in many states restrict the manner in which a licensed entity can interact with affiliates,
transfer assets, issue debt and engage in other business activities. Many acquisitions and divestitures may require approval by
the FCC and some state commissions. These agencies typically have the authority to withhold their approval, or to request or impose
substantial conditions upon the transacting parties in connection with granting their approvals.
The following
description discusses some of the major industry regulations that may affect our traditional operations, but numerous other regulations
not discussed below could also impact us. Some legislation and regulations are currently the subject of judicial, legislative
and administrative proceedings which could substantially change the manner in which the telecommunications industry operates and
the amount of revenues we receive for our services.
Neither the
outcome of these proceedings, nor their potential impact on us, can be predicted at this time. For additional information, see
"Risk Factors."
The laws and
regulations governing our affairs are quite complex and occasionally in conflict with each other. From time to time, we are fined
for failing to meet applicable regulations or service requirements.
Federal Regulation
General
We are required
to comply with the Communications Act of 1934. Among other things, this law requires our local exchange carriers to offer various
of our legacy services at just and reasonable rates and on non-discriminatory terms. The Telecommunications Act of 1996 materially
amended the Communications Act of 1934, primarily to promote competition.
The FCC regulates
interstate services we provide, including the special access charges we bill for wholesale network transmission and the interstate
access charges that we bill to long-distance companies and other communications companies in connection with the origination and
termination of interstate phone calls. Additionally, the FCC regulates a number of aspects of our business related to privacy,
homeland security and network infrastructure, including our access to and use of local telephone numbers and our provision of
emergency 911 services. The FCC has responsibility for maintaining and administering support programs designed to expand nationwide
access to communications services (which are described further below), as well as other programs supporting service to low-income
households, schools and libraries, and rural health care providers. Changes in the composition of the five members of the FCC
or its Chairman can have significant impacts on the regulation of our business.
In recent years,
our operations and those of other telecommunications carriers have been further impacted by legislation and regulation imposing
additional obligations on us, particularly with regards to providing voice and broadband service, bolstering homeland security,
increasing disaster recovery requirements, minimizing environmental impacts and enhancing privacy. These laws include the Communications
Assistance for Law Enforcement Act, and laws governing local telephone number portability and customer proprietary network information
requirements. In addition, the FCC has heightened its focus on the reliability of emergency 911 services. The FCC has imposed
fines on us and other companies for 911 outages and has adopted new compliance requirements for providing 911 service. We are
incurring capital and operating expenses designed to comply with the FCC's new requirements and minimize future outages. All of
these laws and regulations may cause us to incur additional costs and could impact our ability to compete effectively against
companies not subject to the same regulations.
Over the past
several years, the FCC has taken various actions and initiated certain proceedings designed to comprehensively evaluate the proper
regulation of the provisions of data services to businesses. As part of its evaluation, the FCC has reviewed the rates, terms
and conditions under which these services are provided. The FCC's proceedings remain pending, and their ultimate impact on us
is currently unknown.
Telephony
Services
We
operate traditional telecommunications services in our Arizona subsidiary, and those services are largely governed under rules
established for CLECs under the Communications Act. The Communications Act entitles our CLEC subsidiary to certain rights, but
as telecommunications carriers, it also subjects them to regulation by the FCC and the states. Their designation as telecommunications
carriers also results in other regulations that may affect them and the services they offer.
Interconnection
and Intercarrier Compensation
The
Communications Act requires telecommunications carriers to interconnect directly or indirectly with other telecommunications carriers.
Under the FCC's intercarrier compensation rules, we are entitled, in some cases, to compensation from carriers when they use our
network to terminate or originate calls and in other cases are required to compensate another carrier for using its network to
originate or terminate traffic. The FCC and state regulatory commissions, including those in the states in which we operate, have
adopted limits on the amounts of compensation that may be charged for certain types of traffic. As noted above, the FCC has determined
that intercarrier compensation for all terminating traffic will be phased down over several years to a "bill-and-keep"
regime, with no
compensation
between carriers for most terminating traffic by 2018 and is considering further reform that could reduce or eliminate compensation
for originating traffic as well.
Universal Service
Our CLEC subsidiary
is required to contribute to the Universal Service Fund (“USF”). The amount of universal service contribution required
of us is based on a percentage of revenues earned from interstate and international services provided to end users. We allocate
our end user revenues and remit payments to the universal service fund in accordance with FCC rules. The FCC has ruled that states
may impose state universal service fees on CLEC telecommunications services
State Regulation
Our
CLEC subsidiary telecommunications services are subject to regulation by state commissions in each state where we provide services.
In order to provide our services, we must seek approval from the state regulatory commission or be registered to provide services
in each state where we operate and may at times require local approval to construct facilities. Regulatory obligations vary from
state to state and include some or all of the following requirements: filing tariffs (rates, terms and conditions); filing operational,
financial, and customer service reports; seeking approval to transfer the assets or capital stock of the broadband communications
company; seeking approval to issue stocks, bonds and other forms of indebtedness of the broadband communications company; reporting
customer service and quality of service requirements; outage reporting; making contributions to state universal service support
programs; paying regulatory and state Telecommunications Relay Service and E911 fees; geographic build-out; and other matters
relating to competition.
Other Regulations
Our CLEC subsidiary
telecommunications services are subject to other FCC requirements, including protecting the use and disclosure of customer proprietary
network information; meeting certain notice requirements in the event of service termination; compliance with disabilities access
requirements; compliance with CALEA standards; outage reporting; and the payment of fees to fund local number portability administration
and the North American Numbering Plan. As noted above, the FCC and states are examining whether new requirements are necessary
to improve the resiliency of communications networks. Communications with our customers are also subject to FCC, FTC and state
regulations on telemarketing and the sending of unsolicited commercial e-mail and fax messages, as well as additional privacy
and data security requirements.
Broadband
Regulatory
Classification.
Broadband Internet access services were traditionally classified by the FCC as "information
services" for regulatory purposes, a type of service that is subject to a lesser degree of regulation than "telecommunications
services." In 2015, the FCC reversed this determination and classified broadband Internet access services as "telecommunications
services." This reclassification has subjected our broadband Internet access service to greater regulation, although the
FCC did not apply all telecommunications service obligations to broadband Internet access service. The 2015 Order could have a
material adverse impact on our business as it may justify additional FCC regulation or support efforts by States to justify additional
regulation of broadband Internet access services. In December 2017, the FCC adopted an order that in large part reverses the 2015
Order and reestablishes the "information service" classification for broadband Internet access service. The 2017 Order
has not yet gone into effect, however, and the 2015 Order will remain binding until the 2017 Order takes effect. The 2017 Order
is expected to be subject to legal challenge that may delay its effect or overturn it.
Net
Neutrality, and Current Status
. The 2015 Order also established a new "Open Internet" framework that expanded disclosure
requirements on Internet service providers ("ISPs") such as cable companies, prohibited blocking, throttling, and paid
prioritization of Internet traffic on the basis of the content, and imposed a "general conduct standard" that prohibits
unreasonable interference with the ability of end users and edge providers to reach each other. The FCC's 2017 Order eliminates
these rules except for certain disclosure requirements (see the official release summary from the FCC below). Additionally, Congress
and some states are considering legislation that may codify "network neutrality" rules.
The
Federal Communications Commission has made the following official release about the Restoring Internet Freedom Order:
"The
FCC's Restoring Internet Freedom Order, which took effect on June 11, (2018) provides a framework for protecting an open Internet
while paving the way for better, faster and cheaper Internet access for consumers. It replaces unnecessary, heavy-handed regulations
that were developed way back in 1934 with strong consumer protections, increased transparency, and common-sense rules that will
promote investment and broadband deployment. The FCC's framework for protecting Internet freedom has three key parts:
1. Consumer Protection
The
Federal Trade Commission will police and take action against Internet service providers for anticompetitive acts or unfair and
deceptive practices. The FTC is the nation's premier consumer protection agency, and until the FCC stripped it of jurisdiction
over Internet service providers in 2015, the FTC protected consumers consistently across the Internet economy.
2. Transparency
A
critical part of Internet openness involves Internet service providers being transparent about their business practices. That's
why the FCC has imposed enhanced transparency requirements. Internet service providers must publicly disclose information regarding
their network management practices, performance, and commercial terms of service. These disclosures must be made via a publicly
available, easily accessible company website or through the FCC's website. This will discourage harmful practices and help regulators
target any problematic conduct. These disclosures also support innovation, investment, and competition by ensuring that entrepreneurs
and other small businesses have the technical information necessary to create and maintain online content, applications, services,
and devices.
Internet
Service Providers must clearly disclose their network management practices on their own web sites or with the FCC. For more information
about these disclosures, you can visit https://www.fcc.gov/isp- disclosures.
Removes Unnecessary Regulations
to Promote Broadband Investment
The
Internet wasn't broken in 2015, when the previous FCC imposed 1930s-era regulations (known as "Title II") on Internet
service providers. And ironically, these regulations made things worse by limiting investment in high-speed networks and slowing
broadband deployment. Under Title II, broadband network investment dropped more than 5.6% -- the first time a decline has happened
outside of a recession. The effect was particularly serious for smaller Internet service providers (fixed wireless companies,
small-town cable operators, municipal broadband providers, electric cooperatives, and others) that don't have the resources or
lawyers to navigate a thicket of complex rules...."
The
items listed in this internet Order are for carriers such as Century Link, which is our contract internet provider, and we are
in compliance with the areas that we are responsible for which are few. We generate the last mile of internet service but we are
actually a reseller of Century Link services as they provide the bandwidth to us.
Access
for Persons with Disabilities.
The FCC's rules require us to ensure that persons with disabilities
have access to "advanced communications services" ("ACS"), such as electronic messaging and interoperable
video conferencing. They also require that certain pay television programming delivered via Internet Protocol include closed captioning
and require entities distributing such programming to end users to pass through such captions and identify programming that should
be captioned.
Other
Regulation.
The 2015 Order also subjected broadband providers' Internet traffic exchange rates and
practices to potential FCC oversight and created a mechanism for third parties to file complaints regarding these matters. In
addition, our provision of Internet services also subjects us to the limitations on use and disclosure of user communications
and records contained in the Electronic Communications Privacy Act of 1986. Broadband Internet access service is also subject
to other federal and state privacy laws applicable to electronic communications.
