253(g)(2)
File
#024-11868
VETANOVA,
INC.
335
A Josephine St.
Denver,
CO 80206
Units
$0.03⅓
per Unit
OFFERING:
UP TO 300,000,000 UNITS. EACH UNIT IS COMPRISED OF ONE SHARE OF COMMON STOCK, ONE SERIES III WARRANT,
ONE SERIES IV WARRANT AND ONE COMMON MEMBERSHIP INTEREST IN VETANOVA SOLAR PARTNERS, LLC. EACH SERIES III WARRANT ALLOWS THE HOLDER
TO PURCHASE ONE SHARE OF THE COMPANY’S COMMON STOCK AT A PRICE OF $0.03⅓ PER SHARE. EACH
SERIES IV WARRANT ALLOWS THE HOLDER TO PURCHASE ONE SHARE OF THE COMPANY’S COMMON STOCK AT A PRICE OF $0.05 PER SHARE. THE
SERIES III AND SERIES IV WARRANTS EXPIRE ON DECEMBER 31, 2024. THE SHARES ISSUABLE UPON THE EXERCISE OF THE SERIES III AND SERIES IV
WARRANTS ARE SOMETIMES REFERRED TO IN THIS OFFERING CIRCULAR AS “WARRANT SHARES”.
PRICE:
$0.03⅓ PER UNIT
Title of Each Class of Securities to be Qualified | |
Price to Public | | |
Commissions (1) | | |
Proceeds to the Company (2) | |
| Units (300,000,000), each consisting of: | |
$ | 10,000,000 | | |
$ | - | | |
$ | 10,000,000 | |
| - One Share of Common Stock | |
| | | |
| | | |
| | |
| - One Series III Warrant | |
| | | |
| | | |
| | |
| - One Series IV Warrant | |
| | | |
| | | |
| | |
| - One common membership interest in VetaNova Solar Partners, LLC | |
| | | |
| | | |
| | |
| Common Stock (300,000,000 shares) issuable upon exercise of Series III Warrants | |
$ | 10,000,000 | | |
| - | | |
$ | 10,000,000 | |
| Common Stock (300,000,000 shares) issuable upon exercise of Series IV Warrants | |
| 15,000,000 | | |
| - | | |
$ | 15,000,000 | |
| Total | |
| | | |
| | | |
| | |
(1)
The Company will not use an underwriter in connection with this Offering. The Company’s securities will be offered by the
Company’s officers and directors. To the extent that the Company’s officers and directors make any communications in
connection with the Offering they intend to conduct such efforts in accordance with an exemption from registration contained in Rule
3a4-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and, therefore, the Company’s
officers and directors are not required to register as a broker-dealer. See “Plan of Distribution.”
The
Company may offer the Units through underwriters, selected brokers or finders, although the Company has no current arrangements to do
so. If selected brokers are used, the Company estimates that the selected brokers will sell only 50% of the Units offered. If the Company
chooses to offer the Units through underwriters, selected brokers or finders, information regarding any arrangement with such persons
will be disclosed in an amendment to this Offering Circular.
(2) Does not include expenses of the offering which are estimated to be $45,000.
The
minimum investment required is $1,000. However, the Company in its sole discretion may accept less than the minimum investment.
The
Offering will terminate on December 31, 2023.
The
Offering is being conducted on a “best efforts” basis without a minimum offering amount, which means that there is no guarantee
that any minimum amount will be sold in this Offering.
INVESTING
IN THE UNITS, THE COMMON SHARES AND THE WARRANTS COMPRISING THE UNITS, AND THE WARRANT SHARES IS SPECULATIVE AND INVOLVES
SUBSTANTIAL RISKS. YOU SHOULD PURCHASE THESE SECURITIES ONLY IF YOU CAN AFFORD A COMPLETE LOSS OF YOUR INVESTMENT. SEE “RISK
FACTORS” BEGINNING ON PAGE 5 TO LEARN THE MORE SIGNIFICANT RISKS YOU SHOULD CONSIDER IN CONNECTION WITH AN INVESTMENT IN THE
COMPANY’S SECURITIES.
THE
SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS UPON THE MERITS OR GIVE ITS APPROVAL OF ANY SECURITIES OFFERED OR THE TERMS OF THE OFFERING,
NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF ANY OFFERING CIRCULAR OR OTHER SOLICITATION MATERIALS. THESE SECURITIES ARE OFFERED
PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE COMMISSION; HOWEVER THE COMMISSION HAS NOT MADE AN INDEPENDENT DETERMINATION THAT
THE SECURITIES OFFERED ARE EXEMPT FROM REGISTRATION.
GENERALLY
NO SALE MAY BE MADE TO YOU IN THIS OFFERING IF THE AGGREGATE PURCHASE PRICE YOU PAY IS MORE THAN 10% OF THE GREATER OF YOUR ANNUAL INCOME
OR NET WORTH. DIFFERENT RULES APPLY TO ACCREDITED INVESTORS AND NON-NATURAL PERSONS. BEFORE MAKING ANY REPRESENTATION THAT YOUR INVESTMENT
DOES NOT EXCEED APPLICABLE THRESHOLDS, WE ENCOURAGE YOU TO REVIEW RULE 251(d)(2)(i)(C) OF REGULATION A OF THE SEC. FOR GENERAL INFORMATION
ON INVESTING, WE ENCOURAGE YOU TO REFER TO WWW.INVESTOR.GOV.
Sales
of these securities will commence within approximately two (2) days after qualification of this offering.
The
Company is following the Form S-1 (Part I) format for this Offering Circular.
Offering
Circular dated August 30, 2022
TABLE
OF CONTENTS
THIS
OFFERING CIRCULAR MAY CONTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO, AMONG OTHER THINGS, THE COMPANY, ITS BUSINESS PLAN
AND STRATEGY, AND ITS INDUSTRY. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON THE BELIEFS OF, ASSUMPTIONS MADE BY, AND INFORMATION CURRENTLY
AVAILABLE TO THE COMPANY’S MANAGEMENT. WHEN USED IN THE OFFERING MATERIALS, THE WORDS “ESTIMATE,” “PROJECT,”
“BELIEVE,” “ANTICIPATE,” “INTEND,” “EXPECT” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY
FORWARD-LOOKING STATEMENTS. THESE STATEMENTS REFLECT MANAGEMENT’S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO
RISKS AND UNCERTAINTIES THAT COULD CAUSE THE COMPANY’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN THE FORWARD-LOOKING
STATEMENTS. INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE
ON WHICH THEY ARE MADE. THE COMPANY DOES NOT UNDERTAKE ANY OBLIGATION TO REVISE OR UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT
EVENTS OR CIRCUMSTANCES AFTER SUCH DATE OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.
SUMMARY
Overview
The
Company is a development stage company that plans to build and operate solar powered, state of the art, greenhouse facilities which will
grow fruits and vegetables for distribution to local markets across the United States. The
Company has acquired approximately 157 acres in southern Colorado (“Avondale Complex”), which will be its first development
project. As of the date of this Offering Circular, the Company was not operating any solar powered greenhouses.
The
Company’s principal executive offices are located at 335 A Josephine St. Denver, Colorado 80206 and its telephone number is (303)
248-6883.
The
Offering
| Securities offered: |
A
maximum of 300,000,000 Units at an offering price of $0.03⅓ per Unit.
Each
Unit is comprised of one share of common stock, one Series III Warrant, one Series IV Warrant and one common membership interest
in VetaNova Solar Partners, LLC. Each Series III Warrant allows the Holder to purchase one share of the Company’s common stock
at a price of $0.03⅓ per share. Each Series IV Warrant allows the Holder to purchase one share of the Company’s common
stock at a price of $0.05 per share. The Series III and Series IV Warrants expire on December 31, 2024. |
| |
|
| Securities outstanding before the Offering
(1) |
| |
426,100,053 shares of common stock |
| |
|
| Securities outstanding after the Offering:
(1)(2) |
| |
726,100,053 Common Shares
and 600,000,000 Warrants if all Units offered are sold, or 1,326,100,053 Common Shares if all Units offered are sold and all Warrants
are exercised. |
| (1) |
Does not reflect
60,000,000 shares of common stock issuable upon conversion of outstanding convertible notes. |
| |
|
| (2) |
Does not reflect 133,213,237
outstanding Series I and Series II Warrants which are exercisable at a price of $0.20 per share and expire on 12-31-22. |
Implications
of Being an Emerging Growth Company
As
an issuer with less than $1 billion in total annual gross revenues during our last fiscal year, we qualify as an “emerging growth
company” under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). An emerging growth company may take
advantage of certain reduced reporting requirements and is relieved of certain other significant requirements that are otherwise generally
applicable to public companies. In particular, as an emerging growth company we:
| |
● |
will not be
required to obtain an auditor attestation on our internal controls over financial reporting pursuant to the Sarbanes-Oxley Act of
2002; |
| |
|
|
| |
● |
will not be required to
provide a detailed narrative disclosure discussing our compensation principles, objectives and elements and analyzing how those elements
fit with our principles and objectives (commonly referred to as “compensation discussion and analysis”); |
| |
|
|
| |
● |
will not be required to
obtain a non-binding advisory vote from our shareholders on executive compensation or golden parachute arrangements (commonly referred
to as the “say-on-pay,” “say-on-frequency” and “say-on-golden-parachute” votes); |
| |
|
|
| |
● |
will be exempt from certain
executive compensation disclosure provisions requiring a pay-for-performance graph and CEO pay ratio disclosure; |
| |
● |
may present
only two years of audited financial statements and only two years of related Management’s Discussion and Analysis of Financial
Condition and Results of Operations, or MD&A; and |
| |
|
|
| |
● |
will be eligible to claim
longer phase-in periods for the adoption of new or revised financial accounting standards. |
Under
the JOBS Act, we may take advantage of the above-described reduced reporting requirements and exemptions for up to five years after our
initial sale of common equity pursuant to a registration statement declared effective under the Securities Act of 1933, as amended, or
such earlier time that we no longer meet the definition of an emerging growth company. Note that this offering, while a public offering,
is not a sale of common equity pursuant to a registration statement since the offering is conducted pursuant to an exemption from the
registration requirements. In this regard, the JOBS Act provides that we would cease to be an “emerging growth company” if
we have more than $1.07 billion in annual revenues, have more than $700 million in market value of our Common Stock held by non-affiliates,
or issue more than $1 billion in principal amount of non-convertible debt over a three-year period.
In
addition, Section 107 of the JOBS Act provides that an emerging growth company may utilize 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 “opt out” of such extended transition period, and as a result, we will comply with new or revised
accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section
107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting
standards is irrevocable.
Forward-Looking
Statements
Some
of the statements in this Offering Circular constitute forward-looking statements. Forward-looking statements relate to expectations,
beliefs, projections, future plans and strategies, anticipated events or trends and similar matters that are not historical facts. In
some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “could,”
“estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “should,”
“will” and “would” or the negatives of these terms or other comparable terminology.
You
should not place undue reliance on forward-looking statements. The cautionary statements set forth in this Offering Circular, including
in “Risk Factors” and elsewhere, identify important factors which you should consider in evaluating our forward-looking statements.
These factors include, among other things:
The
speculative nature of our business;
Concerns
about our ability to continue as a “going concern;”
Our
ability to effectively execute our business plan;
Our
ability to manage our expansion, growth and operating expenses;
Our
ability to finance our businesses;
Our
ability to promote our businesses;
Our
ability to compete and succeed in highly competitive and evolving businesses;
Our
ability to respond and adapt to changes in technology and customer behavior; and
Although
the forward-looking statements in this Offering Circular are based on our beliefs, assumptions and expectations, taking into account
all information currently available to us, we cannot guarantee future transactions, results, performance, achievements or outcomes. No
assurance can be made to any investor by anyone that the expectations reflected in our forward-looking statements will be attained, or
that deviations from them will not be material and adverse. We undertake no obligation, other than as may be required by law, to amend
this Offering Circular or otherwise make public statements updating our forward-looking statements.
