Tego Cyber, Inc S-1/A, filed Oct 27, 2020
Tego Cyber, Inc. (TGCB)
S-1/A
2020-10-27
View Original
Added on
October 25, 2026
As filed with the U.S. Securities and Exchange
Commission on October 27, 2020.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO.1 TO
FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
Commission File Number: 333-248929
TEGO CYBER INC.
(Exact name of registrant as specified in its charter)
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Nevada
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7370
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84-2678167
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(State or other jurisdiction of
incorporation or organization)
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(Primary Standard Industrial
Classification Code Number)
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(I.R.S. Employer Identification
Number)
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8565 South Eastern Avenue, Suite 150
Las Vegas, Nevada 89123
(855) 939-0100
(Address, including zip code, and telephone number,
including
area code, of registrant’s principal executive
offices)
Shannon Wilkinson
8565 S. Eastern Avenue, Suite 150
Las Vegas, NV 89123
(855) 939-0100
(Name, address, including zip code, and telephone
number,
including area code, of agent for service)
Copies to:
Jessica M. Lockett, Esq.
Horwitz + Armstrong,
A Professional Law Corporation
14 Orchard, Suite 200
Lake Forest, California 92630
(949) 540-6540
(949) 540-6578 — Facsimile
Approximate date of commencement of proposed sale to the public: As
soon as practicable after the effective date of this registration
statement.
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, check the following
box. ☑.
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, check
the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier
effective registration statement for the same
offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier
effective registration statement for the same
offering. ☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer,
or a smaller reporting company. See the definitions of “large
accelerated filer,” “accelerated filer” and
“smaller reporting company” in Rule 12b-2 of the
Exchange Act. (Check one):
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Large
accelerated filer ☐
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Accelerated
filer ☐
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Non-accelerated filer
☒
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Smaller
reporting company ☒
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Emerging
growth company ☒
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CALCULATION OF REGISTRATION FEE
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Title
of Each Class
of
Securities to be
Registered
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Amount
to be
Registered
(1)(2)
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Proposed
Maximum Offering Price Per Share
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Proposed
Maximum
Aggregate
Offering Price
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Amount
of
Registration
Fee
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Common
stock, $0.001 par value per share
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4,386,236
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$0.25(3)
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$1,096,559
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$247.47
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Common
stock, $0.001 par value per share
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10,000,000
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$0.25(4)
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$2,500,000
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$324.50
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Total
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—
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$3,596,559
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$571.97
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(1)
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Estimated solely for purposes of calculating the registration fee
pursuant to Rule 457(o) under the Securities Act of 1933, as
amended.
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(2)
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This
Registration Statement includes an indeterminate number of
additional shares of common stock issuable for no additional
consideration pursuant to any stock dividend, stock split,
recapitalization or other similar transaction effected without the
receipt of consideration, which results in an increase in the
number of outstanding shares of our common stock. In the event of a
stock split, stock dividend or similar transaction involving our
common stock, in order to prevent dilution, the number of shares
registered shall be automatically increased to cover the additional
shares in accordance with Rule 416(a) under the Securities Act of
1933, as amended (the “Securities Act”).
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(3)
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Selling Shareholders. This Registration Statement also covers the
resale under a separate resale prospectus (the “Resale
Prospectus”) by selling shareholders (“Selling
Shareholders”) of the Registrant of up to 4,386,236 ordinary
shares previously issued to the Selling Shareholders as named in
the Resale Prospectus.
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(4)
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Direct Public Offering.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH
DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL
THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY
STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME
EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF
1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS
EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE
SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
PRELIMINARY
PROSPECTUS SUBJECT TO
COMPLETION
DATED SEPTEMBER 21, 2020
TEGO CYBER INC.
8565 S. Eastern Avenue, Suite 150
Las Vegas, NV, 89123
(855) 939-0100
This is the initial offering of Common Stock of Tego Cyber, Inc.
(the “Company”). We are offering for sale a total of
10,000,000 shares of Common Stock at a fixed price of $0.25 per
share for the duration of this Offering (the
“Offering”). This offering also includes up
to 4,386,236 shares of the Company’s common stock offered
by selling shareholders as herein further detailed. Our Common
Stock is presently not traded on any market or securities exchange.
The selling security holders have not engaged any underwriter in
connection with the sale of their shares of Common
Stock. Common Stock being registered in this
Registration Statement may be sold by selling security holders at a
fixed price of $0.25 per share until our Common Stock is quoted on
the OTC Markets and thereafter at a prevailing market prices or
privately negotiated prices or in transactions that are not in the
public market. There can be no assurance that a market maker will
agree to file the necessary documents with OTC Markets, nor can
there be any assurance that such an application for quotation will
be approved. We have agreed to bear the expenses relating to the
registration of the shares of the selling security
holders.
There is no minimum number of shares that must be sold by us for
the Offering to proceed, and we will retain the proceeds from
the sale of any of the offered shares. The Offering is being
conducted on a self-underwritten, best efforts basis, which means
our Officers and Directors will attempt to sell the shares directly
to friends, family members and business acquaintances. Our Officers
and Directors will not receive commissions or any other
remuneration from any such sales. In offering the securities on our
behalf, our Officers and Directors will rely on the “safe
harbor” provisions of SEC Rule 3a4-1, promulgated under the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”). Generally speaking, Rule 3a4-1 provides an exemption
from the broker-dealer registration requirements of the Exchange
Act for persons associated with an issuer that participate in the
sale of the securities of such issuer. We are an “emerging
growth company” under applicable Securities and Exchange
Commission rules and will be subject to reduced public company
reporting requirements.
The shares will be offered for sale at a fixed price of $0.25 per
share for a period of one hundred and eighty (180) days from the
effective date of this Prospectus, unless extended by our Board of
Directors for an additional 90 days. If all of the shares offered
by us are purchased, the gross proceeds to us will be $2,500,000.
All funds raised hereunder will become immediately available
to the Company and will be used in accordance with the
Company’s intended “Use of Proceeds” as set forth
herein. Investors are advised that they will not be entitled to a
refund and could lose their entire investment.
The Company is a development stage company and currently has
limited operations. Any investment in the shares offered
herein involves a high degree of risk. You should only
purchase shares if you can afford a loss of your
investment. Our independent registered public accountant has
issued an audit opinion for the Company, which includes a statement
expressing substantial doubt as to our ability to continue as a
going concern.
This Prospectus covers the primary public offering by the Company
of 10,000,000 shares of Common Stock. The
Company is concurrently conducting a resale offering for 4,386,236
shares of Common Stock, which is covered in a separate Resale
Prospectus.
THE PURCHASE OF THE SECURITIES OFFERED THROUGH THIS PROSPECTUS
INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY READ AND
CONSIDER THE SECTION OF THIS PROSPECTUS ENTITLED “RISK
FACTORS” BEFORE BUYING ANY SHARES OF TEGO’S COMMON
STOCK.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE
SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
No dealer, salesperson or any other person is authorized to give
any information or make any representations in connection with this
offering other than those contained in this Prospectus and, if
given or made, the information or representations must not be
relied upon as having been authorized by us. This Prospectus does
not constitute an offer to sell or a solicitation of an offer to
buy any security other than the securities offered by this
Prospectus, or an offer to sell or a solicitation of an offer to
buy any securities by anyone in any jurisdiction in which the offer
or solicitation is not authorized or is unlawful.
The date of this Prospectus is
[●],
2020.
EXPLANATORY NOTE
This Registration Statement contains two prospectuses, as set forth
below.
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Public Offering Prospectus. A prospectus regarding our offering of up to
10,000,000 shares of our Common Stock in a direct public offering,
without any involvement of underwriters or broker-dealers (the
“Public Offering Prospectus”). Should all shares being
offered by the Company hereunder be sold, the Company would receive
an aggregate of $2,500,000. The offering price is $0.25 per share
for newly issued shares. There is no minimum number of shares that
must be sold and there is no guarantee that the Company will raise
any funds from the direct public offering.
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●
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Resale Prospectus. A
prospectus to be used for the resale by Selling Shareholders of up
to 4,386,236 shares of the Registrant’s Common Stock (the
“Resale Prospectus”). Our Common Stock is
presently not traded on any market or securities exchange. The
selling security holders have not engaged any underwriter in
connection with the sale of their shares of Common
Stock. Common Stock being registered in this
Registration Statement may be sold by selling security holders at a
fixed price of $0.25 per share until our Common Stock is quoted on
the OTC Markets or exchange, and thereafter at a prevailing market
prices or privately negotiated prices or in transactions that are
not in the public market. There can be no assurance that a market
maker will agree to file the necessary documents with OTC Markets,
nor can there be any assurance that such an application for
quotation will be approved. We have agreed to bear the expenses
relating to the registration of the shares of the selling security
holders.
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The Resale Prospectus is substantively identical to the Public
Offering Prospectus, except for the following principal
points:
● they
contain different outside and inside front
covers;
● they
contain different Offering sections;
● they
contain different Use of Proceeds sections;
● a
Selling Shareholders section is included in the Resale
Prospectus;
● they
contain different Plan of Distribution
sections;
● the
Dilution section is deleted from the Resale
Prospectus;
● they
contain different outside back covers.
The Registrant has included in this Registration Statement, after
the financial statements, a set of alternate pages to reflect the
foregoing differences of the Resale Prospectus as compared to the
Public Offering Prospectus.
TABLE OF CONTENTS
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Page
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Prospectus Summary
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1
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The Offering
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4
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Risk Factors
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5
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Determination of Offering Price
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5
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Use of Proceeds
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23
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Plan of Distribution; Terms of the Offering
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25
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Dilution
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27
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Description of Property
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27
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Description of Securities
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27
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Description of Our Business
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29
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Management’s Discussion and Analysis
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36
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Directors, Executive Officers, Promoters and Control
Persons
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42
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Executive Compensation
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45
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Security Ownership of Certain Beneficial Owners and
Management
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46
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Certain Relationships and Related Transactions
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47
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Legal Matters
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49
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Experts
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49
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Commission Position of Indemnification for Securities Act
Liabilities
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49
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Where you can find more Information
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49
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Index to Financial Statements
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F-1
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You should rely only on the information contained or incorporated
by reference to this prospectus in deciding whether to purchase our
common stock. We have not authorized anyone to provide
you with information different from that contained or incorporated
by reference to this prospectus. Under no circumstances should the
delivery to you of this prospectus or any sale made pursuant to
this prospectus create any implication that the information
contained in this prospectus is correct as of any time after the
date of this prospectus. To the extent that any facts or events
arising after the date of this prospectus, individually or in the
aggregate, represent a fundamental change in the information
presented in this prospectus, this prospectus will be updated to
the extent required by law.