Additionally,
providers of broadband Internet access services must comply with CALEA, which requires providers to make their services and facilities
accessible for law enforcement intercept requests. Various other federal and state laws apply to providers of services that are
accessible through broadband Internet access service, including copyright laws, telemarketing laws, prohibitions on obscenity,
and a ban on unsolicited commercial e-mail, and privacy and data security laws. Online content we provide is also subject to some
of these laws.
Other
forms of regulation of broadband Internet access service currently being considered by the FCC, Congress or state legislatures
include consumer protection requirements, cyber security requirements, consumer service standards, requirements to contribute
to universal service programs and requirements to protect personally identifiable customer data from theft. Pending and future
legislation in this area could adversely affect our operations as an Internet service provider and our relationship with our Internet
customers.
Additionally,
from time to time the FCC and Congress have considered whether to subject broadband Internet access services to the federal Universal
Service Fund ("USF") contribution requirements. Any contribution requirements adopted for Internet access services would
impose significant new costs on our broadband Internet service. At the same time, the FCC is changing the manner in which Universal
Service funds are distributed. By focusing on broadband and wireless deployment, rather than traditional telephone service, the
changes could assist some of our competitors in more effectively competing with our service offerings.
VoIP
Services
We
provide telephony services using VoIP technology ("interconnected VoIP"). The FCC has adopted several regulations for
interconnected VoIP services, as have several states, especially as it relates to core customer and safety issues such as e911,
local number portability, disability access, outage reporting, universal service contributions, and regulatory reporting requirements.
The FCC has not, however, formally classified interconnected VoIP services as either information services or telecommunications
services. In this vacuum, some states have asserted more expansive rights to regulate interconnected VoIP services, while others
have adopted laws that bar the state commission from regulating VoIP service.
Universal
Service.
Interconnected VoIP services must contribute to the USF used to subsidize communication services
provided to low income households, to customers in rural and high cost areas, and to schools, libraries, and rural health care
providers. The amount of universal service contribution required of interconnected VoIP service providers is based on a percentage
of revenues earned from interstate and international services provided to end users. We allocate our end user revenues and remit
payments to the universal service fund in accordance with FCC rules. The FCC has ruled that states may impose state universal
service fees on interconnected VoIP providers.
Local
Number Portability.
The FCC requires interconnected VoIP service providers and their "numbering
partners" to ensure that their customers have the ability to port their telephone numbers when changing providers. We also
contribute to federal funds to meet the shared costs of local number portability and the costs of North American Numbering Plan
Administration.
Intercarrier
Compensation.
In an October 2011 reform order and subsequent clarifying orders, the FCC revised the
regime governing payments among providers of telephony services for the exchange of calls between and among different networks
("intercarrier compensation") to, among other things, explicitly include interconnected VoIP. In that Order, the FCC
determined that intercarrier compensation for all terminating traffic, including VoIP traffic exchanged in TDM format, will be
phased down over several years to a "bill-and-keep" regime, with no compensation between carriers for most terminating
traffic by 2018. The FCC is considering further reform in this area, which could reduce or eliminate compensation for originating
traffic as well.
Other
Regulation.
Interconnected VoIP service providers are required to provide enhanced 911 emergency services
to their customers; protect customer proprietary network information from unauthorized disclosure to third parties; report to
the FCC on service outages; comply with telemarketing regulations and other privacy and data security requirements; comply with
disabilities access requirements and service discontinuance obligations; comply with call signaling requirements; and comply with
CALEA standards. In August 2015, the FCC adopted new rules to improve the resiliency of the communications network. Under the
new rules, providers of telephony services,
including
interconnected VoIP service providers, must make available eight hours of standby backup power for consumers to purchase at the
point of sale. The rules also require that providers inform new and current customers about service limitations during power outages
and steps that consumers can take to address those risks.
For additional
information about these matters, see “Risk Factors.”
LICENSES
Arizona
CLEC license in Phoenix area. License #20090393 which expires 2023 and is renewable every seven years.
TITLE TO
PROPERTIES
None.
BACKLOG
OF ORDERS
We currently
have no backlogs of orders for sales, at this time.
GOVERNMENT
CONTRACTS
We have
no government contracts.
COMPANY
SPONSORED RESEARCH AND DEVELOPMENT
We are
not conducting any research.
NUMBER
OF PERSONS EMPLOYED
We have
approximately 30 employees who work approximately 45 hours per week. All officers and directors work approximately 60 hours per
week as directors.
DESCRIPTION OF PROPERTY
DESCRIPTION
OF PROPERTIES/ASSETS
(a)
|
Real
Estate.
|
None.
|
(b)
|
Title
to properties.
|
None.
|
(c)
|
Patents,
Trade Names, Trademarks and Copyrights
|
See
below.
|
Our
executive offices are located in San Diego, California. We do not own any real property, but lease and office space consisting
of approximately 27,000 sq. ft. among all of our corporate and subsidiary locations. We believe that substantially all of our
property and equipment is in good condition, subject to normal wear and tear, and that our facilities have sufficient capacity
to meet the current needs of our business.
PATENTS,
TRADE NAMES, TRADEMARKS AND COPYRIGHTS
Either
directly or through our subsidiaries, we have rights in various patents, trade names, trademarks, copyrights and other intellectual
property necessary to conduct our business. Our services often use the intellectual property of others, including licensed software.
We also occasionally license our intellectual property to others as we deem appropriate.
We
periodically receive offers from third parties to purchase or obtain licenses for patents and other intellectual property rights
in exchange for royalties or other payments. We also periodically receive notices, or are named in lawsuits, alleging that our
products or services infringe on patents or other intellectual property rights of third parties. In certain instances, these matters
can potentially adversely impact our operations, operating results or financial position. For additional information, see “Risk
Factors”.
PLAN OF OPERATIONS
We intend to expend funds over the
next four quarters as follows:
Time
Period
|
|
Description
|
$
Amount
|
1
st
Quarter 2019
|
|
Expand
Sales of products and services organically and through acquisitions.
Raise additional capital through offering of common stock or loans to support sales growth strategy.
|
$900,000
|
|
|
|
|
2
nd
Quarter 2019
|
|
Sales
expansion through Media, Telecom, SaaS, and Content Product Releases and Acquisitions
|
$9,450,000
|
|
|
|
|
3
rd
Quarter 2019
|
|
Expansion
of national and international sales and acquisitions
|
$3,300,000
|
|
|
|
|
4
th
Quarter 2019
|
|
Additional
acquisitions and development costs marketing capital to launch our mobile banking division
|
$3,250,000
|
Our
Budget for operations in the next year is as follows:
|
|
|
Working Capital
|
|
$
|
1,200,000
|
|
Legal, Audit and Accounting
|
|
$
|
400,000
|
|
Fees, rent, travel and general & administrative expenses
|
|
$
|
500,000
|
|
|
|
$
|
2,100,000
|
|
The Company
may change any or all of the budget categories in the execution of its business model. None of the line items are to be considered
fixed or unchangeable. The Company may need substantial additional capital to support its budget. We have not recognized revenues
from our operational activities.
Based on our
current cash reserves of approximately $50,000 as of March 31, 2019, we do not have the cash for an operational budget going forward. If
we are unable to generate enough revenue,
to cover our operational costs, we will need to seek additional sources
of funds. Currently, we have
no
committed source for any funds as of date hereof. No representation is made
that any funds will be available when needed. In the event funds cannot be raised if and when needed, we may not be able
to carry out our business plan and could fail in business as a result of these uncertainties.
The independent
registered public accounting firm’s report on our financial statements as of December 31, 2018, includes a “going
concern” explanatory paragraph that describes substantial doubt about our ability to continue as a going concern.
REPORTS TO SECURITIES
HOLDERS
We provide an
annual report that includes audited financial information to our shareholders. We will make our financial information equally
available to any interested parties or investors through compliance with the disclosure rules for a small business issuer under
the Securities Exchange Act of 1934. We are subject to disclosure filing requirements including filing Form 10K annually and Form
10Q quarterly. In addition, we will file Form 8K and other proxy and information statements from time to time as required. We
do not intend to voluntarily file the above reports in the event that our obligation to file such reports is suspended under the
Exchange Act. The public may read and copy any materials that we file with the Securities and Exchange Commission, (“SEC”),
at the SEC’s Public Reference Room at 100 F Street NE, Washington, DC 20549. The public may obtain information on the operation
of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site (http://www.sec.gov) that
contains reports, proxy and information statements, and other information regarding issuers that file electronically with the
SEC.
Item 1A.
Risk Factors.
FORWARD LOOKING
STATEMENTS
THIS DOCUMENT
INCLUDES FORWARD-LOOKING STATEMENTS, INCLUDING, WITHOUT LIMITATION, STATEMENTS RELATING TO TPT GLOBAL’S PLANS, STRATEGIES,
OBJECTIVES, EXPECTATIONS, INTENTIONS AND ADEQUACY OF RESOURCES. THESE FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS,
UNCERTAINTIES, AND OTHER FACTORS THAT MAY CAUSE OUR COMPANY’S ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS TO BE MATERIALLY
DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY THE FORWARD-LOOKING STATEMENTS. THESE FACTORS
INCLUDE, AMONG OTHERS, THE FOLLOWING: OUR ABILITY OF TO IMPLEMENT OUR BUSINESS STRATEGY; ABILITY TO OBTAIN ADDITIONAL FINANCING;
TPT GLOBAL’S LIMITED OPERATING HISTORY; UNKNOWN LIABILITIES ASSOCIATED WITH FUTURE ACQUISITIONS; ABILITY TO MANAGE GROWTH;
SIGNIFICANT COMPETITION; ABILITY TO ATTRACT AND RETAIN TALENTED EMPLOYEES; AND FUTURE GOVERNMENT REGULATIONS; AND OTHER FACTORS
DESCRIBED IN THIS FILING OR IN OTHER OF TPT GLOBAL’S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. TPT GLOBAL IS
UNDER NO OBLIGATION TO PUBLICLY UPDATE OR REVISE ANY FORWARD-LOOKING STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE
EVENTS OR OTHERWISE.
RISK FACTORS
RELATED TO OUR BUSINESS
Many of
our competitors are better established and have resources significantly greater than we have, which may make it difficult to attract
and retain subscribers.
We
will compete with other providers of telephony service, many of which have substantially greater financial, technical and marketing
resources, larger customer bases, longer operating histories, greater name recognition and more established relationships in the
industry. In addition, a number of these competitors may combine or form strategic partnerships. As a result, our competitors
may be able to offer, or bring to market earlier, products and services that are superior to our own in terms of features, quality,
pricing or other factors. Our failure to compete successfully with any of these companies would have a material adverse effect
on our business and the trading price of our common stock.