RISK
FACTORS
The
price of our common stock may be materially affected by a number of risk factors, including those summarized below:
The
Company has no operating history with respect to its new business and may never be profitable.
Since
the Company only recently began its new business, it is difficult for potential investors to evaluate the Company’s future prospects.
The Company will need to raise enough capital to be able to fund its operations. There can be no assurance that the Company will be profitable
or that the Company’s securities will have any value.
Any
forecasts the Company makes concerning its operations may prove to be inaccurate. The Company’s prospects must be considered in
light of the risks, expenses, and difficulties frequently encountered by companies in the early stage of development.
Our
auditors have expressed doubt as to our ability to continue in business.
The
accompanying financial statements have been prepared assuming we will continue as a going concern, which contemplates, among other things,
the realization of assets and satisfaction of liabilities in the normal course of business. We had a net loss of $(19,906,722) for the
year ended December 31, 2021. These matters, among others, raise substantial doubt about our ability to continue as a going concern.
The
Company needs capital to implement its business plan.
The
Company needs additional capital in order to operate. There is no minimum amount which is required to be raised in this offering. If
only a small number of Units are sold in this offering, the amount received from the sale of these Units will provide little benefit
to the Company. As a result, the Company may need to raise the capital it needs in future offerings of its securities, proceeds from
the exercise of the Company’s warrants, the sale and lease back of the Company’s greenhouse/ warehouse facilities or borrowings
from private lenders. The Company does not know what
the terms of any future capital raising may be, but any future sale of the Company’s equity securities will dilute the ownership
of existing stockholders and could be at prices substantially below the market price of our common. The failure of the Company to obtain
the capital which it requires may result in the slower implementation of the Company’s business plan.
Our
business and results of operations are dependent on the availability, skill and performance of subcontractors.
We
will use subcontractors to construct our greenhouse/ warehouse facilities. Accordingly, the timing and quality of our installations will
depend on the availability and skill of our subcontractors. While we anticipate being able to obtain sufficient materials and reliable
subcontractors, we do not have any contractual commitments with any subcontractors, and we can provide no assurance that skilled subcontractors
will be available at reasonable rates. The inability to contract with skilled subcontractors at reasonable rates on a timely basis could
have a material adverse effect on our business.
We
may discover that our subcontractors have engaged in improper construction practices or have installed defective materials. When we discover
these issues, we will use other subcontractors to make repairs as required by law. The costs of repairs in these instances may be significant
and we may be unable to recover the costs of repairs from subcontractors, suppliers and insurers, which could have a material impact
on our business. We may also suffer damage to our reputation from the actions of subcontractors, which are beyond our control.
Potential
competitors could duplicate our business model.
There
is no aspect of our business which is protected by patents, copyrights, trademarks, or trade names at this time. As a result, potential
competitors could duplicate our business model with little effort.
The
Company may not be able to effectively manage its growth, which would impair our results of operations.
The
Company intends to expand the scope of its operating activities significantly. If the Company is successful in executing its business
plan, it will experience business growth that could place a significant strain on operations, finances, management, and other resources.
The
ability to effectively manage growth may require the Company to substantially expand the capabilities of administrative and operational
resources and to attract, train, manage, and retain qualified management and other personnel. There can be no assurance that the Company
will be successful in recruiting and retaining new employees or retaining existing employees.
The
Company cannot provide assurances that management will be able to manage this growth effectively. The failure to successfully manage
growth could materially adversely affect its business, financial condition or results of operations.
The
Company is dependent on its management and the loss of any of its officers could harm the Company’s business.
The
Company’s future success depends largely upon the experience, skill, and contacts of the Company’s officers. The loss of
the services to these officers may have a material adverse effect upon the Company’s business.
Our
sole officer and director controls the voting of approximately 41% of our common stock.
John
R. McKowen, our only officer and director, owns 88,107,690 shares of our common stock and controls the voting of 147,268,425 shares of
common stock owned by entities controlled by Mr. McKowen. As a result, Mr. McKowen is able to exert a significant level of control over
all matters requiring stockholder approval, including the election of directors, any amendment to our articles of incorporation and approval
of mergers and other transactions requiring stockholder approval.
We
may face business disruption and related risks from the recent pandemic of the novel coronavirus 2019 (COVID-19) which could have a material
adverse effect on our business.
Our
business could be disrupted and materially adversely affected by the recent outbreak of COVID-19. As a result of measures imposed by
the governments in affected regions, businesses and schools have been suspended due to quarantines intended to contain this outbreak.
The spread of SARS CoV-2 from China to other countries has resulted in the Director General of the World Health Organization declaring
COVID-19 a pandemic on March 11, 2020. International stock markets reflect the uncertainty associated with the slow-down in the economy.
The reduced levels of international travel experienced since the beginning of January and the significant declines in the Dow Industrial
Average were largely attributed to the effects of COVID-19. We are still assessing the impact COVID-19 may have on our business, but
there can be no assurance that this analysis will enable us to avoid part or all of any impact from the spread of COVID-019 or its consequences,
including downturns in business sentiment generally or in our sector in particular. The extent to which the COVID-19 pandemic and global
efforts to contain its spread will impact our operations will depend on future developments, which are highly uncertain and cannot be
predicted at this time, and include the duration, severity and scope of the pandemic and the actions taken to contain or treat the COVID-19
pandemic.
As
of the date of this Offering Circular there was only a limited public market for our common stock.
As
a result, you may be unable to sell your shares of our common stock.
Disclosure
requirements pertaining to penny stocks may reduce the level of trading activity for our common stock.
Trades
of the Company’s common stock are subject to Rule 15g-9 of the Securities and Exchange
Commission, which rule imposes certain requirements on broker/dealers who sell securities subject to the rule to persons other than established
customers and accredited investors. For transactions covered by the rule, brokers/dealers must make a special suitability determination
for purchasers of the securities and receive the purchaser’s written agreement to the transaction prior to sale. The Securities
and Exchange Commission also has rules that regulate broker/dealer practices in connection with transactions in “penny stocks”.
Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities
exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in that security
is provided by the exchange or system). The penny stock rules require a broker/ dealer, prior to a transaction in a penny stock not otherwise
exempt from the rules, to deliver a standardized risk disclosure document prepared by the Commission that provides information about
penny stocks and the nature and level of risks in the penny stock market. The broker/dealer also must provide the customer with current
bid and offer quotations for the penny stock, the compensation of the broker/dealer and its salesperson in the transaction, and monthly
account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and
the broker/dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the
transaction and must be given to the customer in writing before or with the customer’s confirmation.
You
may have difficulty depositing your shares with a broker or selling shares of our common stock which you acquire in this offering.
Many
securities brokers will not accept securities for deposits and will not sell securities which:
| |
● |
are considered penny stocks or |
| |
● |
trade in the over-the-counter market |
Further,
for a securities broker which will, under certain circumstances, sell securities which fall under any or all of the categories listed
above, the customer, before the securities broker will accept the shares for deposit, must often complete a questionnaire detailing how
the customer acquired the shares, provide the securities broker with an opinion of an attorney concerning the ability of the shares to
be sold in the public market, and pay a “legal review” fee which in some cases can exceed $1,000.
For
these reasons, investors in this offering may have difficulty selling shares of our common stock.
We
are an Emerging Growth Company, subject to less stringent reporting and regulatory requirements of other publicly held companies and
this status may have an adverse effect on our ability to attract interest in our common stock.
We
are an Emerging Growth Company as defined in the JOBS Act. As long as we remain an Emerging Growth Company, we may take advantage of
certain exemptions from various reporting and regulatory requirements that are applicable to other public companies that are not emerging
growth companies. We cannot predict if investors will find our common stock less attractive if we choose to rely on these exemptions.
If some investors find our common stock less attractive as a result of any choices to reduce future disclosure, there may be a less active
trading market for our common stock and our stock price may be more volatile.
USE
OF PROCEEDS
We
will use these net proceeds from this Offering Circular for the following:
| Units Sold | |
100% | |
75% | |
50% | |
25% |
| | |
| | |
| | |
| | |
| |
| Gross Offering Proceeds | |
$ | 10,000,000 | | |
$ | 7,500,000 | | |
$ | 5,000,000 | | |
$ | 2,500,000 | |
| Commissions | |
| - | | |
| - | | |
| - | | |
| - | |
| Offering Expenses | |
| 45,000 | | |
| 45,000 | | |
| 45,000 | | |
| 45,000 | |
| Net Offering Proceeds | |
| 9,955,000 | | |
| 7,455,000 | | |
| 4,955,000 | | |
| 2,455,000 | |
| Use of Net Proceeds | |
| | | |
| | | |
| | | |
| | |
| ● Repay Bridge Notes | |
| 516,356 | | |
| 516,356 | | |
| 516,356 | | |
| 516,356 | |
| ●Begin expanding/retrofitting existing greenhouse and warehouse | |
$ | 5,000,000 | | |
$ | 4,000,000 | | |
$ | 3,000,000 | | |
$ | 1,000,000 | |
| ●Working Capital | |
$ | 4,438,644 | | |
| 2,938,644 | | |
| 1,438,644 | | |
| 938,644 | |
The
precise amounts that we will devote to each of the foregoing items, and the timing of expenditures, will vary depending on numerous factors.
Any line item amounts not expended completely shall be held in reserve as working capital and subject to reallocation to other line-item
expenditures as required for ongoing operations.
The
expected use of net proceeds from this offering represents our intentions based upon our current plans and business conditions, which
could change in the future as our plans and business conditions evolve and change. The amounts and timing of our actual expenditures,
specifically with respect to working capital, may vary significantly depending on numerous factors. The precise amounts that we will
devote to each of the foregoing items, and the timing of expenditures, will vary depending on numerous factors. As a result, our management
will retain broad discretion over the allocation of the net proceeds from this offering.
In
the event we do not sell all of the Units being offered, we may seek additional financing from other sources in order to support the
intended use of proceeds indicated above. If we secure additional equity funding, investors in this offering would be diluted. In all
events, there can be no assurance that additional financing would be available to us when wanted or needed and, if available, on terms
acceptable to us.
DILUTION
If
you purchase Units in this offering, your ownership interest in our common stock will be diluted immediately, to the extent of the difference
between the public offering price and the net tangible book value per share of our common stock after this offering.
Our
net tangible book value per share as of June 30, 2022, was less than $0.01. Net tangible book value per share equals the amount of our
total tangible assets less total liabilities, divided by the total number of shares of our common stock outstanding as of June 30, 2022.
The
following table illustrates the per share dilution to new investors, assuming the sale of, respectively, of 100%, 75%, 50% and 25% of
the Units (after deducting commissions payable and estimated offering expenses of $50,000). For purposes of the dilution calculations
below, the public offering price of the Units has been allocated to the shares of common stock comprising the Units.
| Percentage of Units sold | |
| 100 | % | |
| 75 | % | |
| 50 | % | |
| 25 | % |
| Public offering price | |
$ | 0.3⅓ | | |
$ | 0.3⅓ | | |
$ | 0.3⅓ | | |
$ | 0.3⅓ | |
| Net tangible book value per share as of June 30, 2022 (1) | |
$ | — | | |
| — | | |
| — | | |
| — | |
| Net tangible book value after this Offering | |
$ | 11,153,626 | | |
$ | 8,653,626 | | |
$ | 6,153,626 | | |
$ | 3,653,626 | |
| Net tangible book value per share after this offering | |
$ | 0.01 | | |
$ | 0.02 | | |
$ | 0.02 | | |
$ | 0.02 | |
| Increase in net tangible book value per share attributable to new investors in this offering | |
$ | 0.01 | | |
$ | 0.02 | | |
$ | 0.02 | | |
$ | 0.02 | |
| Dilution per share to new investors | |
$ | 0.02⅓ | | |
$ | 0.01⅓ | | |
$ | 0.01⅓ | | |
$ | 0.01⅓ | |
| (1) |
Less than $0.01 per share.