PROSPECTUS SUMMARY
The following summary highlights material information contained
elsewhere in this prospectus. This summary does not contain all of
the information you should consider before investing in our common
stock. Before making an investment decision, you should read the
entire prospectus carefully, including the “Risk
Factors” section, the “Management’s Discussion
and Analysis of Financial Condition and Results of
Operations” section, the financial statements and the notes
to the financial statements. You should also review the other
available information referred to in the section entitled
“Where You Can Find More Information” in this
prospectus and any amendment or supplement hereto. Unless otherwise
indicated, the terms the “Company,” “Tego
Cyber,” “we,” “us,” and
“our” refer and relate to Tego Cyber,
Inc.
Corporate History and General Information about the
Company
Tego Cyber Inc. (the “Company”) is an early-stage
company which was incorporated in the State of Nevada on September
6, 2019. Our year end is June 30. We are a development stage
enterprise. The Company is engaged in the business of the
development and commercialization of high‐quality,
innovative cybersecurity services and solutions that reduce risk,
prevent cyber-attacks, and protect intellectual property and
data.
Our
principal office is located at 8565 South Eastern Avenue, Suite
150, Las Vegas, Nevada, 89123. Our telephone number is (855)
939-0100 and our e-mail contact is info@tegocyber.com. Our website
can be viewed at https://tegocyber.com.
The Company has not filed for bankruptcy, receivership or any
similar proceedings nor is in the process of filing for bankruptcy,
receivership or any similar proceedings.
1
The Company Overview
The Company was incorporated in the State of Nevada on September 6,
2019. We are an early stage provider of advanced cyberthreat intelligence for larger
business enterprises. We currently offer a suite of related
cyber security services including vulnerability assessments,
penetration testing, vCISO services, dark web monitoring,
cybersecurity policy creation and review as well as ongoing
enterprise employee training. We are also developing a threat
intelligence platform which will work cohesively to improve the
operational efficiency of an enterprise’s existing cyber
security infrastructure. The platform, currently in beta testing,
will be available for sale upon completion.
Our
product portfolio is built on the TEGO Threat Intelligence Platform
and works cohesively to improve the operational efficiency of the
enterprises' core digital security processes. The TEGO Cyber Threat
Intelligence Platform is a comprehensive and curated source of
threat intelligence that provides not only threat data but
additional context so that the client understands the potential
threats within their environment. The platform automatically
creates updates for the client from its curated and aggregated
threat intelligence feeds, identifying not only current threats but
through its recursive searches, can help identify threats that have
occurred in the past, even before the client installed the Tego
Threat Intelligence Platform. The TEGO Threat Intelligence Platform
identifies known threat indicators and malicious actors using data
that is relevant and timely. The platform identifies threats
through utilization of its aggregated, real-time threat
intelligence data feeds, enabling customers to be agile and rapid
in response to detected digital threats, while reducing their total
cost of technology ownership and increasing the return on
investment (ROI) of their current technologies.
The proceeds of the Offering will largely be utilized for
completion and monetization of the Tego Threat Intelligence
Platform, marketing of the service and software platform, and
payroll. The Company plans to retain five full time staff and lease
nominal executive office facilities in Nevada. All legal,
accounting, and shareholder relations can be outsourced to
consultants as needed. Business development is limited to
developing and maintaining a website presence, and nominal travel
and business entertainment expense.
Competition
We compete with an array of established and emerging security
software and services vendors. As organizations increasingly
embrace cloud platforms, IoT and other new networking technologies,
they are becoming increasingly exposed to ever evolving
cybercrimes. The introduction of new technologies and market
entrants will continue to fuel an intense competitive environment
as companies seek solutions to cybersecurity breaches. Our
competitors include vulnerability management and external
assessment vendors, diversified security software and services
vendors, and providers of threat intelligence platforms that
compete with some of the features present in our solution such as
Anomali, Recorded Future and Threat Quotient. We compete based on
several factors, including product functionality; scope of
offerings; performance; brand, reputation, and customer
satisfaction; ease of implementation, use and service; price,
scalability, reliability, and security. We believe that we will
compete favorably with respect to these factors and are well
positioned as an emerging provider of digital risk protection, data
analysis, and professional services.
Our Growth Strategy
Tego’s growth strategy will focus initially on integration
into the Security Information and Event Management (SIEM) market,
using the Gartner Magic Quadrant and Forrester reports on who has
the largest market share and which companies are visionaries in the
industry. Tego will grow its sales and customer base through the
use of both an inside sales team, utilizing SIEM customer lists,
selected technology channel partners, of which the founders have
direct personal relationships with and have expressed an interest
in carrying Tego’s platform in their product offering, and
attending technology-specific conferences/tradeshows, either
virtually or in person. For integration, we will target those that
are found on the Gartner Magic Quadrant and Forrester reports as
these have the largest market share. Initially, we will focus on
integration within the SIEM market because the SIEM is where the
data for all devices (hardware and software) resides for the
enterprise. For future growth beyond the SIEM market, we will look
to also add integration into the firewall (hardware) and
antivirus/endpoint-detection-response (software) markets but
realistically, for the largest of enterprises, they are pulling the
data from these devices into their SIEM and we go back to the idea
that we live where the data lives. But the idea that Troy and I had
is that a license to Tego will allow the customer to deploy our TIP
to any of their implemented solutions so in the future should we
launch a plugin for Palo Alto firewalls and the client has a
license for SIEM integration, they could use the Palo plugin
without having to purchase an
additional license.
2
Recent developments
In
October 2019, Shannon Wilkinson, CEO Tego Cyber Inc, developed a
business requirement documentation (BRD) for developing a prototype
of the Tego threat intelligence platform. In November 2019, Tego
engaged a senior software developer begin development of a
prototype of the Tego threat intelligence platform. The development
of the prototype was performed on a part-time basis due to
fundraising by Tego Cyber Inc. until March 2020 when the prototype
was completed. Once Tego was able to raise enough money to engage a
full-time development team, in May 2020, Shannon Wilkinson worked
with a project manager to develop a BRD for integrating the Tego
threat intelligence platform to a security incident and event
manage (SIEM). In June 2020, Tego contracted two full-time senior
software developers and the project manager to take the prototype
and finish the development of the threat intelligence platform
along with completing development of the first integration plugin
of the Tego threat intelligence platform to a SIEM.
On June 4, 2020, the Company entered into a
Website Development or Software Development Agreement with CIS
Training Center Kosovo (“Cistck”) for the development
of the Threat Intelligence Platform and Splunk App Code (the
“Agreement”). Pursuant to the Agreement Cistck was
hired to take the prototype and finish the development of
the threat intelligence platform along with completing development
of the first integration plugin of the Tego threat intelligence
platform to a SIEM. On June 5, 2020,
the parties entered into an addendum to the Agreement setting forth
the maximum compensation of Cistck at $20,000 USD payable in
monthly installments until project completion or maximum fee is
reached. We have verbally approved an extension of services period
while Cistck further develops for us at approximately $5,000 per
month, which we may cancel at any time.
Risks and Uncertainties facing the Company
As an
early-stage company with a limited operating history, the Company
has experienced losses since its inception. The Company’s
independent auditors have issued a report questioning the
Company’s ability to continue as a going concern. That is,
the Company needs to create a source of revenue or locate
additional financing in order to continue its developmental plans.
As a development stage company, management of the Company has
experience in developing technology and cybersecurity similar to
that planned by the Company but limitation in marketing and
distributing such services and products on a broad
scale.
One of
the biggest challenges facing the Company is the ability
to increase its sales
revenue and raise adequate capital to develop and execute project
opportunities.
Due to
financial constraints, the Company has to date conducted limited
operations. If the Company were unable to develop strong and
reliable sources of funding for future growth opportunities, it is
unlikely that the Company could develop its operations to return
revenue sufficient to further develop its business plan. Moreover,
the above assumes that the Company’s efforts are met with
customer satisfaction in the marketplace and exhibit steady
adoption of its solutions amongst the potential base of customers,
neither of which are currently known or guaranteed.
Due to
these and other factors, the Company’s need for additional
capital, the Company’s independent auditors have issued a
report raising substantial doubt of the Company’s ability to
continue as a going concern.
Trading Market
Currently,
there is no trading market for the securities of the Company. The
Company intends to initially apply for admission to quotation of
its securities on the OTC Bulletin Board as soon as possible, which
may be while this offering is still in process. There can be no
assurance that the Company will qualify for quotation of its
securities on the OTC Bulletin Board. See “RISK
FACTORS” and “DESCRIPTION OF
SECURITIES”.
3
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The Issuer
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Tego
Cyber Inc.
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Securities being offered
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Up to
10,000,000 shares of Common Stock is being offered for sale by the
Company, this collectively represents approximately 44% of the
currently issued and outstanding shares of the Company's Common
Stock, if the offering is fully subscribed. Our Common Stock is
described in further detail in the section of this prospectus
titled “DESCRIPTION OF SECURITIES.”
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Per Share Price
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$0.25
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Duration of Offering
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The
Shares are offered for a period of one
hundred and eighty (180) days from the effective date of this
Prospectus, unless extended by our Board of
Directors.
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Number of shares Outstanding before the Offering
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There
are 12,906,236 shares of Common Stock issued and
outstanding.
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Net Proceeds to the Company
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We will receive net proceeds of $2,500,000 if the offering
is fully subscribed for all 10,000,000 shares of Common Stock at an
offering price of $0.25 per Share. The full subscription price will
be payable at the time of subscription and accordingly, funds
received from subscribers in this Offering will be released to the
Company when subscriptions are received and accepted. No assurance can be given that the
net proceeds from the total number of shares offered hereby or any
lesser net amount will be sufficient to accomplish our goals. If
proceeds from this offering are insufficient, we may be required to
seek additional capital. No assurance can be given that we will be
able to obtain such additional capital, or even if available, that
such additional capital will be available on terms acceptable to
us.
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Use of Proceeds
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The Company shall use the proceeds from the sale of the shares for
working capital and general corporate purposes, and shall not,
directly or indirectly, use such proceeds for any loan to or
investment in any other corporation, partnership, enterprise or
other person (except in connection with its currently existing
direct or indirect Subsidiaries).
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Risk factors
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An
investment in our Common Stock involves a high degree of risk. You
should carefully consider the risk factors set forth under
“Risk Factors” section hereunder and the other
information contained in this prospectus before making an
investment decision regarding our Common Stock.