The
market for broadband and VoIP services is highly competitive, and we compete with several other companies within a single market:
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cable operators
offering high-speed Internet connectivity services and voice communications;
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incumbent and competitive
local exchange carriers providing DSL services over their existing wide, metropolitan and local area networks;
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3G cellular, PCS
and other wireless providers offering wireless broadband services and capabilities, including developments in existing cellular
and PCS technology that may increase network speeds or have other advantages over our services;
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internet service
providers offering dial-up Internet connectivity;
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municipalities and
other entities operating free or subsidized WiFi networks;
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providers of VoIP
telephony services;
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wireless Internet
service providers using licensed or unlicensed spectrum;
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satellite and fixed
wireless service providers offering or developing broadband Internet connectivity and VoIP telephony;
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electric utilities
and other providers offering or planning to offer broadband Internet connectivity over power lines; and
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resellers providing
wireless Internet service by “piggy-backing” on DSL or WiFi networks operated by others.
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Moreover,
we expect other existing and prospective competitors, particularly if our services are successful; to adopt technologies or business
plans similar to ours or seek other means to develop a product competitive with our services. Many of our competitors are well-established
and have larger and better developed networks and systems, longer-standing relationships with customers and suppliers, greater
name recognition and greater financial, technical and marketing resources than we have. These competitors can often subsidize
competing services with revenues from other sources, such as advertising, and thus may offer their products and services at lower
prices than ours. These or other competitors may also reduce the prices of their services significantly or may offer broadband
connectivity packaged with other products or services. We may not be able to reduce our prices or otherwise alter our services
correspondingly, which would make it more difficult to attract and retain subscribers.
Our
Acquisitions could result in operating difficulties, dilution and distractions from our core business.
We
have evaluated, and expect to continue to evaluate, potential strategic transactions, including larger acquisitions. The process
of acquiring and integrating a company, business or technology is risky, may require a disproportionate amount of our management
or financial resources and may create unforeseen operating difficulties or expenditures, including:
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difficulties in
integrating acquired technologies and operations into our business while maintaining uniform standards, controls, policies
and procedures;
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increasing
cost and complexity of assuring the implementation and maintenance of adequate internal control and disclosure controls and
procedures, and of obtaining the reports and attestations that are required of a company filing reports under the Securities
Exchange Act;
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difficulties in
consolidating and preparing our financial statements due to poor accounting records, weak financial controls and, in some
cases, procedures at acquired entities based on accounting principles not generally accepted in the United States, particularly
those entities in which we lack control; and
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the inability to
predict or anticipate market developments and capital commitments relating to the acquired company, business or technology.
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Acquisitions
of and joint ventures with companies organized outside the United States often involve additional risks, including:
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difficulties, as
a result of distance, language or culture differences, in developing, staffing and managing foreign operations;
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lack of control
over our joint ventures and other business relationships;
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currency exchange
rate fluctuations;
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longer payment cycles;
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credit risk and
higher levels of payment fraud;
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foreign exchange
controls that might limit our control over, or prevent us from repatriating, cash generated outside the United States;
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potentially adverse
tax consequences;
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expropriation or
nationalization of assets;
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differences in regulatory
requirements that may make it difficult to offer all of our services;
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unexpected changes
in regulatory requirements;
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trade barriers and
import and export restrictions; and
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political or social
unrest and economic instability.
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The
anticipated benefit of any of our acquisitions or investments may never materialize. Future investments, acquisitions or dispositions
could result in potentially dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities or amortization
expenses, or write-offs of goodwill, any of which could harm our financial condition. Future investments and acquisitions may
require us to obtain additional equity or debt financing, which may not be available on favorable terms, or at all.
Our
substantial indebtedness and our current default status and any restrictive debt covenants could limit our financing options and
liquidity position and may limit our ability to grow our business.
Our
indebtedness could have important consequences to the holders of our common stock, such as:
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we may not be able
to obtain additional financing to fund working capital, operating losses, capital expenditures or acquisitions on terms acceptable
to us or at all;
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we may be unable
to refinance our indebtedness on terms acceptable to us or at all;
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if substantial indebtedness
continues it could make us more vulnerable to economic downturns and limit our ability to withstand competitive pressures;
and
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cash flows from
operations are currently negative and may continue to be so, and our remaining cash, if any, may be insufficient to operate
our business.
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paying dividends
to our stockholders;
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incurring, or cause
certain of our subsidiaries to incur, additional indebtedness;
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permitting liens
on or conduct sales of any assets pledged as collateral;
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selling all or substantially
all of our assets or consolidate or merge with or into other companies;
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repaying existing
indebtedness; and
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engaging in transactions
with affiliates.
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As
of December 31, 2018, the total debt or financing arrangements was $10,671,806, of which $85,192 or less than 1% of total current
liabilities is past due. As of December 31, 2018, capital leases are in the amount of $560,807, of which 111,704 is in default.
Our inability to renegotiate our indebtedness may cause lien holders to obtain possession of a good portion of our assets which
would significantly alter our ability to generate revenues and obtain any additional financing.
We
may experience difficulties in constructing, upgrading and maintaining our network, which could adversely affect customer satisfaction,
increase subscriber turnover and reduce our revenues.
Our
success depends on developing and providing products and services that give subscribers a high-quality internet connectivity and
VoIP experience. If the number of subscribers using our network and the complexity of our products and services increase, we will
require more infrastructure and network resources to maintain the quality of our services. Consequently, we expect to make substantial
investments to construct and improve our facilities and equipment and to upgrade our technology and network infrastructure. If
we do not implement these developments successfully, or if we experience inefficiencies, operational failures or unforeseen costs
during implementation, the quality of our products and services could decline.
We
may experience quality deficiencies, cost overruns and delays on construction, maintenance and upgrade projects, including the
portions of those projects not within our control or the control of our contractors. The construction of our network requires
the receipt of permits and approvals from numerous governmental bodies, including municipalities and zoning boards. Such bodies
often limit the expansion of transmission towers and other construction necessary for our business. Failure to receive approvals
in a timely fashion can delay system rollouts and raise the cost of completing construction projects. In addition, we typically
are required to obtain rights from land, building and tower owners to install our antennas and other equipment to provide service
to our subscribers. We may not be able to obtain, on terms acceptable to us, or at all, the rights necessary to construct our
network and expand our services.
We
also face challenges in managing and operating our network. These challenges include operating, maintaining and upgrading network
and customer premises equipment to accommodate increased traffic or technological advances, and managing the sales, advertising,
customer support, billing and collection functions of our business while providing reliable network service at expected speeds
and VoIP telephony at expected levels of quality. Our failure in any of these areas could adversely affect customer satisfaction,
increase subscriber turnover, increase our costs, decrease our revenues and otherwise have a material adverse effect on our business,
prospects, financial condition and results of operations.
If
we do not obtain and maintain rights to use licensed spectrum in one or more markets, we may be unable to operate in these markets,
which could adversely affect our ability to execute our business strategy.
Even
though we have established license agreements, growth requires that we plan to provide our services obtaining additional licensed
spectrum both in the United States and internationally, we depend on our ability to acquire and maintain sufficient rights to
use licensed spectrum by obtaining our own licenses or long-term spectrum leases, in each of the markets in which we operate or
intend to operate. Licensing is the short-term solution to obtaining the necessary spectrum as building out spectrum is a long
and difficult process that can be costly and require a disproportionate amount of our management resources. We may not be able
to acquire, lease or maintain the spectrum necessary to execute our business strategy.
Using
licensed spectrum, whether owned or leased, poses additional risks to us, including:
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inability to satisfy
build-out or service deployment requirements upon which our spectrum licenses or leases are, or may be, conditioned;
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increases in spectrum
acquisition costs;
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adverse changes
to regulations governing our spectrum rights;
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the risk that spectrum
we have acquired or leased will not be commercially usable or free of harmful interference from licensed or unlicensed operators
in our or adjacent bands;
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with respect to
spectrum we will lease in the United States, contractual disputes with or the bankruptcy or other reorganization of the license
holders, which could adversely affect our control over the spectrum subject to such license;
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failure of the FCC
or other regulators to renew our spectrum licenses as they expire; and
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invalidation of
our authorization to use all or a significant portion of our spectrum, resulting in, among other things, impairment charges
related to assets recorded for such spectrum.
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If
we fail to establish and maintain an effective system of internal control, we may not be able to report our financial results
accurately or to prevent fraud. Any inability to report and file our financial results accurately and timely could harm our business
and adversely impact the trading price of our common stock.
Effective
internal control is necessary for us to provide reliable financial reports and prevent fraud. If we cannot provide reliable financial
reports or prevent fraud, we may not be able to manage our business as effectively as we would if an effective control environment
existed, and our business, brand and reputation with investors may be harmed.
In
addition, reporting a material weakness may negatively impact investors’ perception of us. We have allocated, and will continue
to allocate, significant additional resources to remedy any deficiencies in our internal control.
There
can be no assurances that our remedial measures will be successful in curing the any material weakness or that other significant
deficiencies or material weaknesses will not arise in the future.
Interruption or failure of
our information technology and communications systems could impair our ability to provide our products and services, which could
damage our reputation and harm our operating results.
We
have experienced service interruptions in some markets in the past and may experience service interruptions or system failures
in the future. Any unscheduled service interruption adversely affects our ability to operate our business and could result in
an immediate loss of revenues. If we experience frequent or persistent system or network failures, our reputation and brand could
be permanently harmed. We may make significant capital expenditures to increase the reliability of our systems, but these capital
expenditures may not achieve the results we expect.
Our
products and services depend on the continuing operation of our information technology and communications systems. Any damage
to or failure of our systems could result in interruptions in our service. Interruptions in our service could reduce our revenues
and profits, and our brand could be damaged if people believe our network is unreliable. Our systems are vulnerable to damage
or interruption from earthquakes, terrorist attacks, floods, fires, power loss, telecommunications failures, computer viruses,
computer denial of service attacks or other attempts to harm our systems, and similar events. Some of our systems are not fully
redundant, and our disaster recovery planning may not be adequate. The occurrence of a natural disaster or unanticipated problems
at our network centers could result in lengthy interruptions in our service and adversely affect our operating results.