Based on net tangible book value as of June 30, 2022 of $919,893 and 466,971,489 outstanding shares of common stock. |
MARKET
FOR OUR COMMON STOCK
Our
common stock is quoted on over-the-counter market. The following table sets forth, for the periods indicated, the high and low closing
sales price of our common stock as provided by OTC Markets Group Inc. These prices reflect inter-dealer prices, without retain mark-up
or commission, and may not represent actual transactions.
| Quarter Ended | |
High | | |
Low | |
| | |
$ | | |
$ | |
| March 31, 2022 | |
| 0.15 | | |
| 0.062 | |
| June 30, 2022 | |
| 0.10 | | |
| 0.05 | |
| Quarter Ended | |
High | | |
Low | |
| | |
$ | | |
$ | |
| December 31, 2021 | |
| 0.20 | | |
| 0.09 | |
| September 30, 2021 | |
| 0.20 | | |
| 0.15 | |
| June 30, 2021 | |
| 0.70 | | |
| 0.07 | |
| March 31, 2021 | |
| 0.08 | | |
| 0.008 | |
| | |
| | | |
| | |
| December 31, 2020 | |
| 0.30 | | |
| 0.0001 | |
| September 30, 2020 | |
| 0.31 | | |
| 0.11 | |
| June 30, 2020 | |
| 0.15 | | |
| 0.12 | |
| March 31, 2020 | |
| 0.58 | | |
| 0.12 | |
Holders
of our common stock are entitled to receive dividends as may be declared by the Board of Directors. The Board of Directors is not restricted
from paying any dividends but is not obligated to declare a dividend. No cash dividends have ever been declared and it is not anticipated
that cash dividends will ever be paid.
Management’s
Discussion and Analysis
of
Financial Condition and Results of Operation
Note
about Forward-Looking Statements
This
Offering Circular contains forward-looking statements, such as statements relating to our financial condition, results of operations,
plans, objectives, future performance and business operations. These statements relate to expectations concerning matters that are not
historical facts. These forward-looking statements reflect our current views and expectations based largely upon the information currently
available to us and are subject to inherent risks and uncertainties. Although we believe our expectations are based on reasonable assumptions,
they are not guarantees of future performance and there are a number of important factors that could cause actual results to differ materially
from those expressed or implied by such forward-looking statements, including the risks described in the Risk Factors section of this
Offering Circular. By making these forward-looking statements, we do not undertake to update them in any manner except as may be required
by our disclosure obligations in filings we make with the Securities and Exchange Commission under the Federal securities laws. Our actual
results may differ materially from our forward-looking statements.
Overview
The
Company is in its development stage and intends to build and operate solar-powered, carbon-negative greenhouses utilizing Artificial
Intelligence assisted technologies to control the growing environment if it can obtain financing. The Company’s revenue is expected
to come from growing farm-fresh fruits and vegetables to be sold to local markets.
The
Company intends to produce farm-fresh fruits and vegetables for local delivery in historically productive agricultural regions with high
solar indexes and close to large urban areas of the United States, such as the Front Range of Colorado and Central Valley of California.
Results
of Operations
Year
Ended December 31, 2020
During
the year ended December 31, 2019 we did not generate any revenue. During the year ended December 31, 2020, we recognized revenues from
sub-leasing operations of $13,125. For the twelve months ended December 31, 2020, we recognized a direct cost of revenue of $13,125.
During
the year ended December 31, 2020, expenses from operations were $297,519 compared to $4,515 for the year ended December 31, 2019. The
increase in expenses was primarily due to higher general and administrative expenses resulting from the efforts to prepare us to become
a fully reporting company with the SEC.
Year
Ended December 31, 2021
For
the twelve months ended December 31, 2021, we did not have any revenue. During this period the Company recognized $5,078,065 in general
and administrative expenses, $14,850,000 loss from land and structures acquisitions and $47,027 in interest expense. This produced a
loss of $19,906,722, of which $68,370 was attributable to minority ownership; therefore, the Company’s shareholders recorded a
$19,906,722 loss.
Liquidity
and Capital Resources
We
have begun our operations relying on external investors. Since inception and through December 31, 2021, we have raised $2,497,452 in
capital.
To
date we have only had limited revenue, which occurred the last six months of 2020 via a sublease of farming land. Therefore, presently
operations are not sufficient to sustain our operations without the additional sources of capital.
The
Company received preliminary approval from C-PACE, a Colorado specialized solar financing program developed by federal, state and county
governments. The Company is in the process of developing the engineering necessary to complete the C-Pace financing application.
On
August 17, 2020, VitaNova agreed to provide us with a $1,000,000 line of credit. Amounts drawn on the line of credit bear interest at
6% per year. We have not drawn on this line of credit as of the date of this Offering Circular.
We
had no cash flows during the year ended December 31, 2019.
Between
November 30, 2021 and the date of this Offering Circular, the Company sold convertible promissory notes in the principal amount of $500,000.
The notes bear interest at 6% per year, are due and payable on June 30, 2022, and are unsecured. At the option of the holder, each $100
of note principal can be converted into 2,000 Company Units. Each Unit will consist of one share of the Company’s common stock,
one Series III Warrant and One Series IV Warrant. Each Series III Warrant allows the holder to purchase one share of the Company’s
common stock at a price of $0.05 per share. Each Series IV Warrant allows the holder to purchase one share of the Company’s common
stock at a price of $0.06⅔ per share. The Series III and Series IV Warrants will expire on December 31, 2024.
Our
sources and (uses) of cash for the periods presented were:
| | |
Year ended | | |
Year Ended | |
| | |
12/31/21 | | |
12/31/20 | |
| Cash used in Operations | |
$ | (913,381 | | |
$ | (351,091 | ) |
| | |
| | | |
| | |
| Purchase of Units from VitaNova Solar Partners, LLC | |
| (4,420 | ) | |
| — | |
| | |
| | | |
| | |
| Sale of common stock and warrants | |
| 214,611 | | |
| 351,091 | |
| | |
| | | |
| | |
| Sale of Units by VitaNova Solar Partners, LLC | |
| 962,422 | | |
| — | |
| | |
| | | |
| | |
| Payment due to related party | |
| (448,925 | ) | |
| — | |
| | |
| | | |
| | |
| Sale of Convertible Notes | |
| 308,200 | | |
| — | |
Capital
Requirements
Our
estimated capital requirements for the twelve month period following the date of this Offering
Circular are:
| | ● |
General and administrative expenses | |
$ | 625,000 | |
| | ● |
Payments related to the purchase of land in southeastern Colorado (1) | |
$ | 2,500,000 | |
| | ● |
Retrofit/ expand existing greenhouse and warehouse (2) | |
$ | 9,500,000 | |
| | ● |
Construction of solar system to power expanded greenhouse (3) and warehouse | |
$ | 3,000,000 | |
| (1) |
See
the “Business” section of this Offering Circular regarding payments we are required to make in connection with the purchase
of these properties. |
| (2) |
Represents
the costs to retrofit an existing greenhouse and warehouse on the land we acquired in southern Colorado. See the “Business”
section of this Offering Circular for information concerning our plans to pay these costs. |
| |
|
| (3) |
If
VetaNova Solar Partners, LLC (“VSP”) is able to raise funds to construct these solar systems, the cost of these solar
systems will be borne by VSP. |
We
believe if all Units offered are sold, and with additional capital from third party investors, we will have sufficient capital to meet
our anticipated cash needs for at least the next twelve months.
Significant
Accounting Policies
See
Note 2 to the December 31, 2021 Financial Statements included as part of this Offering
Circular for a discussion of our significant accounting policies.
Impairment
Policy
At
least once every year, management examines all of our assets for proper valuation and to determine if an impairment is necessary. In
terms of real estate owned, this impairment examination also includes the accumulated depreciation. Management examines market valuations
and if an additional impairment is necessary for lower of cost or market, then an impairment charge is recorded.
Contractual
Obligations
As
of December 31, 2021, we did not have any material capital commitments.
Significant
Accounting Policies
For
a discussion of our significant accounting policies please see Note 2 to the audited financial statements included as part of this Offering
Circular.
Critical
Accounting Estimates
The
preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the
reported amount of assets, liabilities and contingencies at the date of the financial statements as well as the reported amounts of revenues
and expenses during the reporting period. As a result, management is required to routinely make judgments and estimates about the effects
of matters that are inherently uncertain. Actual results may differ from these estimates under different conditions or assumptions. The
following discussion pertains to accounting estimates management believes are most critical to the presentation of our financial position
and results of operations that require management’s most difficult, subjective, or complex judgments.
BUSINESS
The
Company intends to generate revenue from growing fruits and vegetables for sale to local markets.
In
2021 the Company acquired four contiguous parcels of land totaling 157 acres in Pueblo County Colorado.
| |
● |
Parcel 1 -
The Company issued 95,000,000 shares of its common stock and agreed to pay $2,368,421 by December 31, 2022 to GrowCo Partners 1,
LLC for approximately 39 acres containing one fully completed 90,000 sq. ft. greenhouse, and one adjoining fully completed 15,000
sq. ft. warehouse. on the land. The shares were issued in book entry form on November 19, 2021. The cash amount will bear interest
at 6% per year from August 17, 2021 until paid. Parcel 1 has. The completed greenhouse and warehouse have not been in operation since
2020. |
| |
|
|
| |
● |
Parcel 2 - The Company
issued 5,000,000 shares of its common stock and agreed to pay $131, 579 by December 31, 2022 to GrowCo Partners 2, LLC for 39 acres
of vacant land. The shares were issued in book entry form on November 29, 2021. The cash amount will bear interest at 6% per year
from August 17, 2021 until paid. |
| |
● |
Parcel 3 –
The Company issued 5,000,000 shares of its common stock and agreed to pay $131, 579 to GrowCo, Inc. by December 31, 2022 for 39 acres
of vacant land. The shares were issued in book entry form on November 29, 2021. The cash amount will bear interest at 6% per year
from August 17, 2021 until paid. |
| |
|
|
| |
● |
Parcel 4 - The Company
issued 15,000,000 shares of its common stock and agreed to pay $394,737 by December 31, 2022 to GrowCo Partners 2, LLC for 39 acres
of land with a partially completed greenhouse structure. The shares were issued in book entry form on November 29, 2021. The cash
amount will bear interest at 6% per year from August 17, 2021 until paid. |
On
the land in southern Colorado the Company plans to:
| |
1. |
expand the
existing greenhouse from two to six acres and retrofit and expand the greenhouse and warehouse so that the equipment in the greenhouse
and warehouse will run on solar power as opposed to utility provided electricity and propane. (Estimated cost: $9,500,000. Estimated
time to complete: eight months). Build solar system to power the greenhouse/ warehouse (Estimated cost: $3,000,000) |
| |
|
|
| |
2. |
construct an additional
23 acres of greenhouse and associated warehouse space (Estimated cost: $45,500,000. Estimated time to complete: 36 months), and build
solar systems to power the greenhouse and warehouse facilities (Estimated cost: $6,500,000) |
| |
|
|
| |
3. |
If
VetaNova Solar Partners, LLC (“VSP”) is able to raise funds to construct these solar systems referenced in 1 and 2 above,
the cost of these solar systems will be borne by VSP. |
The
Company has a direct or indirect interest in the three entities listed above.