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4
RISK FACTORS
An investment in our Common Stock involves a high degree of risk.
You should carefully consider the risks described below and the
other information in this Prospectus before investing in our Common
Stock. If any of the following risks occur, our business, operating
results and financial condition could be seriously harmed.
Currently, shares of our Common Stock are not publicly traded. In
the event that shares of our Common Stock become publicly traded,
the trading price of our Common Stock could decline due to any of
these risks, and you may lose all or part of your investment. In
the event our Common Stock fails to become publicly traded, you may
lose all or part of your investment.
RISKS RELATED TO THE OFFERING
As there is no minimum for our offering, if only a few persons
purchase shares they could lose their investment.
Since
there is no minimum with respect to the number of securities to be
sold directly by the Company in this Offering, if only a few
securities are sold, we may not have enough capital to sustain our
business. In such an event, it is highly likely that any investment
would be lost. As such, proceeds from this Offering may not be
sufficient to meet the objectives we state in this Prospectus,
other corporate milestones that we may set, or to avoid a
“going concern” modification in future reports of our
auditors as to uncertainty with respect to our ability to continue
as a going concern. If we fail to raise sufficient capital, we
expect to have to significantly decrease operating expenses, which
will curtail the growth of our business.
Investing in the Company is a highly speculative investment and
could result in the loss of your entire investment.
A
purchase of the offered securities is significantly speculative and
involves significant risks. The offered securities should not be
purchased by any person who cannot afford the loss of his or her
entire purchase price. The business objectives of the Company are
also speculative, and we may be unable to satisfy those objectives.
The stockholders of the Company may be unable to realize a
substantial return on their purchase of the offered securities, or
any return whatsoever, and may lose their entire investment in the
Company. For this reason, each prospective purchaser of the offered
securities should read this prospectus and all of its exhibits
carefully and consult with their attorney, business advisor and/or
investment advisor.
The offering price of the offered
securities has been arbitrarily determined by the Company and such
offering should not be used by an investor as an indicator of the
fair market value of the offered securities.
Currently
there is no public market for the Company’s common stock. The
offering price for the offered securities has been arbitrarily
determined by the Company and does not necessarily bear any direct
relationship to the assets, operations, book or other established
criteria of value of the Company. Thus an investor should be aware
that the offering price does not reflect the fair market price of
the offered securities.
RISKS RELATED TO OUR BUSINESS AND INDUSTRY
The Company has limited revenues to
date.
The
Company has generated limited revenues to date. Most of
management’s time, and the Company’s limited resources
have been spent on research and development of the Company’s
cyber security platform and developing its business strategy. Most
of the activity has been centered in the following areas;
researching potential opportunities, preparing a business model,
hiring software development consultants and programmers, working
with software developers and programmers, selecting professional
advisors, bookkeeping, accounting, corporate record keeping,
seeking capital for the Company and preparing this registration
statement.
5
The Company has limited operating history of its own, and as such,
any prospective investor can only assess the Company’s
profitability or performance on a limited basis to
date.
Because
the Company is an early-stage company with limited operating
history, it is impossible for an investor to assess the performance
of the Company or to determine whether the Company will meet its
projected business plan. The Company has limited financial results
upon which an investor may judge its potential. As a company that
only recently emerged from the development-stage, the Company may
in the future still experience under-capitalization, shortages,
setbacks and many of the problems, delays and expenses encountered
by any early stage business. An investor will be required to make
an investment decision based solely on the Company
management’s history and its projected operations in light of
the risks, expenses and uncertainties that may be encountered by
engaging in the Company’s industry.
We have a limited history of operations and unless we are able to
successfully execute our business plan, our business and operating
results will suffer, resulting in the complete failure of our
business.
Our
operations are subject to all of the risks inherent in the
establishment of a new business. The likelihood of our success must
be considered in light of the risks, problems, expenses and delays
frequently encountered in connection with the formation of a new
business in general, as well as the highly competitive environment
in which the business is operating. To address these risks, we
must, among other things, continue to respond to competitive
developments, attract, retain and motivate qualified personnel,
commercialize products, and implement and successfully execute our
marketing strategy and advertising sales strategy. There can be no
assurance that we will be successful in addressing such
risks.
The Company has a correspondingly small financial and accounting
organization. Being a public company may strain the Company's
resources, divert management’s attention and affect its
ability to attract and retain qualified officers and
directors.
The
Company is an early-stage company with no developed finance and
accounting organization and the rigorous demands of being a public
company require a structured and developed finance and accounting
group. Once it becomes a public reporting company, the Company will
become subject to the reporting requirements of the Securities
Exchange Act of 1934. However, the requirements of these laws and
the rules and regulations promulgated thereunder entail significant
accounting, legal and financial compliance costs which may be
prohibitive to the Company as it develops its business plan,
services and scope. These costs have made, and will continue to
make, some activities more difficult, time consuming or costly and
may place significant strain on its personnel, systems and
resources.
The
Securities Exchange Act requires, among other things, that
companies maintain effective disclosure controls and procedures and
internal control over financial reporting. In order to maintain the
requisite disclosure controls and procedures and internal control
over financial reporting, significant resources and management
oversight are required. As a result, management’s attention
may be diverted from other business concerns, which could have a
material adverse effect on the development of the Company's
business, financial condition and results of
operations.
These
rules and regulations may also make it difficult and expensive for
the Company to obtain director and officer liability insurance. If
the Company is unable to obtain adequate director and officer
insurance, its ability to recruit and retain qualified officers and
directors, especially those directors who may be deemed
independent, will be significantly curtailed.
The Company expects to incur additional expenses and may ultimately
never be profitable.
The
Company has only recently emerged from its status as a
development-stage company, and it has limited operations to date.
The Company will need to continue to generate revenue to achieve
and maintain profitability. To become profitable, the Company must
successfully develop and operate its product sales and marketing
business. These processes involve many factors that are beyond the
Company’s control, including the type of competition that the
Company may encounter. Ultimately, in spite of the Company’s
best or reasonable efforts, the Company may never actually generate
revenues sufficient to cover operating expenses or become
profitable.
6
The Company may not be able to continue as a going
concern.
The
ability of the Company to continue as a going concern is dependent
on the Company’s ability to fund future operations through
additional financing from investors and/or lenders or through the
sale of its securities or through development of its operations.
Due to these and other factors, there is substantial doubt of the
Company’s ability to continue as a going
concern.
The Company’s independent auditors have issued a report
raising a substantial doubt of the Company’s ability to
continue as a going concern.
In
their audited financial report, the Company’s independent
auditors have issued added an explanatory paragraph that unless the
Company is able to generate sufficient cash flows from operations
and/or obtain additional financing, there is a substantial doubt as
to its ability to continue as a going concern. The Company
anticipates that it would need substantial capital over the next 12
months to continue as a going concern to expand its operations in
accordance with its current business plan.
No assurance of market acceptance.
Even if
the Company successfully markets, sells and distributes technology
products and services, there can be no assurance that the market
reception will be positive for the Company or its
ventures.
The
widespread adoption and use of the Company’s cybersecurity
products will represent fundamental change in the cybersecurity
industry. As with any new technology, there is a substantial risk
that potential customers may not accept the potential benefits of
the Company’s products. Market acceptance of Company’s
products will depend, in large part, upon the ability of Company to
demonstrate the performance advantages and cost-effectiveness of
its products over competing products. There can be no assurance
that Company will be able to market its technology successfully on
a widespread basis or that any of Company’s current or future
products or services will be accepted in the marketplace.
Furthermore, Company intends to develop products and systems and
sell them at a price assumed by Company sufficient to generate a
profit. Even if Company’s products and services are accepted
in the industry, the market for its products may not be able to
support Company’s pricing structure.
We will incur increased costs and demands upon management as a
result of complying with the laws and regulations affecting public
companies, which could harm our operating results.
As a
public company, we will incur significant additional legal,
accounting and other expenses that we did not incur as a private
company, including costs associated with public company reporting
requirements. We also will incur costs associated with current
corporate governance requirements, including requirements under
Section 404 and other provisions of the Sarbanes-Oxley Act, as well
as rules implemented by the Securities and Exchange Commission, or
SEC, and the exchange on which we list our shares of common stock
issued in this Offering. The expenses incurred by public companies
for reporting and corporate governance purposes have increased
dramatically in recent years. We expect these rules and regulations
to substantially increase our legal and financial compliance costs
and to make some activities more time consuming and costly. We are
unable to currently estimate these costs with any degree of
certainty. We also expect these new rules and regulations may make
it more difficult and more expensive for us to obtain director and
officer liability insurance, and we may be required to accept
reduced policy limits and coverage or incur substantially higher
costs to obtain the same or similar coverage previously available.
As a result, it may be more difficult for us to attract and retain
qualified individuals to serve on our board of directors or as our
executive officers. Currently we do not have a system of checks and
balances in place covering our financial operations and investors
will bear the economic risk associated with the lack such
oversight.
Because we do not have an audit committee, shareholders will have
to rely on the directors, who are not independent, to perform these
functions.
We do
not have an audit or compensation committee comprised of
independent directors. These functions are performed by the board
of directors as a whole. The members of the Board of Directors are
not independent directors. Thus, there is a potential conflict in
that the board members are also engaged in management and
participates in decisions concerning management compensation and
audit issues that may affect management performance.
7
To date, we have not generated sufficient revenues from operations
and we may have additional capital requirements to continue our
operations, but they might not be available to us on favorable
terms or at all, and if unavailable our ability to run our business
will be impaired.
As of
the date of this Prospectus, we have limited working capital. As a
result, it is impossible to expand our operations and we are
totally dependent upon this Offering to sustain and grow our
business. Although this Offering contemplates raising $2,500,000,
there is no assurance that this amount can be raised. If we were to
only receive the minimum amount for this Offering, we would not
have sufficient capital to fully implement our business strategy
and would have to stagger our development. Assuming the sale of all
10,000,000 shares of common stock hereunder, the proceeds will be
utilized over the next twelve months as specified in
“Use of
Proceeds.” If we are unable to generate sufficient
revenues to cover operating expenses or raise additional funds, we
are unlikely establish or maintain our business operations. We
currently have no other plans or arrangements to raise capital for
our business except for this Offering.
Early failures would impair our ability to attract additional
capital.