The industries
in which we operate are continually evolving, which makes it difficult to evaluate our future prospects and increases the risk
of your investment. Our products and services may become obsolete, and we may not be able to develop competitive products or services
on a timely basis or at all.
The
markets in which we and our customers compete are characterized by rapidly changing technology, evolving industry standards and
communications protocols, and continuous improvements in products and services. Our future success depends on our ability to enhance
current products and to develop and introduce, in a timely manner, new products that keep pace with technological developments,
industry standards and communications protocols, compete effectively on the basis of price, performance and quality, adequately
address end-user customer requirements and achieve market acceptance. There can be no assurance that the deployment of wireless
networks will not be delayed or that our products will achieve widespread market acceptance or be capable of providing service
at competitive prices in sufficient volumes. In the event that our products are not timely and economically developed or do not
gain widespread market acceptance, our business, results of operations and financial condition would be materially adversely affected.
There can also be no assurance that our products will not be rendered obsolete by the introduction and acceptance of new communications
protocols.
The
broadband services industry is characterized by rapid technological change, competitive pricing, frequent new service introductions
and evolving industry standards and regulatory requirements. We believe that our success depends on our ability to anticipate
and adapt to these challenges and to offer competitive services on a timely basis. We face a number of difficulties and uncertainties
associated with our reliance on technological development, such as:
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competition from
service providers using more traditional and commercially proven means to deliver similar or alternative services;
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competition from
new service providers using more efficient, less expensive technologies, including products not yet invented or developed;
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uncertain consumer
acceptance;
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realizing economies
of scale;
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responding successfully
to advances in competing technologies in a timely and cost-effective manner;
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migration toward
standards-based technology, requiring substantial capital expenditures; and
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existing, proposed
or undeveloped technologies that may render our wireless broadband and VoIP telephony services less profitable or obsolete.
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As
the products and services offered by us and our competitors develop, businesses and consumers may not accept our services as a
commercially viable alternative to other means of delivering wireless broadband and VoIP telephony services.
If we
are unable to successfully develop and market additional services and/or new generations of our services offerings or market our
services and product offerings to a broad number of customers, we may not remain competitive.
Our future success
and our ability to increase net revenue and earnings depend, in part, on our ability to develop and market new additional services
and/or new generations of our current services offerings and market our existing services offerings to a broad number of customers.
However, we may not be able to, among other things:
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successfully
develop or market new services or product offerings or enhance existing services offerings;
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educate
third-party sales organizations adequately for them to promote and sell our services offerings;
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develop,
market and distribute existing and future services offerings in a cost-effective manner; or
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operate
the facilities needed to provide our services offerings.
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If we fail to
develop new service offerings, or if we incur unexpected expenses or delays in product development or integration, we may lose
our competitive position and incur substantial additional expenses or may be required to curtail or terminate all or part of our
present planned business operations.
Our failure
to do any of the foregoing could have a material adverse effect on our business, financial condition and results of operations.
In addition, if any of our current or future services offerings contain undetected errors or design defects or do not work as
expected for our customers, our ability to market these services offerings could be substantially impeded, resulting in lost sales,
potential reputation damage and delays in obtaining market acceptance of these services offerings. We cannot assure you that we
will continue to successfully develop and market new or enhanced applications for our services offerings. If we do not continue
to expand our services offerings portfolio on a timely basis or if those products and applications do not receive market acceptance,
become regulatory restricted, or become obsolete, we will not grow our business as currently expected.
We operate in a very competitive
environment.
There are three
types of competitors for our service offerings.
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The value-added
resellers and other vendors of hardware and software for on-site installation do not typically have an offering similar to
our cloud-based services. However, they are the primary historic service suppliers to our targeted customers and will actively
work to defend their customer base.
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There are a number
of providers offering services, but they typically offer only one or two applications of their choosing instead of our offering
which bundles customer’s chosen services.
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There are a few
providers that offer more than two applications from the cloud. However currently, these providers typically offer only those
applications they have chosen.
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Our industry
is characterized by rapid change resulting from technological advances and new services offerings. Certain competitors have substantially
greater capital resources, larger customer bases, larger sales forces, greater marketing and management resources, larger research
and development staffs and larger facilities than our and have more established reputations with our target customers, as well
as distribution channels that are entrenched and may
be more effective
than ours. Competitors may develop and offer technologies and products that are more effective, have better features, are easier
to use, are less expensive and/or are more readily accepted by the marketplace than our offerings. Their products could make our
technology and service offerings obsolete or noncompetitive. Competitors may also be able to achieve more efficient operations
and distribution than ours may be able to and may offer lower prices than we could offer profitably. We may decide to alter or
discontinue aspects of our business and may adopt different strategies due to business or competitive factors or factors currently
unforeseen, such as the introduction by competitors of new products or services technologies that would make part or all of our
service offerings obsolete or uncompetitive.
In addition,
the industry could experience some consolidation. There is also a risk that larger companies will enter our markets.
If we
fail to maintain effective relationships with our major vendors, our services offerings and profitability could suffer.
We use third
party providers for services. In addition, we purchase hardware, software and services from external suppliers. Accordingly, we
must maintain effective relationships with our vendor base to source our needs, maintain continuity of supply, and achieve reasonable
costs. If we fail to maintain effective relationships with our vendor base, this may adversely affect our ability to deliver the
best products and services to our customers and our profitability could suffer.
Any failure of the physical
or electronic security that resulted in unauthorized parties gaining access to customer data could adversely affect our business,
financial condition and results of operations.
We use
commercial data networks to service customers cloud based services and the associated customer data. Any data is subject to the
risk of physical or electronic intrusion by unauthorized parties. We have a multi-homed firewalls and Intrusion Detection / Prevention
systems to protect against electronic intrusion and two physical security levels in our networks. Our policy is to close all external
ports as a default. Robust anti-virus software runs on all client servers. Systems have automated monitoring and alerting for
unusual activity. We also have a Security Officer who monitors these systems. We have better security systems and expertise than
our clients can afford separately but any failure of these systems could adversely affect our business growth and financial condition.
Demand
for our service offerings may decrease if new government regulations substantially increase costs, limit delivery or change the
use of Internet access and other products on which our service offerings depend.
We are dependent
on Internet access to deliver our service offerings. If new regulations are imposed that limit the use of the Internet or impose
significant taxes on services delivered via the Internet it could change our cost structure and/or affect our business model.
The significant changes in regulatory costs or new limitations on Internet use could impact our ability to operate as we anticipate,
could damage our reputation with our customers, disrupt our business or result in, among other things, decreased net revenue and
increased overhead costs. As a result, any such failure could harm our business, financial condition and results of operations.
Our securities,
as offered hereby, are highly speculative and should be purchased only by persons who can afford to lose their entire investment
in us. Each prospective investor should carefully consider the following risk factors, as well as all other information set forth
elsewhere in this prospectus, before purchasing any of the shares of our common stock.
Increasing
regulation of our Internet-based products and services could adversely affect our ability to provide new products and services.
On
February 26, 2015, the FCC adopted a new "network neutrality" or Open Internet order (the "2015 Order")
that: (1) reclassified broadband Internet access service as a Title II common carrier service, (2) applied certain existing
Title II provisions and associated regulations; (3) forbore from applying a range of other existing Title II provisions and
associated regulations, but to varying degrees indicated that this forbearance may be only temporary and (4) issued new rules
expanding disclosure requirements and prohibiting blocking, throttling, paid prioritization and
unreasonable
interference with the ability of end users and edge providers to reach each other. The 2015 Order also subjected broadband providers'
Internet traffic exchange rates and practices to potential FCC oversight and created a mechanism for third parties to file complaints
regarding these matters. The 2015 Order could limit our ability to efficiently manage our cable systems and respond to operational
and competitive challenges. In December 2017, the FCC adopted an order (the "2017 Order") that in large part reverses
the 2015 Order. The 2017 Order has not yet gone into effect, however, and the 2015 Order will remain binding until the 2017 Order
takes effect. The 2017 Order is expected to be subject to legal challenge that may delay its effect or overturn it. Additionally,
Congress and some states are considering legislation that may codify "network neutrality" rules.
Offering
telephone services may subject us to additional regulatory burdens, causing us to incur additional costs.
We
offer telephone services over our broadband network and continue to develop and deploy interconnected VoIP services. The FCC has
ruled that competitive telephone companies that support VoIP services, such as those that we offer to our customers, are entitled
to interconnect with incumbent providers of traditional telecommunications services, which ensures that our VoIP services can
operate in the market. However, the scope of these interconnection rights are being reviewed in a current FCC proceeding, which
may affect our ability to compete in the provision of telephony services or result in additional costs. It remains unclear precisely
to what extent federal and state regulators will subject VoIP services to traditional telephone service regulation. Expanding
our offering of these services may require us to obtain certain authorizations, including federal and state licenses. We may not
be able to obtain such authorizations in a timely manner, or conditions could be imposed upon such licenses or authorizations
that may not be favorable to us. The FCC has already extended certain traditional telecommunications requirements, such as E911
capabilities, Universal Service Fund contribution, Communications Assistance for Law Enforcement Act ("CALEA"), measures
to protect Customer Proprietary Network Information, customer privacy, disability access, number porting, battery back-up, network
outage reporting, rural call completion reporting and other regulatory requirements to many VoIP providers such as us. If additional
telecommunications regulations are applied to our VoIP service, it could cause us to incur additional costs and may otherwise
materially adversely impact our operations. In 2011, the FCC released an order significantly changing the rules governing intercarrier
compensation for the origination and termination of telephone traffic between interconnected carriers. These rules have resulted
in a substantial decrease in interstate compensation payments over a multi-year period. The FCC is currently considering additional
reforms that could further reduce interstate compensation payments. Further, although the FCC recently declined to impose additional
regulatory burdens on certain point to point transport ("special access") services provided by cable companies, that
FCC decision has been appealed by multiple parties. If those appeals are successfully, there could be additional regulatory burdens
and additional costs placed on these services.
We
may engage in acquisitions and other strategic transactions and the integration of such acquisitions and other strategic transactions
could materially adversely affect our business, financial condition and results of operations.