The
Company plans to finance all or a part of the cost of retrofitting/ constructing greenhouses and warehouses and acquiring solar systems
through the sale of Units offered by this Offering Circular, future offering of the Company’s
securities, proceeds from the exercise of the Company’s warrants or borrowings from private lenders.
As
of the date of this Offering Circular the Company did not have any agreements with any person
to purchase any of the Company’s securities or lend any funds to the Company.
On
August 4, 2021 the Company entered in an agreement with Mastronardi Produce Limited pursuant to which Mastronardi was granted the exclusive
right to sell and market all US Grade No. 1 Products produced from all of the Company’s greenhouses in North America. For each
sale, Mastronardi will be paid a low double digit percentage of the gross price received for the sale of the products grown at the Company’s
greenhouses, plus all costs incurred in the sale and distribution of such products.
Mastronardi
is a fourth-generation family owned company and the leading marketer and distributor in North America of tomatoes, peppers, cucumbers,
berries and leafy greens. Mastronardi has an extensive and long-tenured retail network and is nationally recognized under the primary
SUNSET® brand and other brands, including Campari®, Angel Sweet®, Flavor Bombs®, Sugar Bombs®, tomatoes and WOW™
berries.
Solar
Energy Overview
Solar
power is energy from the sun that is converted into thermal or electrical energy. Solar energy is the cleanest and most abundant renewable
energy source available. Solar technologies can harness this energy for a variety of uses, including generating electricity, providing
light or a comfortable interior environment, and heating water for domestic, commercial, or industrial use.
There
are three main ways to harness solar energy: photovoltaic, solar heating and cooling, and concentrating solar power. Photovoltaics generate
electricity directly from sunlight via an electronic process and can be used to power anything from small electronics such as calculators
and road signs up to homes and large commercial businesses. Solar heating and cooling (SHC) and concentrating solar power (CSP) applications
both use the heat generated by the sun to provide space or water heating in the case of SHC systems, or to run traditional electricity-generating
turbines in the case of CSP power plants.
Solar
energy is a very flexible energy technology: it can be built as distributed generation (located at or near the point of use) or as a
central-station, utility-scale solar power plant (similar to traditional power plants). Both of these methods can also store the energy
they produce for distribution after the sun sets, using new solar and storage technologies.
In
the last decade alone, solar has experienced an average annual growth rate of 48%. Thanks to strong federal policies like the solar Investment
Tax Credit, rapidly declining costs, and increasing demand across the private and public sector for clean electricity, there are now
nearly 78 gigawatts (GW) of solar capacity installed nationwide, enough to power 14.5 million homes.
The
cost to install solar has dropped by more than 70% over the last decade, leading the industry to expand into new markets and deploy thousands
of systems nationwide. Prices as of June 2021 are at their lowest levels in history across all market segments.
Solar
has ranked first or second in new electric capacity additions in each of the last years. In 2019, 40% of all new electric capacity added
to the grid came from solar, the largest such share in history. Solar’s increasing competitiveness against other technologies has
allowed it to quickly increase its share of total U.S. electrical generation - from just 0.1% in 2010 to more than 2.5% today.
Homeowners
and businesses are increasingly demanding solar systems that are paired with battery storage. While this pairing is still relatively
new, the growth over the next five years is expected to be significant. By 2025, more than 25% of all behind-the-meter solar systems
will be paired with storage, compared to under 5% in 2019.
MANAGEMENT
Officers
and Directors
| Name |
|
Age |
|
Position |
| John R. McKowen |
|
72 |
|
Chief Executive, Financial, and Accounting Officer
and a Director |
John
R. McKowen has been an officer and director of the Company since June 2018. Prior to joining the Company, Mr. McKowen served as the Chief
Executive Officer and President of GrowCo Inc., a builder of greenhouses, from May 2014 to May 2016 and again since October 2017. Mr.
McKowen was the Chief Executive Officer and Chairman of the Board of Directors of Two Rivers Waters and Farming Company from November
2009 to May 2016.
On
December 10, 2021, the Colorado Securities Commission (the “Commission”) filed a Complaint in the District Court for the
City and County of Denver against Two Rivers Water & Farming Company, TR Capital, Partners, LLC, GrowCo, Inc., VitaNova Partners,
LLC, John McKowen, along with other entities and individuals (together the “Defendants”). See the Company’s 8-K report
dated December 13, 2021 for more information.
On
January 7, 2020 a small group of former Growco investors (the “Plaintiffs”) filed an arbitration claim against a brokerage
firm. In their claim, the Plaintiffs alleged that the brokerage firm failed to disclose material information to the Plaintiffs in connection
with the sale of securities by GrowCo. John McKowen was GrowCo’s Chief Executive Officer between April 2014 and May 2016 and has
been GrowCo’s Chief Executive and Financial Officer since October 2017. Specifically, the Plaintiffs allege that the brokerage
firm failed to disclose the following concerning Mr. McKowen: (1) McKowen’s securities license was revoked and he was ordered to
pay restitution to a former customer, and (2) McKowen was sanctioned by the Indiana securities regulators for unlawful sales of securities
to investors in Indiana. On March 17, 2022 the arbitration panel denied all of Plaintiffs’ claims.
We
believe Mr. McKowen is qualified to act as a director based upon his knowledge of business practices and, in particular, his experience
in building greenhouses.
Mr.
McKowen is not independent as that term is defined in Section 803 of the NYSE American Company Guide.
Our
directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until their successors
are elected or appointed. Our officers are appointed by our board of directors and serve at the discretion of the board.
We
do not have a financial expert as that term is defined by the Securities and Exchange Commission.
Our
Board of Directors does not have standing audit, nominating or compensation committees, committees performing similar functions, or charters
for such committees. Instead, the functions that might be delegated to such committees are carried out by our directors, to the extent
required. Our directors believe that the cost of associated with such committees, has not been justified under our current circumstances.
During the year ended December 31, 2021 we did not compensate any person for serving as an officer or a director.
Our
Board of Directors has the ultimate responsibility to evaluate and respond to risks facing us. Our Board of Directors fulfills its obligations
in this regard by meeting on a regular basis and communicating, when necessary, with our officers.
We
have not adopted a Code of Ethics which is applicable to our principal executive, financial, and accounting officers and persons performing
similar functions since we only have one executive officer.
Holders
of our common stock can send written communications to our entire Board of Directors, or to one or more Board members, by addressing
the communication to “the Board of Directors” or to one or more directors, specifying the director or directors by name,
and sending the communication to our corporate office. Communications addressed to the Board of Directors as whole will be delivered
to each Board member. Communications addressed to a specific director (or directors) will be delivered to the director (or directors)
specified.
A
security holder communication not sent to the Board of Directors as a whole is not relayed to Board members which did not receive the
communication.
Executive
Compensation
Our
executive officers will be compensated through the following three components:
| |
● |
Base Salary |
| |
|
|
| |
● |
Short-Term Incentives (cash bonuses) |
| |
|
|
| |
● |
Long-Term Incentives (equity-based awards) |
| |
|
|
| |
● |
Benefits |
These
components provide a balanced mix of base compensation and compensation that is contingent upon our executive officer’s individual
performance. A goal of the compensation program is to provide executive officers with a reasonable level of security through base salary
and benefits. We want to ensure that the compensation programs are appropriately designed to encourage executive officer retention and
motivation to create shareholder value. We believe that our shareholders are best served when we can attract and retain talented executives
by providing compensation packages that are competitive but fair.
Base
Salaries
Base
salaries generally have been targeted to be competitive when compared to the salary levels of persons holding similar positions in other
publicly traded mining companies of comparable size. The executive officer’s respective responsibilities, experience, expertise,
and individual performance are considered.
Short-Term
Incentives
Cash
bonuses may be awarded at the sole discretion of the Board of Directors based upon a variety of factors that encompass both individual
and company performance.
Long-Term
Incentives
Equity
incentive awards help to align the interests of our employees with those of our shareholders. Equity based awards are made under our
Equity Incentive Plan. Options are granted with exercise prices equal to the closing price of our common stock on the date of grant and
may be subject to a vesting schedule as determined by the Board of Directors who administer the plan.
We
believe that grants of equity-based compensation:
| |
● |
enhance
the link between the creation of shareholder value and long-term executive incentive compensation; |
| |
|
|
| |
● |
provide
focus, motivation, and retention incentive; and |
| |
|
|
| |
● |
provide
competitive levels of total compensation |
In
addition to cash and equity compensation programs, executive officers participate in the health and welfare benefit programs available
to other employees.
Compensation
Table
The
following table sets forth in summary form the compensation received by our Chief Executive Officer for the two fiscal years ended December
31, 2021:
Name and
Principal Position | |
Fiscal Year | | |
Salary (1) | | |
Bonus (2) | | |
Stock Awards (3) | | |
Option Awards (4) | | |
All Other Compensation (5) | | |
Total | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| John R. McKowen | |
2021 | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | |
| Chief Executive, Financial | |
2020 | | |
| – | | |
| – | | |
$ | 8,811 | | |
| – | | |
| – | | |
$ | 8,811 | |
| and Accounting Officer | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Louise Lowe | |
2021 | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | |
| Secretary | |
2020 | | |
| – | | |
| – | | |
$ | 302 | | |
| – | | |
| – | | |
$ | 302 | |
| (1) |
The
dollar value of base salary (cash and non-cash) earned. |
| |
|
| (2) |
The
dollar value of bonus (cash and non-cash) earned. |
| |
|
| (3) |
The
value of all stock awarded during the periods covered by the table is calculated according to ASC 718-10-30-3 which represented the
grant date fair value. |
| |
|
| (4) |
The
fair value of all stock options granted during the periods covered by the table are calculated on the grant date in accordance with
ASC 718-10-30-3 which represented the grant date fair value. |
| |
|
| (5) |
All
other compensation that could not be properly reported in any other column. |
Ms.
Lowe resigned as an officer on February 5, 2021.
Since
our inception, we have not compensated any person for acting as a director.
The
following shows the amount we expect to pay to Mr. McKowen, and the amount of time Mr. McKowen expects to devote to our business, during
the year ending December 31, 2022.
| Projected Monthly | | |
Percent of Time to Be |
|
| Compensation | | |
Devoted to our Business |
|
| | | | |
|
|
| $ | 7,500 | | |
100 |
% |
Transactions
with Related Parties
On
December 1, 2020 John R. McKowen was issued 88,107,690 shares of the Company’s common stock and Louise Lowe was issued 3,019,455
shares of the Company’s common stock for services rendered and valued at $0.0001 per share. A total of 29,369,230 shares owned
by Mr. McKowen and 1,006,485 shares owned by Mrs. Lowe are subject to repurchase by the Company for a price of $0.0001 per share if the
Warrant Performance Metric described below is not satisfied. A total of 29,369,230 shares owned by Mr. McKowen and 1,006,485 shares owned
by Mrs. Lowe are subject to repurchase at such price if the Secondary Performance Metric is not satisfied.
The
“Warrant Performance Metric” will be satisfied if Warrants issued in the Company’s 2020 Private Placement are exercised
to acquire at least 42,140,266 shares of the Company’s common stock. The “Secondary Performance Metric” will be satisfied
if, prior to December 31, 2022, the Company completes a “sale lease back” of a solar powered property and receives gross
proceed of a least $6,000,000 from the sale.
On
July 15, 2020, the Company and VitaNova Partners, LLC entered into a consulting agreement whereby VitaNova agreed to provide management
services until a private placement was completed and the shareholders of the Company could properly elect a board of directors and Company
officers could be appointed. VitaNova was paid $456,000 annually for its management services. On December 15, 2020 the consulting agreement
was amended to reduce payments to $19,000 a month effective January 1, 2021.