Our
business model contemplates success from the investment into the
first productions. That is, we are anticipating revenue from these
productions to finance additional productions. In the event that
our early productions are not profitable, we will need to raise
additional capital from outside investment. There are no guarantees
that we will be able to raise such capital, or that if we are able
to, that it will be on favorable terms. Early failures are likely
to make such additional financing more “expensive”
because investors are not likely to be willing to pay for
“past mistakes.”
The proposed operations of the Company are speculative; there are
no assurances that we will receive any revenue.
The
success of the proposed business plan of the Company will depend to
a great extent on the operations, financial condition and
management of the Company. Although the Company has a business plan
and intends to execute its overall business strategy, limited
operations have been conducted to date and the proposed operations
of the Company remain speculative. Technology development generally
may continue for years before any revenue is realized or generated,
if at all.
The Company depends on its management team and employees to operate
its business effectively.
The
Company's future success is dependent in large part upon its
ability to understand and develop the business plan and to attract
and retain highly skilled management, operational and executive
personnel. In particular, due to the relatively early stage of the
Company's business, its future success is highly dependent on its
officers, to provide the necessary experience and background to
execute the Company's business plan. We presently expect each
of our officers and directors to devote such amount of time as they
reasonably believe is necessary to our business; our CEO is
currently working full time for the Company while our President
devotes 8-10 hours a week. The loss of any officer’s
services could impede, particularly initially as the Company builds
a record and reputation, its ability to develop its objectives,
particularly in its ability to develop, commercialize and further
its business and products.
The
Company’s business also depends on its ability to attract and
retain talented product marketing and sales professionals. Any loss
of key members of the team and the customer relationship associated
with the member can impact the business significantly.
Costs associated with our business, including production and input
costs are not fixed and might increase, creating uncertainty about
our ability to meet our plan of operations.
We have
not established long-term contracts with our consultants or other
third-party suppliers we intend to rely on. The lack of long-term
contracts could result in an increase in what we pay these
individuals for their services. An increase in the production costs
will reduce our margins and might make our projects uneconomical,
leading to the failure of our business.
We are in the development stage and have conducted no market
research on the viability of our products or services. There is no
guarantee that we will be able to sell enough of our products or
services to generate a profit, and failure to become profitable
will result in the failure of our business.
The market for our products and services is limited in scope
and there is no assurance that our products or services will
generate market acceptance and result in revenue. We have developed
the products and services with no market research and there is no
assurance that we will be able to respond to the rapidly evolving
markets in the entertainment industry. The inability to sell our
products or services will result in the failure of our
business.
8
The Company’s success is dependent on current management, who
may be unable to devote sufficient time to the development of the
Company’s business plan, which could cause the business to
fail.
The
Company is heavily dependent on the management experience of our
officers, directors and advisors. Currently there are no employment
contracts by and between any officer/director/employee of the
Company. If the Company lost any of its officers or directors, it
would negatively impact and delay operations and there is no
assurance that suitable replacements could be found. Additionally,
all our officers and directors are employed outside of the Company
and some will only be able to devote a limited amount of time to
the development of the Company’s business plan unless this
Offering is successful. If management is required to spend
additional time with their outside employment, they may not have
sufficient time to devote to the Company and we would be unable to
develop our business plan, resulting in the failure of our
business.
Government regulation could
negatively impact the business.
The
Company’s business segments may be subject to various
government regulations in the jurisdictions in which they operate.
Due to the potential wide scope of the Company’s operations,
the Company could be subject to regulation by various political and
regulatory entities, including various local and municipal agencies
and government sub-divisions. The Company may incur increased costs
necessary to comply with existing and newly adopted laws and
regulations or penalties for any failure to comply. The
Company’s operations could be adversely affected, directly or
indirectly, by existing or future laws and regulations relating to
its business or industry.
The Company's election not to opt out of JOBS Act extended
accounting transition period may not make its financial statements
easily comparable to other companies.
Pursuant
to the JOBS Act of 2012, as an emerging growth company the Company
can elect to opt out of the extended transition period for any new
or revised accounting standards that may be issued by the PCAOB or
the SEC. The Company has elected not to opt out of such extended
transition period which means that when a standard is issued or
revised and it has different application dates for public or
private companies, the Company, as an emerging growth company, can
adopt the standard for the private company. This may make
comparison of the Company's financial statements with any other
public company which is not either an emerging growth company nor
an emerging growth company which has opted out of using the
extended transition period difficult or impossible as possible
different or revised standards may be used.
The recently enacted JOBS Act will also allow the Company to
postpone the date by which it must comply with certain laws and
regulations intended to protect investors and to reduce the amount
of information provided in reports filed with the SEC.
The
recently enacted JOBS Act is intended to reduce the regulatory
burden on “emerging growth companies. The Company meets the
definition of an emerging growth company and so long as it
qualifies as an “emerging growth company,” it will,
among other things: be exempt from the provisions of Section 404(b)
of the Sarbanes-Oxley Act requiring that its independent registered
public accounting firm provide an attestation report on the
effectiveness of its internal control over financial reporting; be
exempt from the “say on pay” provisions (requiring a
non-binding shareholder vote to approve compensation of certain
executive officers) and the “say on golden parachute”
provisions (requiring a non-binding shareholder vote to approve
golden parachute arrangements for certain executive officers in
connection with mergers and certain other business combinations) of
the Dodd-Frank Act and certain disclosure requirements of the Dodd-
Frank Act relating to compensation of its chief executive officer;
be permitted to omit the detailed compensation discussion and
analysis from proxy statements and reports filed under the
Securities Exchange Act of 1934 and instead provide a reduced level
of disclosure concerning executive compensation; and be exempt from
any rules that may be adopted by the Public Company Accounting
Oversight Board requiring mandatory audit firm rotation or a
supplement to the auditor’s report on the financial
statements.
9
Although
the Company is still evaluating the JOBS Act, it currently intends
to take advantage of some or all of the reduced regulatory and
reporting requirements that will be available to it so long as it
qualifies as an “emerging growth company”. The Company
has elected not to opt out of the extension of time to comply with
new or revised financial accounting standards available under
Section 102(b) of the JOBS Act. Among other things, this means that
the Company's independent registered public accounting firm will
not be required to provide an attestation report on the
effectiveness of the Company's internal control over financial
reporting so long as it qualifies as an emerging growth company,
which may increase the risk that weaknesses or deficiencies in the
internal control over financial reporting go undetected. Likewise,
so long as it qualifies as an emerging growth company, the Company
may elect not to provide certain information, including certain
financial information and certain information regarding
compensation of executive officers that would otherwise have been
required to provide in filings with the SEC, which may make it more
difficult for investors and securities analysts to evaluate the
Company. As a result, investor confidence in the Company and the
market price of its common stock may be adversely
affected.
Investors in the offering will experience immediate dilution of the
value of their shares.
Purchasers
of the Shares will experience immediate dilution in the value of
their Shares. Dilution represents the difference between the price
per share paid by investors and the net tangible book value per
share immediately after completion of the Offering. Net tangible
book value per share is the net tangible assets of the Company
(total assets less total liabilities less intangible assets),
divided by the number of shares of common stock outstanding. As of
June 30, 2020, the Company’s net tangible per share book
value was $0.005. Thus if at some other time, shares had been sold
by the Company at a price less than the $0.25 paid by purchasers of
the Shares or had been issued by the Company for services or as
other non-cash consideration, then the value of such investor
Shares immediately after purchase would be less than the purchase
price. The Company has issued shares prior to the date of this
prospectus at a price less than $0.25.
If the Company is unable to develop
and introduce new products and improvements, the Company may be
unable to compete in the marketplace.
The
market for the Company’s cybersecurity products and services
is characterized by evolving industry requirements. Accordingly,
the Company’s future performance depends on a number of
factors, including its ability to identify emerging technological
trends in its target markets, to develop and maintain competitive
products, to enhance its products by adding innovative features
that differentiate the Company’s products from those of its
competitors, and to manufacture and bring products to market
quickly at cost-effective prices. There can be no assurance,
however, that the Company will successfully complete the
development of any products, that such products will achieve market
acceptance that such products will receive regulatory approvals
where required, that any required regulatory approvals will be
received in a timely manner, or that such products can be produced
at competitive prices, or at all. In the event that its products
are not timely developed, do not gain market acceptance or cannot
be manufactured at competitive prices, the Company’s business
could be materially adversely affected
War, terrorism, other acts of violence or natural or manmade
disasters such as a global pandemic may affect the markets in which
the Company operates, the Company’s customers, the
Company’s delivery of products and customer service, and
could have a material adverse impact on our business, results of
operations, or financial condition.
The Company’s business may be adversely affected by
instability, disruption or destruction in a geographic region in
which it operates, regardless of cause, including war, terrorism,
riot, civil insurrection or social unrest, and natural or manmade
disasters, including famine, food, fire, earthquake, storm or
pandemic events and spread of disease (including the recent
outbreak of the coronavirus commonly referred to as “COVID-
19”).
Such events may cause customers to suspend their decisions on using
the Company’s products and services and give rise to sudden
significant changes in regional and global economic conditions and
cycles that could interfere with purchases of goods or services.
These events also pose significant risks to the Company’s
personnel and operations, which could materially adversely affect
the Company’s financial results.
Any significant disruption to communications and travel, including
travel restrictions and other potential protective quarantine
measures against COVID-19 by governmental agencies, could make it
difficult for the Company to deliver goods services to its
customers. War, riots, or other disasters may increase the need for
our products and demand may make it difficult for use to provide
products to customers. Further, travel restrictions and protective
measures against COVID-19 could cause the Company to incur
additional unexpected labor costs and expenses or could restrain
the Company’s ability to retain the highly skilled personnel
the Company needs for its operations. The extent to which COVID-19
impacts the Company’s business, sales and results of
operations will depend on future developments, which are highly
uncertain and cannot be predicted.
10
We believe COVID-19 has not yet negatively affected our corporate
operations but could at any time and without notice in the
foreseeable future. As a result of COVID-19, at any time we may be
subject to increased costs, supply interruptions, and difficulties
in obtaining raw materials and components.COVID-19 has resulted in
restrictions, postponements and cancelations and the impact, extent
and duration of the government imposed restrictions on travel and
public gatherings as well as the overall effect of the COVID-19
virus is currently unknown.
Risks Relating to the Cyber Security Industry
If the IT security market does not continue to adopt our security
solutions, our sales will not grow as quickly as anticipated, or at
all, and our business, results of operations and financial
condition would be harmed.
Our
future success depends on market adoption of our approach to IT
security, which combines our technology, threat intelligence and
security expertise in solutions that detect and prevent threats,
measure security effectiveness, investigate and respond to breaches
and enable customers to adapt to changes in the threat environment.