Our business
has grown significantly as a result of acquisitions, including the Acquisitions, which entail numerous risks including:
•distraction
of our management team in identifying potential acquisition targets, conducting due diligence and negotiating acquisition agreements;
•difficulties
in integrating the operations, personnel, products, technologies and systems of acquired businesses;
•difficulties
in enhancing our customer support resources to adequately service our existing customers and the customers of acquired businesses;
•the
potential loss of key employees or customers of the acquired businesses;
•unanticipated
liabilities or contingencies of acquired businesses;
•unbudgeted
costs which we may incur in connection with pursuing potential acquisitions which are not consummated;
•failure
to achieve projected cost savings or cash flow from acquired businesses, which are based on projections that are inherently uncertain;
•fluctuations
in our operating results caused by incurring considerable expenses to acquire and integrate businesses before receiving the anticipated
revenues expected to result from the acquisitions; and
•difficulties
in obtaining regulatory approvals required to consummate acquisitions.
We
also participate in competitive bidding processes, some of which may involve significant cable systems. If we are the winning
bidder in any such process involving significant cable systems or we otherwise engage in acquisitions or other strategic transactions
in the future, we may incur additional debt, contingent liabilities and amortization expenses, which could materially adversely
affect our business, financial condition and results of operations. We could also issue substantial additional equity which could
dilute existing stockholders.
If
our acquisitions, including the Acquisitions and the integration of the Optimum and Suddenlink businesses, do not result in the
anticipated operating efficiencies, are not effectively integrated, or result in costs which exceed our expectations, our business,
financial condition and results of operations could be materially adversely affected.
Significant
unanticipated increases in the use of bandwidth-intensive Internet-based services could increase our costs.
The
rising popularity of bandwidth-intensive Internet-based services poses risks for our broadband services. Examples of such services
include peer-to-peer file sharing services, gaming services and the delivery of video via streaming technology and by download.
If heavy usage of bandwidth-intensive broadband services grows beyond our current expectations, we may need to incur more expenses
than currently anticipated to expand the bandwidth capacity of our systems or our customers could have a suboptimal experience
when using our broadband service. In order to continue to provide quality service at attractive prices, we need the continued
flexibility to develop and refine business models that respond to changing consumer uses and demands and to manage bandwidth usage
efficiently. Our ability to undertake such actions could be restricted by regulatory and legislative efforts to impose so-called
"net neutrality" requirements on broadband communication providers like us that provide broadband services. For more
information, see "Regulation—Broadband."
We
operate in a highly competitive business
environment which could materially adversely affect our business, financial condition,
results of operations and liquidity.
We
operate in a highly competitive, consumer-driven industry and we compete against a variety of broadband, pay television and telephony
providers and delivery systems, including broadband communications companies, wireless data and telephony providers, satellite-delivered
video signals, Internet-delivered video content and broadcast television signals available to residential and business customers
in our service areas. Some of our competitors include AT&T and its DirecTV subsidiary, CenturyLink, DISH Network, Frontier
and Verizon. In addition, our pay television services compete with all other sources of leisure, news, information and entertainment,
including movies, sporting or other live events, radio broadcasts, home-video services, console games, print media and the Internet.
In
some instances, our competitors have fewer regulatory burdens, easier access to financing, greater resources, greater operating
capabilities and efficiencies of scale, stronger brand-name recognition, longstanding relationships with regulatory authorities
and customers, more subscribers, more flexibility to offer promotional packages at prices lower than ours and greater access to
programming or other services. This competition creates pressure on our pricing and has adversely affected, and may continue to
affect, our ability to add and retain customers, which in turn adversely affects our business, financial condition and results
of operations. The effects of competition may also adversely affect our liquidity and ability to service our debt. For example,
we face intense competition from Verizon and AT&T, which have network infrastructure throughout our service areas. We estimate
that competitors are currently able to sell a fiber-based triple play, including broadband, pay television and telephony services,
and may expand these and other service offerings to our potential customers.
Our
competitive risks are heightened by the rapid technological change inherent in our business, evolving consumer preferences and
the need to acquire, develop and adopt new technology to differentiate our products and services from those of our competitors,
and to meet consumer demand. We may need to anticipate far in advance which technology we should use for the development of new
products and services or the enhancement of existing products and services. The failure to accurately anticipate such changes
may adversely affect our ability to attract and retain customers, which in turn could adversely affect our business, financial
condition and results of operations. Consolidation and cooperation in our industry may allow our competitors to acquire service
capabilities or offer products that are not available to us or offer similar products and services at prices lower than ours.
For example, Comcast and Charter Communications have agreed to jointly explore operational efficiencies to speed their respective
entries into the wireless market, including in the areas of creating common operating platforms and
emerging
wireless technology platforms. In addition, changes in the regulatory and legislative environments may result in changes to the
competitive landscape.
In
addition, certain of our competitors own directly or are affiliated with companies that own programming content or have exclusive
arrangements with content providers that may enable them to obtain lower programming costs or offer exclusive programming that
may be attractive to prospective subscribers. For example, DirecTV has exclusive arrangements with the National Football League
that give it access to programming we cannot offer. AT&T also has an agreement to acquire Time Warner, which owns a number
of cable networks, including TBS, CNN and HBO, as well as Warner Bros. Entertainment, which produces television, film and home-video
content. AT&T's and DirecTV's potential access to Time Warner programming could allow AT&T and DirecTV to offer competitive
and promotional packages that could negatively affect our ability to maintain or increase our existing customers and revenues.
DBS operators such as DISH Network and DirecTV also have marketing arrangements with certain phone companies in which the DBS
provider's pay television services are sold together with the phone company's broadband and mobile and traditional phone services.
Most
broadband communications companies, which already have wired networks, an existing customer base and other operational functions
in place (such as billing and service personnel), offer DSL services. We believe DSL service competes with our broadband service
and is often offered at prices lower than our Internet services. However, DSL is often offered at speeds lower than the speeds
we offer. In addition, DSL providers may currently be in a better position to offer Internet services to businesses since their
networks tend to be more complete in commercial areas. They may also increasingly have the ability to combine video services with
telephone and Internet services offered to their customers, particularly as broadband communications companies enter into co-marketing
agreements with other service providers. In addition, current and future fixed and wireless Internet services, such as 3G, 4G
and 5G fixed and wireless broadband services and Wi-Fi networks, and devices such as wireless data cards, tablets and smartphones,
and mobile wireless routers that connect to such devices, may compete with our broadband services.
Our
telephony services compete directly with established broadband communications companies and other carriers, including wireless
providers, as increasing numbers of homes are replacing their traditional telephone service with wireless telephone service. We
also compete against VoIP providers like Vonage, Skype, GoogleTalk, Facetime, WhatsApp and magicJack that do not own networks
but can provide service to any person with a broadband connection, in some cases free of charge. In addition, we compete against
ILECs, other CLECs and long-distance voice-service companies for large commercial and enterprise customers. While we compete with
the ILECs, we also enter into interconnection agreements with ILECs so that our customers can make and receive calls to and from
customers served by the ILECs and other telecommunications providers. Federal and state law and regulations require ILECs to enter
into such agreements and provide facilities and services necessary for connection, at prices subject to regulation. The specific
price, terms and conditions of each agreement, however, depend on the outcome of negotiations between us and each ILEC. Interconnection
agreements are also subject to approval by the state regulatory commissions, which may arbitrate negotiation impasses. These agreements,
like all interconnection agreements, are for limited terms and upon expiration are subject to renegotiation, potential arbitration
and approval under the laws in effect at that time.
We
also face competition for our advertising sales from traditional and non-traditional media outlets, including television and radio
stations, traditional print media and the Internet.
We
face significant risks as a result of rapid changes in technology, consumer expectations and behavior.
The
broadband communications industry has undergone significant technological development over time and these changes continue to
affect our business, financial condition and results of operations. Such changes have had, and will continue to have, a profound
impact on consumer expectations and behavior. Our video business faces technological change risks as a result of the continuing
development of new and changing methods for delivery of programming content such as Internet-based delivery of movies, shows and
other content which can be viewed on televisions, wireless devices and other developing mobile devices. Consumers' video consumption
patterns are also evolving, for example, with more content being downloaded for time-shifted consumption. A proliferation of delivery
systems for video content can adversely affect our ability to attract and retain subscribers and the demand for our services and
it can also decrease advertising demand on our delivery systems. Our broadband business faces
technological
challenges from rapidly evolving wireless Internet solutions. Our telephony service offerings face technological developments
in the proliferation of telephony delivery systems including those based on Internet and wireless delivery. If we do not develop
or acquire and successfully implement new technologies, we will limit our ability to compete effectively for subscribers, content
and advertising. We cannot provide any assurance that we will realize, in full or in part, the anticipated benefits we expect
from the introduction of our home communications hub,, or that it will be rolled out across our footprint in the timeframe we
anticipate. In addition, we may be required to make material capital and other investments to anticipate and to keep up with technological
change. These challenges could adversely affect our business, financial condition and results of operations.
Our revenues
and growth may be constrained due to demand exceeding capacity of our systems or our inability to develop solutions.
We
anticipate generating revenues in the future from broadband connectivity, other Internet services, and broadband and in the cloud
services. Demand and market acceptance for these recently introduced services and products delivered over the Internet is uncertain.
Critical issues concerning the use of the Internet, such as ease of access, security, reliability, cost and quality of service,
exist and may affect the growth of Internet use or the attractiveness of conducting commerce online. In addition, the Internet
and online services may not be accepted as viable for a number of reasons, including potentially inadequate development of the
necessary network infrastructure or delayed development of enabling technologies and performance improvements. To the extent that
the Internet and online services continue to experience significant growth, there can be no assurance that the infrastructure
of the Internet and online services will prove adequate to support increased user demands. In addition, the Internet or online
services could lose their viability due to delays in the development or adoption of new standards and protocols required to handle
increased levels of Internet or online service activity. Changes in, or insufficient availability of, telecommunications services
to support the Internet or online services also could result in slower response times and adversely affect usage of the Internet
and online services generally and us in particular. If use of the Internet and online services does not continue to grow or grows
more slowly than expected, if the infrastructure for the Internet and online services does not effectively support growth that
may occur, or if the Internet and online services do not become a viable commercial marketplace, our business could be adversely
affected.