On
July 12,2021 the Company issued 91,072,971 of its shares of common stock, as well as warrants to purchase an additional 10,249,375 shares
of its common stock to VitaNova Partners, LLC in payment of expenses (amounting to $9,108) paid by VitaNova on behalf of the Company.
The warrants are exercisable at any time on or before December 31, 2022 at a price of $0.20 per share. VitaNova Partners, LLC then transferred
those shares to certain members of VitaNova in exchange for the members interests in VitaNova Partners, LLC. John McKowen, the Company’s
only Officer and Director and a controlling person of VitaNova, did not receive any of those shares.
See
the “Business” section of this Offering Circular for information concerning the Company’s acquisition of land from
three related parties.
PRINCIPAL
SHAREHOLDERS
The
following table provides information with respect to the beneficial ownership of our common stock, of (i) each person or entity that
is a beneficial owner of more than 5% of our outstanding common stock, (ii) each executive officer and director and (iii) all our directors
and executive officers as a group.
| Name and Address of Beneficial Owner | |
Shares Owned | | |
Percent of Outstanding Shares | |
| | |
| | |
| |
| John R. McKowen | |
| 88,107,690 | | |
| 20.65 | % |
| 335 A Josephine St. | |
| | | |
| | |
| Denver, Colorado 80206 | |
| | | |
| | |
| | |
| | | |
| | |
| GrowCo Partners 1, LLC | |
| 70,000,000 | (1) | |
| 16.41 | % |
| 335 A Josephine Street | |
| | | |
| | |
| Denver, CO 80206 | |
| | | |
| | |
| | |
| | | |
| | |
| VitaNova Partners, LLC | |
| 107,581,262 | (1) | |
| 12.25 | % |
| 335 A Josephine Street | |
| | | |
| | |
| Denver, CO 80206 | |
| | | |
| | |
| | |
| | | |
| | |
| GrowCo Partners 2, LLC | |
| 20,000,000 | (1) | |
| 4.69 | % |
| 335 A Josephine Street | |
| | | |
| | |
| Denver, CO 80206 | |
| | | |
| | |
| | |
| | | |
| | |
| GrowCo Inc. | |
| 5,000,000 | (1) | |
| 1.17 | % |
| 335 A Josephine Street | |
| | | |
| | |
| Denver, CO 80206 | |
| | | |
| | |
| | |
| | | |
| | |
| Prasil Family Matters, LLC | |
| 39,137,327 | | |
| 9.17 | % |
| 7275 N. Scottsdale Road | |
| | | |
| | |
| Paradise Valley, AZ 85253 | |
| | | |
| | |
| | |
| | | |
| | |
| Jon D. & Linda W. Gruber Trust | |
| 36,650,603 | | |
| 8.59 | % |
| 300 Tamal Plaza, Ste 280 | |
| | | |
| | |
| Corte Madera, CA 94925 | |
| | | |
| | |
| | |
| | | |
| | |
| I. Wistar Morris | |
| 19,998,386 | | |
| 5.7 | % |
| 19 Pond Lane | |
| | | |
| | |
| Bryn Mawr, PA 19010 | |
| | | |
| | |
| | |
| | | |
| | |
| All officers and directors as a group (one person) | |
| 290,688,952 | | |
| 68.8 | % |
| (1)
|
This
entity is controlled by Mr. McKowen. |
| |
|
| (2)
|
Includes
shares issuable prior to December 31, 2022 upon the exercise of options or warrants held by: |
| | |
Options or Warrants | |
| Name | |
Exercisable Prior to December 31, 2022 | |
| | |
| |
| VitaNova Partners, LLC | |
| 55,312,837 | |
| 335 A Josephine Street | |
| | |
| Denver, CO 80206 | |
| | |
PLAN
OF DISTRIBUTION
We
are offering up to 300,000,000 Units at a price of $0.03⅓ per Unit, for a total of up to $10,000,000 in gross offering proceeds,
assuming all Units offered are sold. Each Unit consists of one share of common stock, one Series III Warrant, one Series IV Warrant and
one common membership interest in VetaNova Solar Partners, LLC. Each Series III Warrant allows the holder to purchase one share of our
common stock at a price of $0.03⅓ per share. Each Series IV Warrant allows the holder to purchase one share of our common stock
at a price of $0.05 per share. The Series III and Series IV Warrants will expire on December 31, 2024. The minimum investment for any
investor is $1,000, unless such minimum is waived by the Company in its sole discretion and on a case-by-case basis. There is no minimum
offering amount or escrow required as a condition to closing and we may sell significantly fewer Units than those offered.
The
Company may offer the Units through underwriters, selected brokers or finders, although the Company has no current arrangements to do
so. If selected brokers are used, the Company estimates that the selected brokers will sell only 50% of the Units offered. If the Company
chooses to offer the Units through underwriters, selected brokers or finders, information regarding any arrangement with such persons
will be disclosed in an amendment to this Offering Circular.
Investors
wishing to participate in this offering should go to www.vtanva.com, where they can find copies of this Offering Circular. You should
click on the “Invest Now” button where you can fill out your subscription agreement, upload required documents, and submit
payment for your subscription. The Company is accepting payments via ACH and wire transfer. The Company will accept or reject subscriptions
in its sole discretion and subscriptions will close on a monthly basis during the term of this offering. Information on vtanva.com is
not a part of this Offering Circular.
If
a subscription is rejected, the Company, as applicable, will return the investor’s funds to the investor following the monthly
close of subscriptions. If a subscription is accepted, the Company will send issuance instructions to the Company’s transfer agent
for the accepted subscriptions. Shares and Warrants purchased in this Offering will be issued to investors in book entry form and held
on the records of the Company’s transfer agent.
We
do not pay promotions fees to third parties; however, third party sites may highlight our offering. Statements on these sites should
not be considered as coming from the Company and should not be relied upon in considering an investment in the Units. We disclaim all
liability from claims made on such third party sites.
Our
directors and officers will not register as broker-dealers under Section 15 of the Securities Exchange Act of 1934 in reliance upon Rule
3a4-1. Rule 3a4-1 sets forth those conditions under which a person associated with an issuer may participate in the offering of the issuer’s
securities and not be deemed to be a broker-dealer. The conditions are that:
| |
● |
the
person is not statutorily disqualified, as that term is defined in Section 3(a)(39) of the Act, at the time of his participation;
and |
| |
|
|
| |
● |
the
person is not at the time of their participation an associated person of a broker-dealer; and |
| |
|
|
| |
● |
the
person is not compensated in connection with his participation by the payment of commissions or other remuneration based either
directly or indirectly on transactions in securities; and |
| |
|
|
| |
● |
the
person restricts his participation to any one or more of the following activities: |
| |
|
|
| |
|
(A) |
Preparing
any written communication or delivering such communication through the mails or other means that does not involve oral solicitation
by the person of a potential purchaser; provided, however, the content of such communication is approved by an officer or director
of the Company; |
| |
|
|
|
| |
|
(B) |
Responding
to inquiries of a potential purchaser in a communication initiated by the potential purchaser; provided, however, the content of
such responses are limited to information contained in a registration statement filed under the Securities Act of 1933 or other offering
document; or |
| |
|
|
|
| |
|
(C) |
Performing
ministerial and clerical work involved in effecting any transaction. |
Our
officers and directors are not statutorily disqualified, are not being compensated, and are not associated with a broker-dealer. They
are and will continue to hold their positions as officers or directors following the completion of the offering and have not been during
the past twelve (12) months and are currently not brokers or dealers or associated with brokers or dealers. Our officers and directors
will not receive a commission or otherwise be compensated for their sale of any Units.
Our
shares and warrants are not now listed on any national securities exchange or the NASDAQ stock market. There is also no guarantee that
our securities will ever trade on any listed exchange or NASDAQ stock market. Accordingly, our shares and warrants should be considered
highly illiquid, which inhibits investors’ ability to resell their shares and warrants.
Upon
this Offering Circular being qualified by the SEC, the Company may offer and sell Units from time to time. This offering will terminate
on December 31, 2023. Notwithstanding the foregoing, the Company may terminate this offering at any time.
There
can be no assurances that the Company will sell any or all of the Units. All Units will be offered on a “best efforts” basis.
Should
any fundamental change occur regarding the status or other matters concerning the Company, we will file an amendment to this Offering
Circular disclosing such matters.
Generally,
no sale may be made to you in this offering if the aggregate purchase price you pay is more than 10% of the greater of your annual income
or net worth. Different rules apply to accredited investors and non-natural persons. Before making any representation that your investment
does not exceed applicable thresholds, we encourage you to review Rule 251(d)(2)(i)(C) of Regulation A. For general information on investing,
we encourage you to refer to www.investor.gov.
All
subscription agreements and payments are irrevocable until accepted. A subscription agreement executed by a subscriber is not binding
on the Company until it is accepted by the Company. There is no minimum offering amount and no provision to escrow or return investor
funds if any minimum number of Units is not sold.
We
will not apply for “blue sky” registration in any state. We intend to sell the Units only in the jurisdictions in which an
exemption from the registration requirements is available, and purchases of Units may be made only in those jurisdictions.
DESCRIPTION
OF SECURITIES
Units
By
means of this Offering Circular we are offering 300,000,000 Units at a price of $0.03⅓ per Unit. Each Unit is comprised of one
share of common stock, one Series III Warrant and one Series IV Warrant.
Common
Stock
We
are authorized to issue 500,000,000 shares of common stock. Holders of our common stock are each entitled to cast one vote for each share
held of record on all matters presented to the shareholders. Cumulative voting is not allowed; hence, the holders of a majority of our
outstanding common shares can elect all directors.
Holders
of our common stock are entitled to receive such dividends as may be declared by our Board of Directors out of funds legally available
and, in the event of liquidation, to share pro rata in any distribution of our assets after payment of liabilities. Our Board of Directors
is not obligated to declare a dividend. It is not anticipated that dividends will be paid in the foreseeable future.
Holders
of our common stock do not have preemptive rights to subscribe to additional shares if issued. There are no conversions, sinking fund
or similar provisions regarding the common stock. All outstanding shares of common stock are fully paid and non-assessable.
We
have not paid any dividends and we do not plan on paying any dividends in the foreseeable future.
Warrants
Each
Series III Warrant allows the holder to purchase one share of the Company’s common stock at a price of $0.03⅓ per share.
Each Series IV Warrant allows the holder to purchase one share of the Company’s common stock at a price of $0.05 per share. The
Series III and Series IV Warrants will expire on December 31, 2024.
Other
provisions of the Warrants:
1. Unless exercised within the time provided for exercise, the warrants will automatically expire.
2. The exercise price of the warrants may not be increased during the term of the warrants, but the exercise price may be decreased at the discretion of the Company’s Board of Directors by giving each warrant holder notice of such decrease. The exercise period for the warrants may be extended by the Company’s Board of Directors giving notice of such extension to each warrant holder of record.
3. There is no minimum number of shares which must be purchased upon exercise of the warrants.
4.
The exercise price of the warrants, as well as the shares issuable upon the exercise of the warrants, will be proportionately adjusted
in the event of any stock split, stock dividend, reclassification, capital reorganization or merger.
5.
The holders of the warrants have no voting power and are not entitled to dividends. In the event of the liquidation or dissolution of
the Company, holders of the warrants will not be entitled to participate in the distribution of the Company’s assets.
Membership
Units in VetaNova Solar Partners, LLC
With
each Unit purchased in this Offering, subscribers will receive one common membership unit in VetaNova Solar Partners, LLC (“VSP”).