We are seeking to disrupt the IT security market with our security
solutions. Our solutions interoperate with, but do not replace,
other IT security products. Enterprises that use other security
products, including signature-based and advanced products, for
their IT security may be hesitant to purchase our security
solutions if they believe their existing products provide a level
of IT security that is sufficient to meet their needs. Currently,
many enterprises have not allocated a fixed portion of their
budgets to separate standalone threat intelligence or solutions
that evaluate security effectiveness. As a result, to expand our
customer base, we need to convince potential customers to allocate
a portion of their discretionary budgets to purchase our
technology, threat intelligence and expertise. However, even if we
are successful in doing so, any future deterioration in general
economic conditions may cause our customers to cut their overall IT
spending, and such cuts may fall disproportionately on solutions
like ours. If we do not succeed in convincing customers that our
solutions should be an integral part of their overall approach to
IT security and that a fixed portion of their annual IT budgets
should be allocated to our solutions, our sales will not grow as
quickly as anticipated, or at all, which would have an adverse
impact on our business, results of operations and financial
condition
Even
if there is significant demand for security solutions like ours, if
our competitors include functionality that is, or is perceived to
be, better than or equivalent to that of our solutions, we may have
difficulty increasing the market penetration of our solutions.
Furthermore, even if the functionality offered by other IT security
providers is different and more limited than the functionality of
our solutions, organizations may elect to accept such limited
functionality in lieu of adding solutions and services from
additional vendors like us, especially if competitor offerings are
free or available at a lower cost.
In
addition, if one or more enterprises share, on a free or nearly
free basis, threat intelligence with other organizations, then
those agencies or organizations might have less demand for
additional threat intelligence and may purchase less of our
standalone threat intelligence offerings.
If
enterprises do not adopt our security solutions for any of the
reasons discussed above or for other reasons not contemplated, our
sales would not grow as quickly as anticipated, or at all, and our
business, results of operations and financial condition would be
harmed.
We face intense competition and
could lose market share to our competitors, which could adversely
affect our business, financial condition and results of
operations.
The
market for security products and services is intensely competitive
and characterized by rapid changes in technology, customer
requirements, industry standards, threat vectors and frequent new
product introductions and improvements. We anticipate continued
challenges from current competitors, which in many cases are more
established and enjoy greater resources than us, as well as by new
entrants into the industry. If we are unable to anticipate or
effectively react to these competitive challenges, our competitive
position could weaken, and we could experience a decline in our
growth rate or revenue that could adversely affect our business and
results of operations.
11
Our
competitors and potential competitors include threat intelligence
vendors of substantial size such as Recorded Future or
ThreatQuotient that may emulate or integrate security features
similar to ours into their own products; independent security
vendors that offer products or features that claim to perform
similar functions to our platform; small and large companies,
including new market entrants, that offer niche security solutions
that compete with some of the features present in our solutions;
and other providers of incident response and compromise assessment
services. Other IT providers offer, and may continue to introduce,
security features that compete with our platform, either in
stand-alone security products or as additional features in their
network infrastructure products. Many of our existing competitors
have, and some of our potential competitors could have, substantial
competitive advantages such as:
●
greater
name recognition, longer operating histories and larger customer
bases;
●
larger
sales and marketing budgets and resources;
●
broader
distribution and established relationships with channel and
distribution partners and customers;
●
greater
customer support resources;
●
greater
resources to make acquisitions or enter into strategic
partnerships;
●
lower
labor and research and development costs;
●
larger
and more mature intellectual property portfolios; and
●
substantially
greater financial, technical, and other resources.
12
In
addition, some of our competitors have substantially broader
product offerings and may be able to leverage their relationships
with distribution partners and customers based on other products or
incorporate functionality into existing products to gain business
in a manner that discourages users from purchasing our products,
subscriptions and services, including by selling at zero or
negative margins, product bundling or offering closed technology
platforms. Potential customers may also prefer to purchase from
their existing suppliers rather than a new supplier regardless of
product performance or features. As a result, even if the features
of our platform are superior, customers may not purchase our
products. In addition, new innovative start-up companies, and
larger companies that are making significant investments in
research and development, may invent similar or superior products
and technologies that compete with our platform. Our current and
potential competitors may also establish cooperative relationships
among themselves or with third parties that may further enhance
their resources. Further, as our customers refresh the security
products bought in prior years, they may seek to consolidate
vendors, which may result in current customers choosing to purchase
products from our competitors on an ongoing basis.
Some
of our competitors have made or could make acquisitions of
businesses that allow them to offer more competitive and
comprehensive solutions. As a result of such acquisitions, our
current or potential competitors may accelerate the adoption of new
technologies that better address end-customer needs, devote greater
resources to bring these products and services to market, initiate
or withstand substantial price competition, or develop and expand
their product and service offerings more quickly than we do. These
competitive pressures in our market or our failure to compete
effectively may result in price reductions, fewer orders, reduced
revenue and gross margins, and loss of market share.
If we are unable to compete successfully, or if competing
successfully requires us to take costly actions in response to the
actions of our competitors, our business, financial condition and
results of operations could be adversely affected.
Real or perceived defects, errors or vulnerabilities in our
products or services, the misconfiguration of our products, the
failure of our products or services to block malware or prevent a
security breach, or the failure of customers to take action on
attacks identified by our products could harm our reputation and
adversely impact our business, financial position and results of
operations.
Because
our products and services are complex, they have contained and may
contain design or manufacturing defects or errors that are not
detected until after their deployment. Our products also provide
our customers with the ability to customize a multitude of
settings, and it is possible that a customer could misconfigure our
products or otherwise fail to configure our products in an optimal
manner. Such defects and misconfigurations of our products could
cause our products or services to be vulnerable to security
attacks, cause them to fail to secure networks and detect threats,
or temporarily interrupt the networking traffic of our customers.
In addition, because the techniques used by cyber-criminals to
access or sabotage networks change frequently and generally are not
recognized until launched against a target, there is a risk that an
advanced attack could emerge that our products and services are
unable to detect or prevent. Moreover, as our products and services
are adopted by an increasing number of enterprises, it is possible
that the individuals and organizations behind advanced malware
attacks will focus on finding ways to defeat our products and
services. If this happens, our networks, products, services and
subscriptions could be targeted by attacks specifically designed to
disrupt our business and undermine the perception that our products
and services are capable of providing superior IT security, which,
in turn, could have a serious impact on our reputation as a
provider of security solutions. In addition, defects or errors in
our subscription updates or our products could result in a failure
of our subscriptions to effectively update customers' hardware and
cloud-based products. Our data centers and networks may experience
technical failures and downtime, may fail to distribute appropriate
updates, or may fail to meet the increased requirements of a
growing installed customer base, any of which could temporarily or
permanently expose our customers’ networks, leaving their
networks unprotected against the latest security threats. Moreover,
our products must interoperate with our customers’ existing
infrastructure, which often have different specifications, utilize
multiple protocol standards, deploy products from multiple vendors,
and contain multiple generations of products that have been added
over time. As a result, unanticipated failures could occur if a
customer deploys our products in an untested configuration.
Similarly, if we inadvertently update our products with an
erroneous configuration or untested detection content, invalid
detections or product downtime could occur. Any of these situations
could result in negative publicity to us, damage to our reputation,
declining sales, increased expenses and customer relations issues,
and therefore adversely impact our business, financial position and
results of operations.
13
If
any of our customers becomes infected with malware after using our
products or services, such customer could be disappointed with our
products and services, regardless of whether our products or
services blocked the theft of any of such customer’s data or
would have blocked such theft if configured properly. Similarly, if
our products detect attacks against a customer but the customer
does not take action against the attack, the public may erroneously
believe that our products were not effective. Furthermore, if any
enterprises that are publicly known to use our products or services
are the subject of an advanced cyber attack that becomes
publicized, our other current or potential customers may look to
our competitors for alternatives to our products and services. Real
or perceived security breaches of our customers’ networks
could cause disruption or damage to their networks or other
negative consequences and could result in negative publicity to us,
damage to our reputation, declining sales, increased expenses and
customer relations issues.
Furthermore,
our products and services may fail to detect malware, ransomware,
viruses, worms or similar threats for any number of reasons,
including our failure to enhance and expand our products and
services to reflect industry trends, new technologies and new
operating environments, the complexity of the environment of our
clients and the sophistication of malware, viruses and other
threats. In addition, from time to time, firms test our products
against other security products. Our products may fail to detect or
prevent threats in any particular test for a number of reasons,
including misconfiguration. To the extent potential customers,
industry analysts or testing firms believe that the occurrence of a
failure to detect any particular threat is a flaw or indicates that
our products or services do not provide significant value, our
reputation and business could be harmed. Failure to keep pace with
technological changes in the IT security industry and changes in
the threat landscape could adversely affect our ability to protect
against security breaches and could cause us to lose customers. In
addition, in the event that a customer suffers a cyber attack, we
could be subject to claims based on a misunderstanding of the scope
of our contractual warranties or the protection afforded by the
Support Anti-Terrorism by Fostering Effective Technologies Act of
2002 (the "SAFETY Act").
In
addition, we cannot assure you that any limitation of liability
provisions in our customer agreements, contracts with third-party
vendors and service providers or other contracts would be
enforceable or adequate or would otherwise protect us from any
liabilities or damages with respect to any particular claim
relating to a security breach or other security-related matter.
While our insurance policies include liability coverage for certain
of these matters, if we experienced a widespread security breach or
other incident that impacted a significant number of our customers
to whom we owe indemnity obligations, we could be subject to
indemnity claims or other damages that exceed our insurance
coverage. We also cannot be certain that our insurance coverage
will be adequate for data handling or data security liabilities
actually incurred, that insurance will continue to be available to
us on economically reasonable terms, or at all, or that any future
claim will not be excluded or otherwise be denied coverage by any
insurer. The successful assertion of one or more large claims
against us that exceed available insurance coverage, or the
occurrence of changes in our insurance policies, including premium
increases or the imposition of large deductible or co-insurance
requirements, could have a material adverse effect on our business,
including our financial condition, operating results and
reputation.