Certain
aspects of our VoIP telephony services differ from traditional telephone service. The factors that may have this effect include:
|
|
|
|
•
|
our subscribers
may experience lower call quality than they experience with traditional wireline telephone companies, including static, echoes
and transmission delays;
|
|
•
|
our subscribers
may experience higher dropped-call rates than they experience with traditional wireline telephone companies; and
|
|
•
|
a power loss or
Internet access interruption causes our service to be interrupted.
|
Additionally,
our VoIP emergency calling service is significantly more limited than the emergency calling services offered by traditional telephone
companies. Our VoIP emergency calling service can only transmit to a dispatcher at a public safety answering point, or PSAP, the
location information that the subscriber has registered with us, which may at times be different from the actual location at the
time of the call. As a result, our emergency calling systems may not assure that the appropriate PSAP is reached and may cause
significant delays, or even failures, in callers’ receipt of emergency assistance. Our failure to develop or operate an
adequate emergency calling service could subject us to substantial liabilities and may result in delays in subscriber adoption
of our VoIP telephony services or all of our services, abandonment of our services by subscribers, and litigation costs, damage
awards and negative publicity, any of which could harm our business, prospects, financial condition or results of operations.
If
our subscribers do not accept the differences between our VoIP telephony services and traditional telephone service, they may
not adopt or keep our VoIP telephony services or our other services, or may choose to retain or return to service provided by
traditional telephone companies. Because VoIP telephony services represent an important aspect of our business strategy, failure
to achieve subscribers’ acceptance of our VoIP telephony services may adversely affect our prospects, results of operations
and the trading price of our shares.
We rely on contract manufacturers
and a limited number of third-party suppliers to produce our network equipment and to maintain our network sites. If these companies
fail to perform, we may have a shortage of components and may be required to suspend our network deployment and our product and
service introduction
.
We
depend on contract manufacturers, to produce and deliver acceptable, high quality products on a timely basis. We also depend on
a limited number of third parties to maintain our network facilities. If our contract manufacturer or other providers do not satisfy
our requirements, or if we lose our contract manufacturers or any other significant provider, we may have an insufficient network
services for delivery to subscribers, we may be forced to suspend portions of our wireless broadband network, enrollment of new
subscribers, and product sales and our business, prospects, financial condition and operating results may be harmed.
We rely
on highly skilled executives and other personnel. If we cannot retain and motivate key personnel, we may be unable to implement
our business strategy
.
We
will be highly dependent on the scientific, technical, and managerial skills of certain key employees, including technical, research
and development, sales, marketing, financial and executive personnel, and on our ability to identify, hire and retain additional
personnel. To accommodate our current size and manage our anticipated growth, we must expand our employee base. Competition for
key personnel, particularly persons having technical expertise, is intense, and there can be no assurance that we will be able
to retain existing personnel or to identify or hire additional personnel. The need for such personnel is particularly important
given the strains on our existing infrastructure and the need to anticipate the demands of future growth. In particular, we are
highly dependent on the continued services of our senior management team, which currently is composed of a small number of individuals.
We do not maintain key-man life insurance on the life of any employee. The inability of us to attract, hire or retain the necessary
technical, sales, marketing, financial and executive personnel, or the loss of the services of any member of our senior management
team, could have a material adverse effect on us.
Our
future success depends largely on the expertise and reputation of our founder, Chairman and Chief Executive Officer Stephen J.
Thomas, Richard Eberhardt, and the other members of our senior management team. In addition, we intend to hire additional highly
skilled individuals to staff our operations. Loss of any of our key personnel or the inability to recruit and retain qualified
individuals could adversely affect our ability to implement our business strategy and operate our business.
We are currently
managed by a small number of key management and operating personnel. Our future success depends, in part, on our ability to recruit
and retain qualified personnel. Failure to do so likely would have an adverse impact on our business and the trading price of
our common stock.
If our data security measures
are breached, subscribers may perceive our network and services as not secure
.
Our
network security and the authentication of the subscriber’s credentials are designed to protect unauthorized access to data
on our network. Because techniques used to obtain unauthorized access to or to sabotage networks change frequently and may not
be recognized until launched against a target, we may be unable to anticipate or implement adequate preventive measures against
unauthorized access or sabotage. Consequently, unauthorized parties may overcome our encryption and security systems and obtain
access to data on our network, including on a device connected to our network. In addition, because we operate and control our
network and our subscribers’ Internet connectivity, unauthorized access or sabotage of our network could result in damage
to our network and to the computers or other devices used by our subscribers. An actual or perceived breach of network security,
regardless of whether the breach is our fault, could harm public perception of the effectiveness of our security measures, adversely
affect our ability to attract and retain subscribers, expose us to significant liability and adversely affect our business prospects.
Our activities outside the
United States could disrupt our operations
.
We
intend to invest in various international companies and spectrum opportunities through acquisitions and strategic alliances as
these opportunities arise. Our activities outside the United States operate in environments different from the one we face in
the United States, particularly with respect to competition and regulation. Due to these
differences,
our activities outside the United States may require a disproportionate amount of our management and financial resources, which
could disrupt our U.S. operations and adversely affect our business.
In
a number of international markets, we face substantial competition from local service providers that offer or may offer their
own wireless broadband or VoIP telephony services and from other companies that provide Internet connectivity services. We may
face heightened challenges in gaining market share, particularly in certain European countries, where a large portion of the population
already has broadband Internet connectivity and incumbent companies already have a dominant market share in their service areas.
Furthermore, foreign providers of competing services may have a substantial advantage over us in attracting subscribers due to
a more established brand, greater knowledge of local subscribers’ preferences and access to significant financial or strategic
resources.
In
addition, foreign regulatory authorities frequently own or control the incumbent telecommunications companies operating under
their jurisdiction. Established relationships between government-owned or government-controlled telecommunications companies and
their traditional local providers of telecommunications services often limit access of third parties to these markets. The successful
expansion of our international operations in some markets will depend on our ability to locate, form and maintain strong relationships
with established local communication services and equipment providers. Failure to establish these relationships or to market or
sell our products and services successfully could limit our ability to attract subscribers to our services.
We
may be unable to protect our intellectual property, which could reduce the value of our services and our brand
.
Our
ability to compete effectively depends on our ability to protect our proprietary technologies, system designs and manufacturing
processes. We may not be able to safeguard and maintain our proprietary rights. We rely on patents, trademarks and policies and
procedures related to confidentiality to protect our intellectual property. Some of our intellectual property, however, is not
covered by any of these protections.
We could
be subject to claims that we have infringed on the proprietary rights of others, which claims would likely be costly to defend,
could require us to pay damages and could limit our ability to use necessary technologies in the future
.
Our
competitors may independently develop or patent technologies or processes that are substantially equivalent or superior to ours.
These competitors may claim that our services and products infringe on these patents or other proprietary rights. Defending against
infringement claims, even merit less ones, would be time consuming, distracting and costly. If we are found to be infringing proprietary
rights of a third party, we could be enjoined from using such third party’s rights and be required to pay substantial royalties
and damages and may no longer be able to use the intellectual property on acceptable terms or at all. Failure to obtain licenses
to intellectual property could delay or prevent the development, manufacture or sale of our products or services and could cause
us to expend significant resources to develop or acquire non-infringing intellectual property.
Our business depends on our
brand, and if we do not maintain and enhance our brand, our ability to attract and retain subscribers may be impaired and our
business and operating results harmed
.
We
believe that our brand is a critical part of our business. Maintaining and enhancing our brand may require us to make substantial
investments with no assurance that these investments will be successful. If we fail to promote and maintain our brands, or if
we incur significant expenses in this effort, our business, prospects, operating results and financial condition may be harmed.
We anticipate that maintaining and enhancing our brand will become increasingly important, difficult and expensive.
We
are subject to extensive regulation.
Our
acquisition, lease, maintenance and use of spectrum licenses are extensively regulated by federal, state, local, and foreign governmental
entities. A number of other federal, state, local and foreign privacy, security and consumer laws also apply to our business.
These regulations and their application are subject to continual change as new legislation, regulations or amendments to existing
regulations are adopted from time to time by governmental or regulatory authorities, including as a result of judicial interpretations
of such laws and regulations. Current regulations directly affect the breadth of services we are able to offer and may impact
the rates, terms and conditions
of
our services. Regulation of companies that offer competing services, such as cable and DSL providers and incumbent telecommunications
carriers, also affects our business indirectly.
We
are also subject to regulation because we provide VoIP telephony services. As an “interconnected” VoIP provider, we
are required under FCC rules, to comply with the Communications Assistance for Law Enforcement Act, or CALEA, which requires service
providers to build certain capabilities into their networks and to accommodate wiretap requests from law enforcement agencies.
In
addition, the FCC or other regulatory authorities may in the future restrict our ability to manage subscribers’ use of our
network, thereby limiting our ability to prevent or address subscribers’ excessive bandwidth demands. To maintain the quality
of our network and user experience, we manage the bandwidth used by our subscribers’ applications, in part by restricting
the types of applications that may be used over our network. Some providers and users of these applications have objected to this
practice. If the FCC or other regulatory authorities were to adopt regulations that constrain our ability to employ bandwidth
management practices, excessive use of bandwidth-intensive applications would likely reduce the quality of our services for all
subscribers. Such decline in the quality of our services could harm our business.
In
certain of our international markets, the services provided by our business may require receipt of a license from national, provincial
or local regulatory authorities. Where required, regulatory authorities may have significant discretion in granting the licenses
and in the term of the licenses and are often under no obligation to renew the licenses when they expire.
The
breach of a license or applicable law, even if inadvertent, can result in the revocation, suspension, cancellation or reduction
in the term of a license or the imposition of fines. In addition, regulatory authorities may grant new licenses to third parties,
resulting in greater competition in territories where we already have rights to licensed spectrum. In order to promote competition,
licenses may also require that third parties be granted access to our bandwidth, frequency capacity, facilities or services. We
may not be able to obtain or retain any required license, and we may not be able to renew a license on favorable terms, or at
all.
Our
wireless broadband and VoIP telephony services may become subject to greater state or federal regulation in the future. The scope
of the regulations that may apply to VoIP telephony services providers and the impact of such regulations on providers’
competitive position are presently unknown.
Our Chairman and Chief Executive
Officer is also our largest stockholder, and as a result he can exert control over us and has actual or potential interests that
may diverge from yours.
Mr. Thomas
may have interests that diverge from those of other holders of our common stock and he owns our super majority voting Series A
stock. As a result, Mr. Thomas may vote the shares he owns or otherwise cause us to take actions that may conflict with your best
interests as a stockholder, which could adversely affect our results of operations and the trading price of our common stock.
Through
his control, Mr. Thomas can control our management, affairs and all matters requiring stockholder approval, including the
approval of significant corporate transactions, a sale of our company, decisions about our capital structure and, the composition
of our board of directors.
RISK FACTORS
RELATED TO OUR STOCK
We can
give no assurance of success or profitability to our investors.