In
January 2020, the Company formed VSP in Colorado as a limited liability company. As of August 30, 2022, VSP had 895,146,695 outstanding
common units, of which the Company owned 632,403,663 common units.
If
all Units offered by means of this Offering Circular are sold, the Company will issue 300,000,000 VSP common membership units to the
investors in this offering. If less than all Units offered are sold, the Company will return to VSP common membership interests equal
to the number determined by subtracting the number of Units sold in this offering from 300,000,000.
VSP,
depending on available funding, plans to construct the solar systems which will power the Company’s existing greenhouse and warehouse
facility and new facilities to be built. These solar systems will then be leased to the Company at a yet to be determined price. For
building the solar systems, VSP will receive solar tax credits. VSP may elect to sell the solar tax credit, in which case VSP will distribute
the proceeds from the sale of the credits to its membership unit holders on a pro-rata basis. If VSP does not sell the solar tax credits,
each membership unit holder will be allocated a pro-rata portion of the tax credit, which the membership unit holder can use as a tax
credit on the membership unit holder’s tax return.
VSP
will elect to be treated as a partnership for federal and Colorado income tax purposes. As such, VSP will not be subject to federal income
tax or Colorado state income tax.
VSP
is required to file a partnership information tax return annually. Each holder of a VSP membership unit must report on their income tax
return, their allocable share of VSP’s income, loss, capital gain or loss, deduction, tax credit (including any solar tax credit),
tax preference, and deferral for their taxable year in which VSP’s taxable year ends. VSP plans to report its operations on a cash
basis for federal income tax purposes, using the calendar year as its tax year. Holders of membership units in VSP will be sent information
on Schedule K-1 that will enable them to prepare their tax returns.
Holders
of membership interests in VSP will be required to include their allocable portion of VSP’s income and gain in the computation
of their taxable income regardless of whether VSP makes distributions of cash to the holders of VSP membership units. Therefore, holders
of membership interests in VSP may be liable for federal, state or local income taxes on such allocable income even though they may not
receive any distributions from VSP with which to pay taxes.
Transfer
Agent
Old
Monmouth Stock Transfer Co., Inc.
200
Memorial Parkway
Atlantic
Highlands, NJ 07716
(732)
872-2727
LEGAL
MATTERS
Hart
and Hart, LLC of Denver, Colorado has passed upon the validity of our common stock offered by this Offering Circular.
EXPERTS
Our
financial statements as of December 31, 2020 and 2019 and for the periods then ended have been audited by BF Borgers CPA PC, our independent
registered public accounting firm, as set forth in their report which is part of this Offering Circular. Such financial statements have
been incorporated herein in reliance on the report of such firm given upon their authority as experts in accounting and auditing.
INDEMNIFICATION
The
Company’s Bylaws authorize indemnification of a director, officer, employee or agent of the Company against expenses incurred by
him in connection with any action, suit, or proceeding to which he is named a party by reason of his having acted or served in such capacity,
except for liabilities arising from his own misconduct or negligence in performance of his duty. In addition, even a director, officer,
employee, or agent of the Company’ who was found liable for misconduct or negligence in the performance of his duty may obtain
such indemnification if, in view of all the circumstances in the case, a court of competent jurisdiction determines such person is fairly
and reasonably entitled to indemnification. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to directors, officers, or persons controlling the Company pursuant to the foregoing provisions, the Company has been informed
that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Act
and is therefore unenforceable.
WHERE
YOU CAN FIND MORE INFORMATION
We
have filed with the SEC a Regulation A Offering Statement on Form 1-A under the Securities Act with respect to the shares of common stock
offered hereby. This Offering Circular, which constitutes a part of the Offering Statement, does not contain all of the information set
forth in the Offering Statement or the exhibits and schedules filed therewith. For further information about us and the common stock
offered hereby, we refer you to the Offering Statement and the exhibits and schedules filed therewith. Statements contained in this Offering
Circular regarding the contents of any contract or other document that is filed as an exhibit to the Offering Statement are not necessarily
complete, and each such statement is qualified in all respects by reference to the full text of such contract or other document filed
as an exhibit to the Offering Statement. Upon the completion of this Offering, we will be required to file periodic reports, proxy statements,
and other information with the SEC pursuant to the Securities Exchange Act of 1934. You may read and copy this information at the SEC’s
Public Reference Room, 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet website that contains reports, proxy statements
and other information about issuers, including us, that file electronically with the SEC. The address of this site is www.sec.gov.
VETANOVA
INC
CONDENSED
AND CONSOLIDTED FINANCIAL STATEMENTS FOR THE PERIOD ENDED DECEMBER 31, 2021
Report
of Independent Registered Public Accounting Firm
To
the shareholders and the board of directors of VETANOVA INC
Opinion
on the Financial Statements
We
have audited the accompanying balance sheets of VETANOVA INC as of December 31, 2021 and 2020, the related statements of operations,
stockholders’ equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred to as the
“financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial
position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the years then ended,
in conformity with accounting principles generally accepted in the United States.
Substantial
Doubt about the Company’s Ability to Continue as a Going Concern
The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note
1 to the financial statements, the Company has suffered recurring losses from operations and has a significant accumulated deficit. In
addition, the Company continues to experience negative cash flows from operations. These factors raise substantial doubt about the Company’s
ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial
statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis
for Opinion
These
financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s
financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We
conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company
is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits
we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion
on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our
audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or
fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides
a reasonable basis for our opinion.
/S/
BF Borgers CPA PC
BF
Borgers CPA PC
We
have served as the Company’s auditor since 2020.
Lakewood,
CO
March
29, 2022
VETANOVA
INC
Condensed
and Consolidated Balance Sheets
| | |
As of December 31, | |
| | |
2021 | | |
2020 | |
| ASSETS | |
| | | |
| | |
| Current Assets | |
| | | |
| | |
| Cash and cash equivalents | |
$ | 108,951 | | |
$ | - | |
| Prepaid expenses | |
| - | | |
| 13,734 | |
| Due from related party - VitaNova Partners LLC | |
| - | | |
| 51,179 | |
| Total Current Assets | |
| 108,951 | | |
| 64,913 | |
| Long Term Assets | |
| | | |
| | |
| Greenhouse | |
| 3,410,000 | | |
$ | - | |
| Land | |
| 90,000 | | |
| - | |
| Total Long Term Assets | |
| 3,500,000 | | |
| - | |
| TOTAL ASSETS | |
$ | 3,608,951 | | |
$ | 64,913 | |
| | |
| | | |
| | |
| LIABILITIES & STOCKHOLDERS’ EQUITY | |
| | | |
| | |
| Current Liabilities | |
| | | |
| | |
| Accounts payable and accrued liabilities | |
$ | 37,630 | | |
$ | - | |
| Interest payable | |
| 7,809 | | |
| 11,925 | |
| Payment due to related parties for land and greenhouse acquisition | |
| 2,051,075 | | |
| - | |
| Bridge note payable | |
| 219,292 | | |
| - | |
| Bridge note payable to related party (net of discount) | |
| 94,519 | | |
| - | |
| Total Current Liabilities | |
| 2,410,325 | | |
| 11,925 | |
| TOTAL LIABILITIES | |
| 2,410,325 | | |
| 11,925 | |
| Commitments & Contingencies (Notes 3, 4 and 6) | |
| | | |
| | |
| Stockholders’ Equity | |
| | | |
| | |
| Common stock, $0.0001 par value, 500,000,000 shares authorized, 426,100,053 and 194,971,866 shares issued and outstanding on September 30, 2021 and December 31, 2020, respectfully | |
| 91,835 | | |
| 68,694 | |
| VitaNova Solar Partners, LLC 71,774,011 common units outstanding and 7,379,305 preferred units outstanding, 100,000,000 preferred and 100,000,000 common units authorized | |
| 604,252 | | |
| - | |
| Additional paid-in capital | |
| 20,435,134 | | |
| 298,322 | |
| Accumulated (deficit) | |
| (20,289,120 | ) | |
| (314,028 | ) |
| Total VETANOVA INC Equity | |
| 842,101 | | |
| 52,988 | |
| Non-controlling interest in a subsidiary | |
| 356,525 | | |
| - | |
| TOTAL STOCKHOLDERS’ EQUITY | |
| 1,198,626 | | |
| 52,988 | |
| TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY | |
$ | 3,608,951 | | |
$ | 64,913 | |
The
accompanying notes to condensed financial statements are an integral part of these statements.
VETANOVA
INC
Condensed
and Consolidated Statements of Operations
| | |
Twelve Months ended December 31, | |
| | |
2021 | | |
2020 | |
| Revenue | |
$ | - | | |
$ | 13,125 | |
| Direct cost of revenue | |
| - | | |
| 13,125 | |
| Gross Margin | |
| - | | |
| - | |
| Operating Expenses | |
| | | |
| | |
| General and administrative | |
| 5,078,065 | | |
| 297,519 | |
| Depreciation and amortization | |
| - | | |
| - | |
| Total Operating Expenses | |
| 5,078,065 | | |
| 297,519 | |
| Profit (Loss) from Operations | |
| (5,078,065 | ) | |
| (297,519 | ) |
| Other Income (Expense) | |
| | | |
| | |
| Loss on asset acquisitions - related party | |
| (14,850,000 | ) | |
| - | |
| Interest expense | |
| (47,027 | ) | |
| - | |
| Total Other Income (Expense) | |
| (14,897,027 | ) | |
| - | |
| Minority Share of Loss | |
| 68,370 | | |
| | |
| Net Profit (Loss) Before Taxes | |
| (19,906,722 | ) | |
| (297,519 | ) |
| Income Tax (Provision) Benefit | |
| - | | |
| - | |
| Net Profit (Loss) | |
$ | (19,906,722 | ) | |
$ | (297,519 | ) |
| | |
| | | |
| | |
| (Loss) per Common Share - Basic | |
$ | (0.08 | ) | |
$ | (0.01 | ) |
| (Loss) per Common Share - Dilutive | |
$ | (0.08 | ) | |
$ | (0.01 | ) |
| Weighted Average Shares Outstanding: |
| Basic | |
| 251,906,754 | | |
| 19,919,780 | |
| Dilutive | |
| 251,906,754 | | |
| 19,919,780 | |
The
accompanying notes to condensed financial statements are an integral part of these statements.
VETANOVA
INC
Condensed
and Consolidated Statements of Cash Flows
| | |
Twelve Months Ended Dec 31, | |
| | |
2021 | | |
2020 | |
| Cash Flows from Operating Activities: | |
| | | |
| | |
| Net Loss | |
$ | (19,975,092 | ) | |
$ | (297,519 | ) |
| Adjustments to reconcile net (loss) to net cash used in operating activities: | |
| | | |
| | |
| Depreciation & amortization | |
| 5,611 | | |
| - | |
| Loss and impairment on purchase of assets | |
| 14,850,000 | | |
| - | |
| Stock issued for services | |
| 4,104,917 | | |
| | |
| Net change in operating assets and liabilities: | |
| | | |
| | |
| Decrease in prepaid expenses | |
| 13,734 | | |
| 15,924 | |
| Decrease (Increase) in related party receivable | |
| 51,179 | | |
| (13,000 | ) |
| (Decrease) in related party payable | |
| - | | |
| (45,798 | ) |
| Increase (Decrease) in accounts payable | |
| 33,514 | | |
| (10,698 | ) |
| VSP common units issued for services | |
| 2,756 | | |
| - | |
| Net Cash Used in Operating Activities | |
| (913,381 | ) | |
| (351,091 | ) |
| Cash Flows from Investing Activities | |
| - | | |
| - | |
| Purchase of VSP LLC units | |
| (4,420 | ) | |
| - | |
| Purchase of land | |
| - | | |
| | |
| Net Cash Used in Investing Activities | |
| (4,420 | ) | |
| - | |
| Cash Flows from Financing Activities | |
| | | |
| | |
| Sale of units | |
| 205,037 | | |
| 351,091 | |
| Sale of VSP LLC units | |
| 962,442 | | |
| - | |
| Payments to related parties in connection with land acquisitions | |
| (448,925 | ) | |
| | |
| Sale of convertible debt | |
| 308,200 | | |
| | |
| Cash Flows from Financing Activities | |
| 1,026,754 | | |
| 351,091 | |
| Net Change in Cash & Cash Equivalents | |
| 108,951 | | |
| - | |
| Beginning Cash & Cash Equivalents | |
| - | | |
| - | |
| Ending Cash & Cash Equivalents | |
$ | 108,951 | | |
$ | - | |
Non-cash transactions
| | |
For the 12 months ended December 31, | |
| | |
2021 | | |
2020 | |
| NCI | |
$ | 356,525 | | |
$ | - | |
| Purchase of land for deferred payment and issuance of shares | |
$ | 300,000 | | |
$ | - | |
| Purchase of GCP1 land and infrastructure for deferred payment and issuance of shares | |
$ | 6,873,568 | | |
$ | - | |
| Shares issued for prior common shares due | |
$ | 4,000,000 | | |
$ | - | |
The
accompanying notes to condensed financial statements are an integral part of these statements.