Any
real or perceived defects, errors or vulnerabilities in our
products and services, or any other failure of our products and
services to detect an advanced threat, could result
in:
●
a
loss of existing or potential customers or channel
partners;
●
delayed
or lost revenue and harm to our financial condition and results of
operations;
●
a
delay in attaining, or the failure to attain, market
acceptance;
14
●
the
expenditure of significant financial and product development
resources in efforts to analyze, correct, eliminate, or work around
errors or defects, to address and eliminate vulnerabilities, or to
identify and ramp up production with alternative third-party
manufacturers;
●
an
increase in warranty and other claims, or an increase in the cost
of servicing warranty and other claims, either of which would
adversely affect our gross margins;
●
harm
to our reputation or brand; and
●
claims
and litigation, regulatory inquiries, or investigations,
enforcement actions, and other claims and liabilities, all of which
may be costly and burdensome and further harm our
reputation.
A network or data security incident against us, whether actual,
alleged or perceived, may harm our reputation, create liability and
adversely impact our financial results.
Increasingly,
companies are subject to a wide variety of attacks on their
networks on an ongoing basis. In addition to traditional
cyber-criminals, malicious code (such as viruses and worms),
phishing attempts, employee theft or misuse, and denial of service
attacks, sophisticated nation-state and nation-state supported
actors engage in intrusions and attacks (including advanced
persistent threat intrusions) and add to the risks to our internal
networks, cloud deployed enterprise and customer facing
environments and the information they store and process. We and/or
our third-party service providers may face security threats and
attacks from a variety of sources. Our data, corporate systems,
third-party systems and security measures may be breached due to
the actions of outside parties, employee error, malfeasance, a
combination of these, or otherwise, including social engineering
and employee and contractor error or malfeasance, and, as a result,
an unauthorized party may obtain access to our systems, networks,
or data. We may face difficulties or delays in identifying or
otherwise responding to any attacks or actual or potential breaches
of security. Furthermore, as a provider of security solutions, we
may be a more attractive target for such attacks. A breach in our
data security or an attack against our service availability, or
that of our third-party service providers, could impact our
networks or networks secured by our products and subscriptions,
creating system disruptions or slowdowns and exploiting security
vulnerabilities of our products, and the information stored on our
networks or those of our third-party service providers could be
accessed, publicly disclosed, altered, lost, or stolen, which could
result in a loss of intellectual property or loss of data and
subject us to liability and cause us financial
harm.
Any
actual, alleged or perceived breach of network security in our
systems or networks, or any other actual, alleged or perceived data
security incident we or our third-party service providers suffer,
could result in damage to our reputation, negative publicity, loss
of channel partners, customers and sales, loss of competitive
advantages over our competitors, increased costs to remedy any
problems and otherwise respond to any incident, regulatory
investigations and enforcement actions, costly litigation, and
other liability. In addition, we may incur significant costs and
operational consequences of investigating, remediating, eliminating
and putting in place additional tools and devices designed to
prevent actual or perceived security breaches and other security
incidents, as well as the costs to comply with any notification
obligations resulting from any security incidents. Any of these
negative outcomes could adversely impact the market perception of
our products and subscriptions and end-customer and investor
confidence in our company and could seriously harm our business or
operating results.
15
If we are unable to retain our customers, renew and expand our
relationships with them, and add new customers, we may not be able
to sustain revenue growth and we may not achieve or maintain
profitability in the future.
We
are a relatively new company with limited operating history.
Although we anticipate rapid growth based on our industry
experience, we may not experience growth due to a myriad of factors
and any success that we may experience will depend, in large part,
on our ability to, among other things:
●
maintain,
renew and expand our existing customer base;
●
win
new customers to our solutions;
●
increase
revenues from existing customers through increased use of our
products, subscriptions and services within their
organizations;
●
improve
the capabilities of our products and subscriptions through research
and development;
●
continue
to develop our cloud-based solutions;
●
maintain
the rate at which customers purchase our subscriptions and
support;
●
continue
to successfully expand our business domestically and
internationally; and
●
successfully
compete with other companies.
If
we are unable to maintain consistent or increasing revenue growth
or if our revenues decline, it may be difficult to achieve and
maintain profitability and our business and financial results could
be adversely affected.
16
If we are unable to sell additional products, subscriptions and
services, as well as renewals of our subscriptions and services, to
our customers, our future revenue and operating results will be
harmed.
As
existing customers that purchase our platform have no contractual
obligation to renew their subscriptions and support and maintenance
services after the initial contract period, and given our limited
operating history, we may not be able to accurately predict our
retention rates. Our customers’ retention rates may decline
or fluctuate as a result of a number of factors, including the
level of their satisfaction with our platform, our customer
support, customer budgets and the pricing of our platform compared
with the products and services offered by our competitors. If our
customers renew their subscriptions, they may renew for shorter
contract lengths or on other terms that are less economically
beneficial to us. We cannot assure you that our customers will
renew their subscriptions, and if our customers do not renew their
subscriptions or renew them on less favorable terms, our revenue
may grow more slowly than expected, not grow at all, or even
decline.
We
also depend on our installed customer base for future support and
maintenance revenue. We offer our support and maintenance
agreements for terms that generally range between one and three
years. If customers choose not to renew their support and
maintenance agreements or seek to renegotiate the terms of their
support and maintenance agreements prior to renewing such
agreements, our revenue may grow more slowly than expected, not
grow at all, or even decline.
Fluctuating
economic conditions make it difficult to predict revenue for a
particular period, and a shortfall in revenue may harm our business
and operating results.
Our
revenue depends significantly on general economic conditions and
the demand for products in the IT security market. Economic
weakness, customer financial difficulties, and constrained spending
on IT security may result in decreased revenue and earnings. Such
factors could make it difficult to accurately forecast our sales
and operating results and could negatively affect our ability to
provide accurate forecasts to our contract manufacturers and manage
our inventory purchases, contract manufacturer relationships and
other costs and expenses. General economic weakness may lead to
longer collection cycles for payments due from our customers, an
increase in customer bad debt, restructuring initiatives and
associated expenses, and impairment of investments. Furthermore,
the continued uncertainty in worldwide credit markets may adversely
impact the ability of our customers to adequately fund their
expected capital expenditures, which could lead to delays or
cancellations of planned purchases of our platform.
Uncertainty
about future economic conditions also makes it difficult to
forecast operating results and to make decisions about future
investments. Future or continued economic weakness for us or our
customers, failure of our customers and markets to recover from
such weakness, customer financial difficulties, and reductions in
spending on IT security could have a material adverse effect on
demand for our platform and consequently on our business, financial
condition and results of operations.
If the general level of advanced cyber attacks declines, or is
perceived by our current or potential customers to have declined,
our business could be harmed.
Our
business is substantially dependent on enterprises recognizing that
advanced cyber attacks are pervasive and are not effectively
prevented by legacy security solutions. High visibility attacks on
prominent enterprises have increased market awareness of the
problem of advanced cyber attacks and help to provide an impetus
for enterprises to devote resources to protecting against advanced
cyber attacks, such as testing our platform, purchasing it, and
broadly deploying it within their organizations. If advanced cyber
attacks were to decline, or enterprises perceived that the general
level of advanced cyber attacks have declined, our ability to
attract new customers and expand our offerings within existing
customers could be materially and adversely affected. A change in
the threat landscape may reduce the demand from customers or
prospects for our solutions, and therefore could increase our sales
cycles and harm our business, results of operations and financial
condition.
17
If organizations do not adopt cloud-based SaaS-delivered security
solutions, our ability to grow our business and
results of
operations may be adversely affected.
We
believe our future success will depend in large part on the growth,
if any, in the market for cloud-based SaaS-delivered security
solutions. The use of SaaS solutions to manage and automate
security and IT operations is at an early stage and rapidly
evolving. As such, it is difficult to predict its potential growth,
if any, customer adoption and retention rates, customer demand for
our solutions, or the success of existing competitive products. Any
expansion in our market depends on a number of factors, including
the cost, performance, and perceived value associated with our
solutions and those of our competitors. If our solutions do not
achieve widespread adoption or there is a reduction in demand for
our solutions due to a lack of customer acceptance, technological
challenges, competing products, privacy concerns, decreases in
corporate spending, weakening economic conditions or otherwise, it
could result in early terminations, reduced customer retention
rates, or decreased revenue, any of which would adversely affect
our business, results of operations, and financial results. We do
not know whether the trend in adoption of cloud-based
SaaS-delivered security solutions we have experienced in the past
will continue in the future. Furthermore, if we or other SaaS
security providers experience security incidents, loss or
disclosure of customer data, disruptions in delivery, or other
problems, the market for SaaS solutions as a whole, including our
security solutions, may be negatively affected. You should consider
our business and prospects in light of the risks and difficulties
we encounter in this new and evolving market.
If we do not accurately anticipate and respond promptly to changes
in our customers’ technologies, business plans or security
needs, our competitive position and prospects could be
harmed.
The
IT security market has grown quickly and is expected to continue to
evolve rapidly. Moreover, many of our customers operate in markets
characterized by rapidly changing technologies and business plans,
which require them to add numerous network access points and adapt
to increasingly complex IT networks, incorporating a variety of
hardware, software applications, operating systems and networking
protocols. As their technologies and business plans grow more
complex, we expect these customers to face new and
increasingly sophisticated methods of attack. We face
significant challenges in ensuring that our platform effectively
identifies and responds to these advanced and evolving attacks
without disrupting our customers’ network performance. As a
result of the continued rapid innovations in the technology
industry, including the rapid growth of smart phones, tablets and
other devices, the trend of “bring your own device” in
enterprises, an increasingly remote workforce, and the rapidly
evolving Internet of Things ("IOT"), we expect the networks of our
customers to continue to change rapidly and become more
complex.
We
have identified a number of new products and enhancements to that
we believe are important to our success in the IT security market,
including our threat intelligence platform and continued
integration to existing cybersecurity SIEM solutions. There can be
no assurance that we will be successful in developing and
marketing, on a timely basis, such new products or enhancements or
that our new products or enhancements will adequately address the
changing needs of the marketplace. We may experience unanticipated
delays in the availability of new products and enhancements to our
platform and fail to meet customer expectations with respect to the
timing of such availability. If we do not quickly respond to the
rapidly changing and rigorous needs of our customers by developing,
releasing and making available on a timely basis new products and
enhancements to our platform, such as our threat intelligence
platform and enhancements to our SIEM integration solutions, that
can adequately respond to advanced threats and our customers’
needs, our competitive position and business prospects will be
harmed. Furthermore, from time to time, we or our competitors may
announce new products with capabilities or technologies that could
have the potential to replace or shorten the life cycles of our
existing products. There can be no assurance that announcements of
new products will not cause customers to defer purchasing our
existing products.