Cash
flows generated from operating activities were not enough to support all working capital requirements for the years ended December
31, 2018 and 2017. Financing activities described below, have helped with working capital and other capital requirements. We incurred
$5,377,489 and $3,807,401, respectively, in losses, and we used $916,407 and $750,408, respectively, in cash for operations for
the years ended December 31, 2018 and 2017. Cash flows from financing activities were $871,199 and $693,502 for the same periods.
These factors raise substantial doubt about the ability of the Company to continue as a going concern for a period of one year
from the issuance of
these financial
statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Subsequent
to December 31, 2018, shareholders extended loans to the Company in the amount of approximately $104,300 into debt that is convertible
one dollar into one share of sock of Series C Preferred Stock that has been designated convertible into common stock at $0.15
per share and includes terms similar to the other Preferred Stock. A third-party advanced the company $50,000 on March 13, 2019
with verbal terms that included repayment in 45 days at 10%. There were no other terms on this.
On March 19,
2019, the “Company consummated a Securities Purchase Agreement dated March 15, 2019 with Geneva Roth Remark Holdings, Inc.
(“Geneva Roth”) for the purchase of a $68,000 Convertible Promissory Note (“Geneva Roth Convertible Promissory
Note”). This Geneva Roth Convertible Promissory Note is part of a larger investment term sheet with Geneva Roth, at their
option, to invest in the Company up to $975,000.
In addition,
On March 25, 2019, TPT Global Tech, Inc. (the “Company”) consummated a Securities Purchase Agreement dated March 18,
2019 with Auctus Fund, LLC. (“Auctus”) for the purchase of a $600,000 Convertible Promissory Note (“Auctus Convertible
Promissory Note”).
In order for
us to continue as a going concern for a period of one year from the issuance of these financial statements, we will need to obtain
additional debt or equity financing and look for companies with cash flow positive operations that we can acquire. There can be
no assurance that we will be able to secure additional debt or equity financing, that we will be able to acquire cash flow positive
operations, or that, if we are successful in any of those actions, those actions will produce adequate cash flow to enable us
to meet all our future obligations. Most of our existing financing arrangements are short-term. If we are unable to obtain additional
debt or equity financing, we may be required to significantly reduce or cease operations.
Our sources
of capital are loans and sales of equity from common or preferred stock. We have no firm commitments for loans or equity sales
at this date.
We may
in the future issue more shares which could cause a loss of control by our present management and current stockholders.
We may issue
further shares as consideration for the cash or assets or services out of our authorized but unissued common stock that would,
upon issuance, represent a majority of the voting power and equity of our Company. The
result of such
an issuance would be those new stockholders and management would control our Company, and persons unknown could replace our management
at this time. Such an occurrence would result in a greatly reduced percentage of ownership of our Company by our current shareholders,
which could present significant risks to investors.
We have options
issued and outstanding, convertible promissory notes and preferred stock that is convertible into common stock. A conversion of
such equity and debt instruments could have a dilutive effect to existing shareholders.
As of December
31, 2018, we had options outstanding to purchase 3,093,120 shares of common stock of the Company as follows:
Grant
Purpose
|
Grant
Date
|
Number
|
Exercise
Price
|
Expiration
Date
|
Vesting
|
Part
of debt issuance terms
|
Various
|
93,120
|
$0.046
to $0.22
|
12-31-2019
|
100%
|
Consulting
|
3-21-2018
|
1,000,000
|
$0.10
|
3-20-2021
|
100%
|
Legal
services
|
3-1-2018
|
2,000,000
|
$0.10
|
2-28-2020
|
Monthly
over 18 mos.
|
As of December
31, 2018, we had the following convertible promissory notes outstanding that were convertible into 4,252,555 common shares:
Grant Purpose
|
|
Balance
|
|
Accrued Interest
|
|
Debt Date
|
|
Number of equivalent shares
|
|
Convertible Share Price
|
|
Debt Due Date
|
Convertible Debt 2017
|
|
$
|
67,000
|
|
|
|
5,115
|
|
|
Various
|
|
|
288,460
|
|
|
$
|
0.25
|
|
|
|
5-1-20
|
|
Convertible Debt 2018
|
|
$
|
547,200
|
|
|
|
17,011
|
|
|
Various
|
|
|
3,761,407
|
|
|
$
|
0.15
|
|
|
|
(1
|
)
|
Convertible Promissory Note
|
|
$
|
202,688
|
|
|
|
—
|
|
|
9-30-16
|
|
|
202,688
|
|
|
$
|
1.00
|
|
|
|
8-30-19
|
|
|
(1)
|
Due
dates are 30 months from the issue date.
|
In addition,
the Series A and B preferred stocks outstanding are convertible into common shares of 128,056,693 and 2,588,693, respectively
as of December 31, 2018.
The exercise
of the options, convertible promissory notes and Series A and B Series Preferred Stock into shares of our common stock could have
a dilutive effect to the holdings of our existing shareholders. There are no warrants outstanding as of December 31, 2018.
Our officers
and directors may have conflicts of interests as to corporate opportunities which we may not be able or allowed to participate
in
.
Presently there
is no requirement contained in our Articles of Incorporation, Bylaws, or minutes which requires officers and directors of our
business to disclose to us business opportunities which come to their attention. Our officers and directors do, however, have
a fiduciary duty of loyalty to us to disclose to us any business opportunities which come to their attention, in their capacity
as an officer and/or director or otherwise. Excluded from this duty would be opportunities which the person learns about through
his involvement as an officer and director of another company. We have no intention of merging with or acquiring business opportunity
from any affiliate or officer or director. (See “Conflicts of Interest” at page 79)
We have
agreed to indemnification of officers and directors as is provided by Florida Statutes.
Florida Statutes
provide for the indemnification of our directors, officers, employees, and agents, under certain circumstances, against attorney’s
fees and other expenses incurred by them in any litigation to which they become a party arising from their association with or
activities our behalf. We will also bear the expenses of such litigation for any of our directors, officers, employees, or agents,
upon such person’s promise to repay us therefore if it is ultimately determined that any such person shall not have been
entitled to indemnification. This indemnification policy could result in substantial expenditures by us that we will be unable
to recoup.
Our directors’
liability to us and shareholders is limited.
Florida Statutes
exclude personal liability of our directors and our stockholders for monetary damages for breach of fiduciary duty except in certain
specified circumstances. Accordingly, we will have a much more limited right of action against our directors that otherwise would
be the case. This provision does not affect the liability of any director under federal or applicable state securities laws.
Our
Stock prices in the Market may be volatile.
The
value of our Common stock following this offering may be highly volatile and could be subject to fluctuations in price in response
to various factors, some of which are beyond our control. These factors include:
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•
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quarterly variations
in our results of operations or those of our competitors;
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•
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announcements by
us or our competitors of acquisitions, new products, significant contracts, commercial relationships or capital commitments;
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•
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disruption to our
operations or those of other sources critical to our network operations;
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•
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the emergence of
new competitors or new technologies;
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•
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our ability to develop
and market new and enhanced products on a timely basis;
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•
|
seasonal or other
variations in our subscriber base;
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•
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commencement of,
or our involvement in, litigation;
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•
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availability of
additional spectrum;
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•
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dilutive issuances
of our stock or the stock of our subsidiaries, or the incurrence of additional debt;
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•
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changes
in our board or management;
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•
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adoption of new
or different accounting standards;
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•
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changes in governmental
regulations or in the status of our regulatory approvals;
|
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•
|
changes in earnings
estimates or recommendations by securities analysts;
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•
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announcements regarding
WiMAX and other technical standards; and
|
|
•
|
general economic
conditions and slow or negative growth of related markets.
|
In
addition, the stock market in general, and the market for shares of technology companies in particular, has experienced price
and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies. We
expect the value of our common stock will be subject to such fluctuations.
We may
not be able to successfully implement our business strategy without substantial additional capital. Any such failure may adversely
affect the business and results of operations.
Unless we can
generate revenues sufficient to implement our Business Plan, we will need to obtain additional financing through debt or bank
financing, or through the sale of shareholder interests to execute our Business Plan. We expect to need $16,900,000 in the next
twelve months in capital or loans to complete our plans and operations. We may not be able to obtain this financing at all. We
have not sought commitments for this financing, and we have no terms for either debt or equity financing, and we realize that
it may be difficult to obtain on favorable terms. Moreover, if we issue additional equity securities to support our operations,
Investor holdings may be diluted. Our business plans are at risk if we cannot continually achieve additional capital raising to
complete our plans.
We are
reliant, in part, on third party sales organizations, which may not perform as we expect.
We, from time
to time rely on the sales force of third-party sales organizations with support from our own selling resources. The third-party
relationships and internal organization are not fully developed at this time and must be developed. We may not be able to hire
effective inside sales people to help our third-party sales organizations close sales. There is no assurance that any approaches
will improve sales. Further, using only a direct sales force would be less cost-effective than our plan to use third-party sales
organizations. In addition, a direct sales model may be ineffective if we were unable to hire and retain qualified salespeople
and if the sales force fails to complete sales. Moreover, even if we successfully implement our business strategy, we may not
have positive operating results. We may decide to alter or discontinue aspects of our business strategy and may adopt different
strategies due to business or competitive factors.
Our growth
may be affected adversely if our sales of products and services are negatively affected by competition or other factors.
The growth of
our business is dependent, in large part, upon the development of sales for our services and product offerings. Market opportunities
that we expect to exist may not develop as expected, or at all. For example, a substantial percentage of our service offerings
is oriented around data access. If lower cost alternatives are developed, our sales would decrease and our operating results would
be negatively affected. Moreover, even if market opportunities develop as expected, new technologies and services offerings introduced
by competitors may significantly limit our ability to capitalize on any such market opportunity. Our failure to capitalize on
expected market opportunities would adversely affect revenue growth.
The lack of
operating history and the rapidly changing nature of the market in which we compete make it difficult to accurately forecast revenues
and operating results. We anticipate that revenues and operating results might fluctuate in the future due to a number of factors
including the following:
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·
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the timing of sales
for current services and products offerings
|
|
·
|
the timing of new
product implementations
|
|
·
|
unexpected delays
in introducing new services and products offerings
|
|
·
|
increased expense
related to sales and marketing, product development or administration
|
|
·
|
the mix of products
and our services offerings
|
|
·
|
costs related to
possible acquisitions of technology or business.
|
|
·
|
costs of providing
services
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We may be unable to compete
with larger, more established competitors.