VETANOVA
INC
Condensed
and Consolidated Statements of Changes in Stockholders’ Equity
| | |
| Common
Stock | | |
| VetaNova | | |
| | | |
| | | |
| | | |
| | |
| | |
| Shares
(000s) | | |
| Amount | | |
|
Solar
Partners
(VSP) | | |
| Additional
Paid
In Capital | | |
| Accumulated
(Deficit) | | |
| Noncontrolling
interest
in VSP | | |
| Stockholders’
Equity | |
| Balances, December 31, 2019 | |
| 627 | | |
$ | 49,260 | | |
| | | |
$ | (49,260 | ) | |
$ | (16,509 | ) | |
| | | |
$ | (16,509 | ) |
| 2020 Activity: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net (Loss) | |
| - | | |
| - | | |
| | | |
| - | | |
| (297,519 | ) | |
| | | |
| (297,519 | ) |
| Private placement | |
| 35,109 | | |
| 3,511 | | |
| | | |
| 347,582 | | |
| - | | |
| | | |
| 351,093 | |
| Stock issued for services | |
| 103,623 | | |
| 10,362 | | |
| | | |
| - | | |
| - | | |
| | | |
| 10,362 | |
| Stock
issued to VitaNova Partners LLC | |
| 55,613 | | |
| 5,561 | | |
| | | |
| - | | |
| - | | |
| | | |
| 5,561 | |
| Balances, December 31, 2020 | |
| 194,972 | | |
$ | 68,694 | | |
$ | - | | |
$ | 298,322 | | |
$ | (314,028 | ) | |
$ | - | | |
$ | 52,988 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| 2021 Activity: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net (Loss) | |
| - | | |
| - | | |
| - | | |
| - | | |
| (19,906,722 | ) | |
| - | | |
| (19,906,722 | ) |
| Private placement - VTNA | |
| 115,961 | | |
| 11,624 | | |
| - | | |
| 193,412 | | |
| - | | |
| - | | |
| 205,036 | |
| VetaNova Solar Partners | |
| - | | |
| - | | |
| 604,252 | | |
| - | | |
| (68,370 | ) | |
| 356,525 | | |
| 892,407 | |
| Return of stock issued for
services | |
| (2,333 | ) | |
| (233 | ) | |
| - | | |
| - | | |
| - | | |
| - | | |
| (233 | ) |
| Stock issued for services | |
| 22,500 | | |
| 2,250 | | |
| - | | |
| 4,102,900 | | |
| - | | |
| - | | |
| 4,105,150 | |
| Stock issued for asset purchases | |
| 95,000 | | |
| 9,500 | | |
| - | | |
| 15,840,500 | | |
| - | | |
| - | | |
| 15,850,000 | |
| Stock
re-issued to VitaNova Partners | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
| Balances, December 31,
2021 | |
| 426,100 | | |
| 91,835 | | |
| 604,252 | | |
| 20,435,134 | | |
| (20,289,120 | ) | |
| 356,525 | | |
| 1,198,626 | |
The
accompanying notes to condensed financial statements are an integral part of these statements.
VETANOVA
INC
Notes
to Condensed Financial Statements
For
the Twelve Months Ended December 31, 2021 and December 31, 2020
Note
1 – Organization and Business
The
Company is in its development stage and intends to build and operate solar-powered, carbon-negative greenhouses utilizing Artificial
Intelligence assisted technologies to control the growing environment if the Company can obtain financing. The Company’s revenue
is expected to come from growing farm-fresh fruits and vegetables to be sold to local markets.
The
Company intends to produce farm-fresh fruits and vegetables for local delivery in historically productive agricultural regions with high
solar indexes and close to large urban areas of the United States, such as the Front Range of Colorado and Central Valley of California.
In
2021 the Company acquired four contiguous parcels of land from a related party totaling 157 acres in Pueblo County Colorado.
| |
● |
Parcel
1 - The Company issued 95,000,000 shares of its common stock and agreed to pay $2,368,421 by December 31, 2022 to GrowCo Partners
1, LLC for approximately 39 acres containing one fully completed 90,000 sq. ft. greenhouse, and one adjoining fully completed 15,000
sq. ft. warehouse. on the land. The shares were issued in book entry form on November 19, 2021. The cash amount will bear interest
at 6% per year from August 17, 2021 until paid. Parcel 1 has. The completed greenhouse and warehouse have not been in operation since
2020. |
| |
|
|
| |
● |
Parcel
2 - The Company issued 5,000,000 shares of its common stock and agreed to pay $131, 579 by December 31, 2022 to GrowCo Partners 2,
LLC for 39 acres of vacant land. The shares were issued in book entry form on November 29, 2021. The cash amount will bear interest
at 6% per year from August 17, 2021 until paid. |
| |
|
|
| |
● |
Parcel
3 – The Company issued 5,000,000 shares of its common stock and agreed to pay $131, 579 to GrowCo, Inc. by December 31, 2022
for 39 acres of vacant land. The shares were issued in book entry form on November 29, 2021. The cash amount will bear interest at
6% per year from August 17, 2021 until paid. |
| |
|
|
| |
● |
Parcel
4 - The Company issued 15,000,000 shares of its common stock and agreed to pay $394,737 by December 31, 2022 to GrowCo Partners 2,
LLC for 39 acres of land with a partially completed greenhouse structure. The shares were issued in book entry form on November 29,
2021. The cash amount will bear interest at 6% per year from August 17, 2021 until paid. |
On
the land in southern Colorado the Company plans to:
| |
● |
retrofit
the existing greenhouse and warehouse so that the equipment in the greenhouse and warehouse will run on solar power as opposed to
utility provided electricity and propane. (Estimated cost: $750,000. Estimated time to complete: eight months) and build solar system
to power the greenhouse/ warehouse (Estimated cost: $1,125,000) |
| |
|
|
| |
● |
construct
a total 25 acres of. greenhouse and associated warehouse space (Estimated cost: $55,000,000. Estimated time to complete: 36 months),
and build a solar system to power the greenhouse and warehouse facilities (Estimated cost: $9,500,000) |
The
Company has a direct or indirect interest in the three entities listed above.
The
Company plans to finance all or a part of the cost of retrofitting/ constructing greenhouses and warehouses and acquiring solar systems
through future offering of the Company’s securities, proceeds from the exercise of the Company’s warrants or borrowings from
private lenders.
As
of December 31, 2021 the Company did not have any agreements with any person to purchase any of the Company’s securities lend any
funds to the Company or purchase and lease back any of the greenhouse/ warehouse facilities which the Company plans to retrofit or construct.
On
August 4, 2021 the Company entered in an agreement with Mastronardi Produce Limited pursuant to which Mastronardi was granted the exclusive
right to sell and market all US Grade No. 1 Products produced from all of the Company’s greenhouses in North America. For each
sale, Mastronardi will be paid a low double digit percentage of the gross price received for the sale of the products grown at the Company’s
greenhouses, plus all costs incurred in the sale and distribution of such products.
Mastronardi
is a fourth-generation family owned company and the leading marketer and distributor in North America of tomatoes, peppers, cucumbers,
berries and leafy greens. Mastronardi has an extensive and long-tenured retail network and is nationally recognized under the primary
SUNSET® brand and other brands, including Campari®, Angel Sweet®, Flavor Bombs®, Sugar Bombs®, tomatoes and WOW™
berries.
Going
Concern
The
Company has suffered recurring losses from initial buildout and has a significant accumulated deficit, which, as of December 31, 2021,
was $20,289,120. In addition, the Company continues to experience negative cash flows from initial buildout. These factors raise substantial
doubt about the Company’s ability to continue as a going concern if additional capital is not raised. Management’s plans
in regard to these matters is to continue its capital raise activities, and if necessary, substantially reduce general and administrative
costs along with forgoing capital expenditures. The financial statements do not include any adjustments that might result from the outcome
of this uncertainty.
Note
2 – Summary of Significant Accounting Policies
Basis
of Presentation
The
Company’s consolidated financial statements, prepared using the accrual basis of accounting, have been presented in accordance
with United States generally accepted accounting principles and stated in US dollars.
Use
of Estimates
The
preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management
to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during
the reported period. Actual results could differ materially from those estimates.
Consolidation
In
January 2021, the Company formed VetaNova Solar Partners, LLC (“VSP”). VSP is authorized to issue 100,000,000 common and
100,000,000 preferred membership units. As of December 31, 2021, 71,744,011 common units and 7,379,305 preferred units were outstanding,
representing a total of 79,153,316 units outstanding. The Company owns 44,209,020 of common units of VSP which represent approximately
55.85% of the outstanding common units of VSP. Additionally, both the Company and VSP share common management. As a result, VSP is consolidated
with the Company’s financial statements.
Cash
and cash equivalents
For
purposes of reporting cash flows, the Company considers cash and cash equivalents to include highly liquid investments with original
maturities of 90 days or less. Those are readily convertible into cash and not subject to significant risk from fluctuations in interest
rates. The recorded amounts for cash equivalents approximate fair value due to the short-term nature of these financial instruments.
Due
from related party – VitaNova Partners, LLC
As
of December 31, 2020, the Company has advanced funds to a related party, VitaNova Partners, LLC for a total of $51,179. As of December
31, 2021, this has been fully paid.
Greenhouse
and associated land
On
November 8, 2021, the Company entered into an agreement to purchase an approximately 39 acres along with a greenhouse and warehouse on
adjacent property to the 188 acres acquired above. For this purchase, the Company issued 25,000,000 shares of the Company’s common
stock, and $1,842105 in cash, to be paid by December 31, 2022.
The
land and structures were acquired from a related party entity and therefore, the land and structure value was transferred at historical
cost. Based on consideration paid, the Company recognized a loss of $5,818,537 from this acquisition.
After
completing the above acquisitions, the Company commissioned an appraisal to be performed. This appraisal gave an “as-is”
estimate of value at $3,500,000, which included the greenhouse and infrastructure and land. Therefore, the Company recognized an impairment
of $3,673,568.
Income
Taxes
The
Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities
for the expected future tax consequences of events that have been included in the financial statements. Under this method, the Company
has determined the deferred tax assets and liabilities on the basis of the differences between the financial statement and tax basis
of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect
of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.
The
Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making
such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable
temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If the Company determines
that it would be able to realize deferred tax assets in the future in excess of their net recorded amount, it would make an adjustment
to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.