Additionally,
the process of developing new technology is expensive, complex and
uncertain. The success of new products and enhancements depends on
several factors, including appropriate component costs, timely
completion and introduction, differentiation of new products and
enhancements from those of our competitors, and market acceptance.
To maintain our competitive position, we must continue to commit
significant resources to developing new products or enhancements to
our platform before knowing whether these investments will be
cost-effective or achieve the intended results. There can be no
assurance that we will successfully identify new product
opportunities, develop and bring new products or enhancements to
market in a timely manner, or achieve market acceptance of our
platform, or that products and technologies developed by others
will not render our platform obsolete or noncompetitive. If we
expend significant resources on researching and developing products
or enhancements to our platform and such products or enhancements
are not successful, our business, financial position and results of
operations may be adversely affected.
18
Our current research and development efforts may not produce
successful products or enhancements to our platform that result in
significant revenue, cost savings or other benefits in the near
future, if at all.
We
must continue to dedicate significant financial and other resources
to our research and development efforts if we are to maintain our
competitive position. However, developing products and enhancements
to our platform is expensive and time consuming, and there is no
assurance that such activities will result in significant new
marketable products or enhancements to our platform, design
improvements, cost savings, revenue or other expected benefits. If
we spend significant resources on research and development and are
unable to generate an adequate return on our investment, our
business and results of operations may be materially and adversely
affected.
If we are unable to increase sales to large organizations while
mitigating the risks associated with serving such customers, our
business, financial position and results of operations may
suffer.
Our
growth strategy is dependent, in part, upon increasing sales of our
solutions to large enterprises. Sales to large customers involve
risks that may not be present (or that are present to a lesser
extent) with sales to smaller entities. These risks
include:
●
increased
purchasing power and leverage held by large customers in
negotiating contractual arrangements with us;
●
more
stringent or costly requirements imposed upon us in our support
service contracts with such customers, including stricter support
response times and penalties for any failure to meet support
requirements;
●
more
complicated implementation processes;
●
longer
sales cycles and the associated risk that substantial time and
resources may be spent on a potential customer that ultimately
elects not to purchase our platform or purchases less than we
hoped;
●
closer
relationships with, and dependence upon, large technology companies
who offer competitive products; and
●
more
pressure for discounts and write-offs.
In
addition, because security breaches with respect to larger,
high-profile enterprises are likely to be heavily publicized, there
is increased reputational risk associated with serving such
customers. If we are unable to increase sales of our offerings to
large enterprise customers while mitigating the risks associated
with serving such customers, our business, financial position and
results of operations may suffer.
19
If the prices we charge for our services are unacceptable to our
customers, our operating results will be harmed.
As
the market for our services matures, or as new or existing
competitors introduce new products or services that compete with
ours, we may experience pricing pressure and be unable to renew our
agreements with existing customers or attract new customers at
prices that are consistent with our pricing model and operating
budget. If this were to occur, it is possible that we would have to
change our pricing model or reduce our prices, which could harm our
revenue, gross margin and operating results.
Seasonality may cause fluctuations in our revenue.
We
believe there are significant seasonal factors that may cause us to
record higher revenue in some quarters compared with others. We
believe this variability is largely due to (i) our customers’
budgetary and spending patterns, as many customers spend the unused
portions of their discretionary budgets prior to the end of their
fiscal years, and (ii) our sales compensation plans, which are
typically structured around annual quotas and commission
rates.
Claims by others that we infringe their proprietary technology or
other rights could harm our business.
Technology
companies frequently enter into litigation based on allegations of
patent infringement or other violations of intellectual property
rights. In addition, patent holding companies seek to monetize
patents they have purchased or otherwise obtained. As we face
increasing competition and gain an increasingly higher profile, the
possibility of intellectual property rights claims against us
grows. From time to time, third parties may assert, and we expect
that third parties will assert, claims of infringement of
intellectual property rights against us. Third parties may in the
future also assert claims against our customers or channel
partners, whom our standard license and other agreements obligate
us to indemnify against claims that our products infringe the
intellectual property rights of third parties. While we intend to
increase the size of our patent portfolio, many of our competitors
and others may now and in the future have significantly larger and
more mature patent portfolios than we have. In addition, future
litigation may involve patent holding companies or other patent
owners who have no relevant product offerings or revenue and
against whom our own patents may therefore provide little or no
deterrence or protection. Any claim of intellectual property
infringement by a third party, even a claim without merit, could
cause us to incur substantial costs defending against such claim,
could distract our management from our business and could require
us to cease use of such intellectual property.
Although
third parties may offer a license to their technology or other
intellectual property, the terms of any offered license may not be
acceptable, and the failure to obtain a license or the costs
associated with any license could cause our business, financial
condition and results of operations to be materially and adversely
affected. We may also be subject to additional fees or be required
to obtain new licenses if any of our licensors allege that we have
not properly paid for such licenses or that we have improperly used
the technologies under such licenses. In addition, some licenses
may be non-exclusive, and therefore our competitors may have access
to the same technology licensed to us. If a third party does not
offer us a license to its technology or other intellectual property
on reasonable terms, or at all, we could be enjoined from continued
use of such intellectual property. As a result, we may be required
to develop alternative, non-infringing technology, which could
require significant time (during which we could be unable to
continue to offer our affected products, subscriptions or
services), effort, and expense and may ultimately not be
successful. Furthermore, a successful claimant could secure a
judgment or we may agree to a settlement that prevents us from
distributing certain products, providing certain subscriptions or
performing certain services or that requires us to pay substantial
damages, royalties or other fees. Any of these events could harm
our business, financial condition and results of
operations.
20
RISKS ASSOCIATED WITH OUR COMMON STOCK
The Company’s stock price may be volatile.
The market price of the Company’s common stock is likely to
be highly volatile and could fluctuate widely in price in response
to various potential factors, many of which will be beyond the
Company’s control, including the following:
●
Competition;
●
Additions or
departures of key personnel;
●
The Company’s
ability to execute its business plan;
●
Operating results
that fall below expectations;
●
Loss of any
strategic relationship;
●
Industry
developments;
●
Economic and other
external factors; and
●
Period-to-period
fluctuations in the Company’s financial results.
In
addition, the securities markets have from time to time experienced
significant price and volume fluctuations that are unrelated to the
operating performance of particular companies. These market
fluctuations may also materially and adversely affect the market
price of the Company’s common stock.
We do not expect to pay dividends in the foreseeable
future.
We do not intend to declare dividends for the foreseeable future,
as we anticipate that we will reinvest any future earnings in the
development and growth of our business. Therefore, investors will
not receive any funds unless they sell their common stock, and
stockholders may be unable to sell their shares on favorable terms
or at all. We cannot assure you of a positive return on investment
or that you will not lose the entire amount of your investment in
our common stock.
We may in the future issue additional shares of our common stock
which would reduce investors’ ownership interests in the
Company, and which may dilute our share value.
Our Articles of Incorporation authorize the issuance of 50,000,000
shares of common stock, par value $0.001 per share. The future
issuance of all or part of our remaining authorized common stock
may result in substantial dilution in the percentage of our common
stock held by our then existing stockholders. We may value any
common stock issued in the future on an arbitrary basis. The
issuance of common stock for future services or acquisitions or
other corporate actions may have the effect of diluting the value
of the shares held by our investors, and might have an adverse
effect on any trading market for our common stock.
An active trading market for our common stock may never develop or
be sustained.
We
cannot assure you that an active trading market for our Common
Stock will develop in the future or, if developed, that any market
will be sustained. Accordingly, you may be required to hold your
Shares indefinitely or to sell them at a price that does not meet
your expectations, if at all.
21
The Company’s stock may be considered a penny stock and any
investment in the Company’s stock will be considered a
high-risk investment and subject to restrictions on
marketability.
If the
Shares commence trading, the trading price of the Company's common
stock may be below $5.00 per share. If the price of the common
stock is below such level, trading in its common stock would be
subject to the requirements of certain rules promulgated under the
Securities Exchange Act of 1934, as amended. These rules require
additional disclosure by broker-dealers in connection with any
trades generally involving any non-NASDAQ equity security that has
a market price of less than $5.00 per share, subject to certain
exceptions. Such rules require the delivery, before any penny stock
transaction, of a disclosure schedule explaining the penny stock
market and the risks associated therewith, and impose various sales
practice requirements on broker-dealers who sell penny stocks to
persons other than established customers and accredited investors
(generally institutions). For these types of transactions, the
broker-dealer must determine the suitability of the penny stock for
the purchaser and receive the purchaser’s written consent to
the transactions before sale. The additional burdens imposed upon
broker-dealers by such requirements may discourage broker-dealers
from effecting transactions in the Company’s common stock
which could impact the liquidity of the Company’s common
stock.
FINRA sales practice requirements may limit a stockholder’s
ability to buy and sell our stock.
The Financial Industry Regulatory Authority (“FINRA”)
has adopted rules that relate to the application of the SEC’s
penny stock rules in trading our securities and require that a
broker/dealer have reasonable grounds for believing that the
investment is suitable for that customer, prior to recommending the
investment. Prior to recommending speculative, low priced
securities to their non-institutional customers, broker/dealers
must make reasonable efforts to obtain information about the
customer’s financial status, tax status, investment
objectives and other information.
|
|
Under interpretations of these rules, FINRA believes that there is
a high probability that speculative, low priced securities will not
be suitable for at least some customers. FINRA’s requirements
make it more difficult for broker/dealers to recommend that their
customers buy our common stock, which may have the effect of
reducing the level of trading activity and liquidity of our common
stock. Further, many brokers charge higher transactional fees for
penny stock transactions. As a result, fewer broker/dealers may be
willing to make a market in our common stock, reducing a
shareholder’s ability to resell shares of our common
stock.
There has been no prior public market for the Company’s
securities and the lack of such a market may make resale of the
stock difficult.
No
prior public market has existed for the Company’s securities
and the Company cannot assure any investor that a market will
develop subsequent to this offering. An investor must be fully
aware of the long-term nature of an investment in the Company. The
Company intends to apply for quotation of its common stock on the
OTC Bulletin Board as soon as possible, which may be while this
offering is still in process. To qualify for quotation on the OTC
Bulletin Board, an equity security must have one registered
broker-dealer, known as the market maker, willing to list bid or
sale quotations and to sponsor the company listing (currently, the
Company does not have an arrangement with any such market maker to
qualify the Company’s securities for quotation on the OTC
Bulletin Board). Moreover, the Company does not know if it will be
successful in such application for quotation on the OTC bulletin
board, how long such application will take, or, that if successful,
that a market for the common stock will ever develop or continue on
the OTC Bulletin Board. If for any reason the common stock is not
listed on the OTC Bulletin Board or a public trading market does
not otherwise develop, investors in the offering may have
difficulty selling their common stock should they desire to do so.