The market for
providing network delivered service solutions is competitive. We expect competition to intensify in the future. Many of our potential
competitors have longer operating histories, larger customer bases, greater recognition and significantly greater resources. As
a result, competitors may be able to respond more quickly to emerging technologies and changes in customer requirements than we
can. The continuous and timely introduction of competitively priced services offerings into the market is critical to our success,
and there can be no assurance that we will be able to introduce such services offerings. We may not be able to compete successfully
against competitors, and the competitive pressures we face may have an adverse effect on our business.
RISKS RELATING
TO OUR INTELLECTUAL PROPERTY AND POTENTIAL LITIGATION
We may not be able to protect
our intellectual property and proprietary rights.
There can be
no assurances that we will be able to obtain intellectual property protection that will effectively prevent any competitors from
developing or marketing the same or a competing technology. In addition, we cannot predict whether we will be subject to intellectual
property litigation the outcome of which is subject to uncertainty and which can be very costly to pursue or defend. We will attempt
to continue to protect our proprietary designs and to avoid infringing on the intellectual property of third parties. However,
there can be no assurance that we will be able to protect our intellectual property or avoid suits by third parties claiming intellectual
property infringement.
If
our patents and other intellectual property rights do not adequately protect our service offering, we may lose market share to
competitors and be unable to operate our business profitably.
Patents and
other proprietary rights are anticipated to be of value to our future business, and our ability to compete effectively with other
companies depends on the proprietary nature of our current or future technologies. We also rely upon trade secrets, know-how,
continuing technological innovations and licensing opportunities to develop, maintain, and strengthen our competitive position.
We cannot assure you that any future patent applications will result in issued patents, that any patents issued or licensed to
us will not be challenged, invalidated or circumvented or that the rights granted there under will provide a competitive advantage
to us or prevent competitors from entering markets which we currently serve. Any required license may not be available to us on
acceptable terms, if at all or may become invalid if the licensee’s right to such technology become challenged and/or revoked.
In addition, some licenses may be non-exclusive, and therefore competitors may have access to the same technologies as we do.
Furthermore, we may have to take legal action in the future to protect our trade secrets or know-how, or to defend them against
claimed infringement of the rights of others. Any legal action of that type could be costly and
time-consuming
to us, and we cannot assure you that such actions will be successful. The invalidation of key patents or proprietary rights which
we own or unsuccessful outcomes in lawsuits to protect our intellectual property may have a material adverse effect on our business,
financial condition and results of operations.
We may
in the future become subject to claims that some, or the entire service offering violates the patent or intellectual property
rights of others, which could be costly and disruptive to us.
We operate in
an industry that is susceptible to patent litigation. As a result, we or the parties we license technology from may become subject
to patent infringement claims or litigation. Further, one or more of our future patents or applications may become subject to
interference proceedings declared by the U.S. Patent and Trademark Office, (“USPTO”) or the foreign equivalents thereof
to determine the priority of claims to inventions. The defense of intellectual property suits, USPTO interference proceedings
or the foreign equivalents thereof, as well as related legal and administrative proceedings, are both costly and time consuming
and may divert management's attention from other business concerns. An adverse determination in litigation or interference proceedings
to which we may become a party could, among other things:
-
subject
us to significant liabilities to third parties, including treble damages;
-
require
disputed rights to be licensed from a third party for royalties that may be substantial;
-
require
us to cease using such technology; or
-
prohibit
us from selling certain of our service offerings.
Any of these
outcomes could have a material adverse effect on our business, financial condition and results of operations.
Our stock
will in all likelihood be thinly traded and as a result you may be unable to sell at or near ask prices or at all if you need
to liquidate your shares.
The shares of
our common stock may be thinly-traded on the OTC Market, meaning that the number of persons interested in purchasing our common
shares at or near ask prices at any given time may be relatively small or non-existent. This situation is attributable to a number
of factors, including the fact that we are a small company which is relatively unknown to stock analysts, stock brokers, institutional
investors and others in the investment community that generate or influence sales volume, and that even if we came to the attention
of such persons, they tend to be risk-averse and would be reluctant to follow an unproven, early stage company such as ours or
purchase or recommend the purchase of any of our Securities until such time as we became more seasoned and viable. As a consequence,
there may be periods of several days or more when trading activity in our Securities is minimal or non-existent, as compared to
a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without
an adverse effect on Securities price. We cannot give you any assurance that a broader or more active public trading market for
our common Securities will develop or be sustained, or that any trading levels will be sustained. Due to these conditions, we
can give investors no assurance that they will be able to sell their shares at or near ask prices or at all if they need money
or otherwise desire to liquidate their securities of our Company.
The regulation
of penny stocks by SEC and FINRA may discourage the tradability of our securities.
We are a “penny
stock” company. None of our securities currently trade in any market and, if ever available for trading, will be subject
to a Securities and Exchange Commission rule that imposes special sales practice requirements upon broker-dealers who sell such
securities to persons other than established customers or accredited investors. For purposes of the rule, the phrase “accredited
investors” means, in general terms, institutions with assets in excess of $5,000,000, or individuals having a net worth
in excess of $1,000,000 or having an annual income that exceeds $200,000 (or that, when combined with a spouse’s income,
exceeds $300,000). For transactions covered by the rule, the broker-dealer must make a special suitability determination for the
purchaser and receive the purchaser’s written agreement to the transaction prior to the sale. Effectively, this discourages
broker-dealers from executing trades in penny stocks. Consequently, the rule will affect the ability of purchasers in this offering
to sell
their securities
in any market that might develop therefore because it imposes additional regulatory burdens on penny stock transactions.
In addition,
the Securities and Exchange Commission has adopted a number of rules to regulate “penny stocks". Such rules include
Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities and Exchange Act of 1934, as amended.
Because our securities constitute “penny stocks” within the meaning of the rules, the rules would apply to us and
to our securities. The rules will further affect the ability of owners of shares to sell our securities in any market that might
develop for them because it imposes additional regulatory burdens on penny stock transactions.
Shareholders
should be aware that, according to Securities and Exchange Commission, the market for penny stocks has suffered in recent years
from patterns of fraud and abuse. Such patterns include (i) control of the market for the security by one or a few broker-dealers
that are often related to the promoter or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales
and false and misleading press releases; (iii) “boiler room” practices involving high-pressure sales tactics and unrealistic
price projections by inexperienced sales persons; (iv) excessive and undisclosed bid-ask differentials and markups by selling
broker-dealers; and (v) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated
to a desired consequent investor losses. Our management is aware of the abuses that have occurred historically in the penny stock
market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate
in the market, management will strive within the confines of practical limitations to prevent the described patterns from being
established with respect to our securities.
Inventory in
penny stocks have limited remedies in the event of violations of penny stock rules. While the courts are always available to seek
remedies for fraud against us, most, if not all, brokerages require their customers to sign mandatory arbitration agreements in
conjunctions with opening trading accounts. Such arbitration may be through an independent arbiter. Investors may file a complaint
with FINRA against the broker allegedly at fault, and FINRA may be the arbiter, under FINRA rules. Arbitration rules generally
limit discovery and provide more expedient adjudication, but also provide limited remedies in damages usually only the actual
economic loss in the account. Investors should understand that if a fraud case is filed against a company in the courts it may
be vigorously defended and may take years and great legal expenses and costs to pursue, which may not be economically feasible
for small investors.
That absent
arbitration agreements, specific legal remedies available to investors of penny stocks include the following:
If a penny stock
is sold to the investor in violation of the requirements listed above, or other federal or states securities laws, the investor
may be able to cancel the purchase and receive a refund of the investment.
If a penny stock
is sold to the investor in a fraudulent manner, the investor may be able to sue the persons and firms that committed the fraud
for damages.
The fact that
we are a penny stock company will cause many brokers to refuse to handle transactions in the stocks, and may discourage trading
activity and volume, or result in wide disparities between bid and ask prices. These may cause investors significant illiquidity
of the stock at a price at which they may wish to sell or in the opportunity to complete a sale. Investors will have no effective
legal remedies for these illiquidity issues.
We will
pay no dividends in the foreseeable future
.
We have not
paid dividends on our common stock and do not anticipate paying such dividends in the foreseeable future.
Rule 144
sales in the future may have a depressive effect on our stock price.
All of the outstanding
shares of common stock held by our present officers, directors, and affiliate stockholders are “restricted securities”
within the meaning of Rule 144 under the Securities Act of 1933, as amended. As restricted Shares, these shares may be resold
only pursuant to an effective registration statement or under the requirements of
Rule 144 or
other applicable exemptions from registration under the Act and as required under applicable state securities laws. Rule 144 provides
in essence that a person who has held restricted securities for six months, under certain conditions, sell every three months,
in brokerage transactions, a number of shares that does not exceed the greater of 1.0% of a company’s outstanding common
stock or the average weekly trading volume during the four calendar weeks prior to the sale. There is no limit on the amount of
restricted securities that may be sold by a non-affiliate after the owner has held the restricted securities for a period of six
months. A sale under Rule 144 or under any other exemption from the Act, if available, or pursuant to subsequent registration
of shares of common stock of present stockholders, may have a depressive effect upon the price of the common stock in any market
that may develop.
Any sales
of our common stock, if in significant amounts, are likely to depress the future market price of our securities.
Assuming all
of the shares of common stock held by the selling security holders registered recently in a Form S-1 that became effective in
2019 are sold, we would have 38,208,210 new shares that are freely tradable and therefor available for sale, in market or private
transactions.
Unrestricted
sales of 38,208,210 shares of stock by these selling stockholders could have a huge negative impact on our share price, and the
market for our shares.
Any
new potential investors will suffer a disproportionate risk and there will be immediate dilution of existing investor’s
investments.
Our present
shareholders have acquired their securities at a cost significantly less than that which the investors purchasing pursuant to
shares will pay for their stock holdings or at which future purchasers in the market may pay. Therefore, any new potential investors
will bear most of the risk of loss.
We can
issue shares of preferred stock without shareholder approval, which could adversely affect the rights of common shareholders.
Our Articles
of Incorporation permit our Board of Directors to establish the rights, privileges, preferences and restrictions, including voting
rights, of future series of stock and to issue such stock without approval from our shareholders. The rights of holders of common
stock may suffer as a result of the rights granted to holders of preferred stock that may be issued in the future. In addition,
we could issue preferred stock to prevent a change in control of our Company, depriving common shareholders of an opportunity
to sell their stock at a price in excess of the prevailing market price.