The
Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) it determines whether
it is more likely than not that the tax positions will be sustained on the basis of the technical merits of its position and (2) for
those tax positions that meet the more-likely-than-not recognition threshold, it recognizes the largest amount of tax benefit that is
more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.
Loss
per Share
Basic
loss per share is computed by dividing the loss attributed to the Company’s common shareholders for the period by the weighted
average number of common shares outstanding for the period. Diluted loss per share is computed by dividing the net income for the period
by the weighted average number of common and potential common shares outstanding during the period.
As
of December 31, 2021, and December 31, 2020, the Company’s outstanding warrants were excluded from the fully diluted weighted average
number of shares outstanding since the warrants would be anti-dilutive.
Accounting
for Equity Raise
The
Company recently sold common stock and warrants. Accounting Standards Codification (“ASC”) requires the Company to first
analyze the warrants to determine if the warrants are a liability or an equity instrument.
The
warrants in the offering qualify as equity. The warrants do not obligate the Company to repurchase its shares by transferring an asset.
The warrants do not obligate the Company to settle the warrants by issuing a variable number of shares if the monetary value of the obligation
is based on a predetermined fixed amount, variation in something other than the issuer’s stock price, or variations inversely related
to the issuers stock price. Therefore, since there is no obligation on behalf of the Company, the warrants have been classified as equity.
The
next step is to determine the fair value of the equity unit. The Company’s offering does not meet any of the four areas of ASC
820-10-30-3A requiring a fair value calculation; therefore, fair value equals the actual transaction value. The next step is to compute
the fair in order to determine the allocation of value between the common shares and the warrants issued (ASC 815). The Company performed
this calculation which gave a value of 50% to the warrant and 50% to the common shares.
The
following variables were used to calculate the warrant value:
| |
● |
Annualized
volatility of 865% |
| |
● |
Expected
life in years of 1.02 |
| |
● |
Discount
rate – bond equivalent (US Treasury 5-year coupon rate) of 0.37% |
The
common share value was computed by evaluating each equity raise closing date to the Company’s market stock price to the price issue,
which was $0.01/share.
Accounting
for debt to equity conversions
For
the quarter ending December 31, 2021, the Company issued bridge notes that contains a convertible. These notes mature on June 30, 2022.
On, or before, maturity date, the notes can be exchanged for one share of the Company’s stock at $0.05/share. During this offering
period, VTNA stock was priced at between $0.05 to $0.15/share.
In
order to simplify, and provide less confusion, on accounting for debt with conversion options, FASB release ASU 2020-06 in August 2020.
ASU
2020-06 simplifies the accounting for convertible instruments. Therefore, the embedded conversion features no longer are separated from
the debt with conversion features that are not required to be accounted for as derivatives under or that do not result in substantial
premiums accounted for as paid-in capital. Consequently, a convertible debt instrument will be accounted for as a single liability measured
at its amortized cost and therefor will be accounted for as a single equity instrument measured at its historical cost.
Note
3 – Payment due to related parties for land and structure purchases
On
August 17, 2021, the Company acquired from a related party approximately 118 contiguous acres located near the Arkansas River in Avondale,
Colorado, for 25,000,000 shares of the Company’s common stock, which were issued on October 6, 2021, and $657,895 in cash to be
paid by December 31, 2022.
The
issuance of the 25,000,000 common shares is valued at the Company’s public market traded closing price of $0.20/share on August
17, 2021, or $5,000,000.
On
November 8, 2021, the Company acquired from a related party approximately 39 contiguous acres located next to the 118 acres purchased
above and a greenhouse and warehouse, for 70,000,000 shares of the Company’s common stock, which were issued on October 6, 2021,
and $1,842,105 in cash to be paid by December 31, 2022.
The
issuance of the 25,000,000 common shares is valued at the Company’s public market traded closing price of $0.155/share on October
6, 2021, or $10,850,000.
During
the quarter ended December 31, 2021, the Company paid $448,925 to related parties for the acquisition of land in southern Colorado by
offsetting amounts owed by the related parties to the Company.
Note
4 – Notes Payable
The
following is a detail of the bridge notes payable:
| | |
December 31, 2021 | | |
December 31, 2020 |
| Note | |
Principle Balance | | |
Accrued Interest | | |
Discount | | |
Principle Balance | | |
Interest rate | | |
Security |
| Bridge Notes | |
$ | 235,000 | | |
$ | 1,584 | | |
$ | 15,708 | | |
$ | - | | |
| 6 | % | |
Deeds of trust on certain
property |
| Bridge Note - related party | |
$ | 100,000 | | |
$ | 1,291 | | |
$ | 5,481 | | |
$ | - | | |
| 6 | % | |
|
| Totals | |
$ | 335,000 | | |
$ | 2,874 | | |
$ | 21,189 | | |
| | | |
| | | |
|
| Less: note discounts | |
$ | 21,189 | | |
| | | |
| | | |
| | | |
| | | |
|
| Total current notes due | |
$ | 313,811 | | |
| | | |
| | | |
| | | |
| | | |
|
For
the quarter ending December 31, 2021, the Company issued bridge notes that contains a convertible. These notes mature on June 30, 2022.
On, or before, maturity date, the notes can be exchanged for one share of the Company’s stock at $0.05/share. During this offering
period, the Company’s stock was priced at between $0.05 to $0.15/share. There are no conversion contingencies. Only the holder
of the bridge notes controls the conversion rights.
Note
5 – Equity Transactions
During
the twelve months ended December 31, 2021 there were the following equity transactions:
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● |
115,961,484
shares to outside investors; |
| |
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22,500,000
stock issued for services; |
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95,000,000
stock issued for land and structure purchases, and |
| |
● |
2,333,333
shares returned from a prior issuance to a consultant for services rendered. |
During
the year ended December 31, 2020 there were the following equity transactions:
| |
● |
91,127,145
shares issued to the Company’s founders, officers and board members; |
| |
● |
12,495,700
shares issued to the Company’s consultants; |
| |
● |
55,612,837
shares issued to VitaNova Partners, LLC, and |
| |
● |
35,109,231
shares issued to outside investors. |
Note
6 – Income Taxes
On
December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (the “Act”), which significantly changed U.S. tax law. The
Act lowered the Company’s U.S. statutory federal income tax rate from 35% to 21% effective January 1, 2018, while also imposing
a deemed repatriation tax on previously deferred foreign income. The Act also created a new minimum tax on certain future foreign earnings.
The impact of the Act had no material impact on the Company’s tax liability and deferrals.
The
Company record tax positions as liabilities in accordance with ASC 740 and adjust these liabilities when our judgement changes as a result
of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate
resolution may result in a payment that is materially different from our current estimate of the recognized tax benefit liabilities.
These differences will be reflected as increases or decreases to income tax expense in the period in which new information is available.
As of December 31, 2021, and 2020, we have not recorded any uncertain tax positions in our financial statements. The Company has not
filed tax returns for the year ended December 31, 2021, December 31, 2019 and December 31, 2018. The Company has filed tax returns for
the year ended December 31, 2020. Prior to January 31, 2018, there was no financial or taxable transactions since 2011, so the company
does not anticipate any material penalties.
Book
loss reconciliation to estimated taxable income is as follows:
| | |
2021 | | |
2020 | |
| Book loss | |
$ | (19,906,722 | ) | |
$ | (297,519 | ) |
| Tax adjustments: | |
| | | |
| | |
| Loss on asset acquisitions | |
| 14,850,000 | | |
| - | |
| Estimate of taxable income | |
$ | (5,056,722 | ) | |
$ | (297,519 | ) |
The
Company will recognize future accrued interest and penalties related to unrecognized tax benefits in income tax expense if incurred.
On December 31, 2021 and December 31, 2020, we had no unrecognized tax benefits in income tax expense.
The
components of the deferred tax asset are as follows:
| | |
2021 | | |
2020 | |
| Current deferred tax asset | |
| | | |
| | |
| Net operating loss carryforwards | |
$ | (1,379,054 | ) | |
$ | (83,664 | ) |
| Other adjustments: | |
| | | |
| | |
| None | |
| - | | |
| - | |
| Total cumulative deferred tax asset | |
| (1,379,054 | ) | |
| (83,664 | ) |
| Valuation allowance | |
| 1,379,054 | | |
| 83,664 | |
| Effective income tax asset | |
$ | - | | |
$ | - | |
Income
tax provision is summarized below (in thousands):
| | |
2021 | | |
2020 | |
| Income tax provision: | |
| | | |
| | |
| Current benefit (expense) | |
| | | |
| | |
| Federal | |
$ | - | | |
$ | - | |
| State | |
| - | | |
| - | |
| Total current | |
| - | | |
| - | |
| Deferred benefit (expense) | |
| | | |
| | |
| Federal | |
| 1,061,912 | | |
| 62,479 | |
| State | |
| 234,126 | | |
| 13,127 | |
| Total deferred | |
| 1,296,038 | | |
| 75,606 | |
| Less: Valuation allowance | |
| (1,296,038 | ) | |
| (75,606 | ) |
| Total | |
$ | - | | |
$ | - | |
For
the years ended December 31, 2021 and December 31, 2020, the deferred tax asset of $1,296,038 and $75,606, respectively, has a valuation
allowance of $1,296,038 and $75,606, respectively, since management has determined the tax benefit cannot be reasonably assured of being
used in the near future. The net operating loss carry forward, if not used, will begin to expire in 2045, and is severely restricted
as per the Internal Revenue Code if there is a change in ownership.
Note
7 – Related Party Transactions
As
of September 30, 2021 VitaNova Partners owed the Company $480,578. During the three months ended December 31, 2021 this was paid in full
as an offset to the amounts owed to GrowCo Partners 2, LLC, a related party, and accrued interest owed.
On
July 15, 2020, the Company and VitaNova entered into a consulting agreement whereby VitaNova would provide management services to the
Company. VitaNova is paid $456,000 annually for its management services. Payments are made in 12 monthly instalments of $38,000. On December
15, 2020 the consulting agreement was amended to reduce payments to $19,000 a month effective January 1, 2021.
On
August 17, 2021, the Company acquired from a related party approximately 118 contiguous acres located near the Arkansas River in Avondale,
Colorado, for 25,000,000 shares of the Company’s common stock, which were issued on October 29, 2021, and $657,895 in cash to be
paid by December 31, 2022.
On
November 8, 2021, the Company acquired from a related party approximately 39 contiguous acres located next to the 118 acres purchased
above and a greenhouse and warehouse, for 70,000,000 shares of the Company’s common stock, which were issued on October 6, 2021,
and $1,842,105 in cash to be paid by December 31, 2022.
During
the year ended December 31, 2020, there were the following equity transactions involving related parties:
| |
● |
91,127,145
shares issued to the Company’s founders, officers and board members, and |
| |
● |
55,612,837
shares issued to VitaNova Partners, LLC. |
During
the twelve months ended December 31, 2021 there were the following equity transactions involving related parties:
| |
● |
17,621,538
VSP common units were issued to John McKowen, and |
| |
● |
95,000,000
shares of the Company’s common stock issued for land and greenhouse/warehouse purchase |
Note
9 - Subsequent Events
On
February 8, 2022 the Company entered into an agreement with Dalmore Group, LLC pursuant to which Dalmore Group will act as the Company’s
broker/ dealer of record in connection with the Company’s future Regulation A+ Offering.
No
money or other consideration is being solicited by means of this report, and if sent, will not be accepted. No offer to buy the Company’s
securities can be accepted and no part of the purchase price can be received until the Company’s offering statement is qualified,
and any such offer may be withdrawn or revoked, without obligation or commitment of any kind, at any time before notice of its acceptance
is given by the Company after the qualification date. A person’s indication of interest involves no obligation or commitment of
any kind.
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