If the Company is not successful in its application for quotation
on the OTC Bulletin Board, it will apply to have its securities
quoted by the Pink OTC Markets, Inc., real-time quotation service
for over-the-counter equities.
Shares of common stock in the
Company are subject to resale restrictions imposed by Rule 144 of
the Securities and Exchange Commission.
The
shares of common stock held by current shareholders are
“restricted securities” subject to the limitations of
Rule 144 under the Securities Act. In general, securities can be
sold pursuant to Rule 144 after being fully-paid and held for more
than 6 months. Unregistered shares of the Company’s common
stock held by current shareholders are subject to Rule 144 resale
restrictions; provided, however, investors participating in the
Offering are not subject to such resale limitations.
FORWARD-LOOKING STATEMENTS
This
prospectus contains, in addition to historical information, certain
information, assumptions and discussions that may constitute
forward-looking statements. Such statements are subject to certain
risks and uncertainties which could cause actual results to differ
materially than those projected or anticipated. Actual results
could differ materially from those projected in the forward-looking
statements. Although the Company believes its assumptions
underlying the forward-looking statements are reasonable, the
Company cannot assure an investor that the forward-looking
statements set out in this prospectus will prove to be accurate.
The Company’s businesses can be affected by, without
limitation, such things as natural disasters, economic trends,
international strife or upheavals, consumer demand patterns, labor
relations, existing and new competition, consolidation, and growth
patterns within the industries in which the Company competes and
any deterioration in the economy may individually or in combination
impact future results.
22
DETERMINATION OF OFFERING PRICE
As a result of there being no established public market for our
shares, the offering price and other terms and conditions relative
to our shares have been arbitrarily determined by the Company and
do not bear any relationship to assets, earnings, book value, or
any other objective criteria of value. In determining the
number of shares to be offered and the Offering price, we took into
consideration our capital structure and the amount of money we
would need to implement our business plan. Accordingly, the
Offering price should not be considered an indication of the actual
value of our securities. In addition,
no investment banker, appraiser, or other independent third party
has been consulted concerning the offering price for the shares or
the fairness of the offering price used for the
shares.
USE OF PROCEEDS
Our offering is being made in a direct public offering without the
involvement of underwriters or broker-dealers. We intend to
disburse the proceeds from this offering in the priority set forth
below within the first 12 months after successful completion of
this offering.
Not taking into account any possible additional funding or
revenues, we intend to use the proceeds from this offering as
follows. The following chart indicates the approximate amount of
funds that we will allocate to each item, but does not indicate the
total fee/cost of each item. The amount of proceeds we
allocate to each item is dependent upon the amount of proceeds we
receive from this offering:
If we sell all of the Shares being offered, our net proceeds will
be $2,500,000. If the Offering is fully subscribed, the
proceeds will be applied in the manner described below. If less
than the full numbers of shares are subscribed, the proceeds will
be applied in the order of priority listed. If we are only to
receive between $0 and $625,000, we would need to amend our
business plan. The
following table sets forth a breakdown of the estimated use of the
net proceeds as we currently expect to use them, assuming the sale
of 100%, 75%, 50% and 25% of the Shares offered for sale in this
offering:
|
Assumed Percentage of Shares
Sold
|
25%
Shares
Sold
|
50%
Shares
Sold
|
75%
Shares
Sold
|
100%
Shares
Sold
|
|
GROSS
PROCEEDS FROM OFFERING
|
$625,000
|
$1,250,000
|
$1,875,000
|
$2,500,000
|
|
LESS OFFERING
EXPENSES
|
|
|
|
|
|
Legal, accounting
& professional fees
|
40,000
|
40,000
|
40,000
|
40,000
|
|
Miscellaneous
|
15,000
|
15,000
|
15,000
|
15,000
|
|
SUBTOTAL
|
55,000
|
55,000
|
55,000
|
55,000
|
|
LESS
USE OF PROCEEDS
|
|
|
|
|
|
Capital
purchases(1)
|
40,000
|
75,000
|
150,000
|
200,000
|
|
Contractors(2)
|
30,000
|
175,000
|
250,000
|
300,000
|
|
General &
administrative(3)
|
100,000
|
175,000
|
250,000
|
270,000
|
|
Marketing &
promotion(4)
|
100,000
|
150,000
|
250,000
|
350,000
|
|
Research &
development(5)
|
150,000
|
220,000
|
350,000
|
475,000
|
|
Wages &
benefits(6)
|
150,000
|
400,000
|
570,000
|
850,000
|
|
SUBTOTAL
|
570,000
|
1,195,000
|
1,820,000
|
2,445,000
|
|
TOTAL
|
$625,000
|
$1,250,000
|
$1,875,000
|
$2,500,000
|
23
The
above figures represent only estimated costs. As indicated in the table above, if we sell only
75%, or 50%, or 25% of the Shares offered for sale in this
offering, we would expect to use the resulting net proceeds for the
same purposes as we would use the net proceeds from a sale of 100%
of the Shares, and in approximately the same proportions. However,
the lower our net proceeds, the less we would expect to use the
funds in the expenditure categories.
(1)
Capital Purchases -
This may include but is not limited to purchase of computers,
computer monitors, laptops, cell phones, desk telephones, and
servers.
(2)
Contractors - This
may include but is not limited to contractor services for content
writing, sales representatives, technical support staff, network
engineers, and administrative staff.
(3)
General
& Administrative - This may include, but is not be limited to
rent, insurance, internet, office equipment, office supplies,
postage, subscriptions, overnight delivery services, telephone,
utilities, web hosting.
(4)
Marketing &
Brand Promotion - This may include but is not limited to
development of corporate presentations, graphic design services,
document printing, conference attendance fees, web design, speaking
engagements and industry support initiatives.
(5)
Research &
Development - This may include but is not limited to software
developer contractor costs, rental of development servers, software
licenses for development purposes, purchase of hardware for testing
and
(6)
Salaries and
Consulting Expense - We anticipate meeting all staffing need
through a combination of outside third-party service providers
(contractors) and salaried employees. Some of our officers and
directors are employed outside of Tego Cyber Inc. and will only be
able to devote a limited amount of time to the development of our
business unless this Offering is successful. At 25% of the proceeds
we estimate it will be able to accommodate up to 2 employees; at
50% of the proceeds we will be able to accommodate up to 5-8
employees and at 75-100% of the proceeds we estimate we can
accommodate a staff of up to 8-10 people.
In the event we do not sell all of the Shares being offered, we may
seek additional financing to support the intended use of proceeds
discussed 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 when needed
and, if available, on terms acceptable to us.
DIVIDEND POLICY
We have not paid any dividends on our common stock since inception
and we currently expect that, in the foreseeable future, all
earnings (if any) will be retained for the development of our
business and no dividends will be declared or paid. Any future
dividends will be subject to the discretion of our board of
directors and will depend upon, among other things, our earnings
(if any), operating results, financial condition and capital
requirements, general business conditions and other pertinent
facts.
24
PLAN OF DISTRIBUTION; TERMS OF THE OFFERING
Tego Cyber Inc. has issued and outstanding as of September 18,
2020 12,906,236 shares of
Common Stock. The Company is registering an additional
10,000,000 shares of its Common Stock for sale at the price of
$0.25 per share. There is no arrangement to address the possible
effect of the offering on the price of the stock. In connection
with the Company’s selling efforts in the offering, our
officers and directors will not register as broker-dealers pursuant
to Section 15 of the Exchange Act, but rather will rely upon the
“safe harbor” provisions of SEC Rule 3a4-1, promulgated
under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”). Generally speaking, Rule 3a4-1
provides an exemption from the broker-dealer registration
requirements of the Exchange Act for persons associated with an
issuer that participate in the sale of the securities of such
issuer.
Our officers and directors meet the conditions of the Rule 3a4-1
exemption, as: (1) they are not subject to any statutory
disqualification, as that term is defined in Section 3(a)(39) of
the Exchange Act; (2) they will not be compensated in connection
with their participation in the direct public offering or resale
offering by the payment of commissions or other remuneration based
either directly or indirectly on transactions in our securities;
and (3) they will not be associated persons of a broker or dealer
at the time of their participation in the direct public offering
and resale offering. Further, our officers and directors: (1) at
the end of the offerings, will continue to primarily perform
substantial duties for the Company or on its behalf otherwise than
in connection with transactions in securities; (2) are not, nor
have been within the preceding 12 months, a broker or dealer, and
they are not, nor have they been within the preceding 12 months, an
associated person of a broker or dealer; and (3) they have not
participated in another offering of securities pursuant to the
Exchange Act Rule 3a4-1 in the past 12 months and they have not and
will not participate in selling an offering of securities for any
issuer more than once every 12 months other than in reliance on the
Exchange Act Rule 3a4-1(a)(4)(i) or (iii).
In order to comply with the applicable securities laws of certain
states, the securities will be offered or sold in those states only
if they have been registered or qualified for sale, an exemption
from such registration is available, or if qualification
requirement is available and with which the Company has complied.
In addition, and without limiting the foregoing, the Company will
be subject to applicable provisions, rules and regulations under
the Exchange Act with regard to security transactions during the
period of time when this Registration Statement is
effective.
Offering Period and Expiration Date
This offering will start on the date of this Prospectus and
continue for a period of up to 180 days, unless extended by our
board of directors for an additional 90 days
Concurrent Offering
The Company will be offering shares of the Company’s Common
Stock under the direct public offering at the same time that the
Selling Shareholders will be offering shares of the Company’s
Common Stock under the resale offering. The Selling Shareholders
include our officers and directors who will be selling shares on
their own behalf, individually. Pursuant to our informal Code of
Ethics, our officers and directors have an ethical obligation to
give their loyalty to the best interests of the Company. As such,
our officers and directors will first offer shares of the
Company’s Common Stock under the direct public offering on
behalf of the Company and will offer their individual shares in the
resale offering only if the direct public offering is fully
subscribed.
Procedures for Subscribing
If you decide to subscribe for any shares in this offering, you
must:
|
|
1.
|
execute and deliver a Subscription Agreement; and
|
|
|
2.
|
deliver
a check, certified funds or cash by wire transfer of immediately
available funds directly to the Company for acceptance or
rejection.
|
The Subscription Agreement requires you to disclose your name,
address, social security number, telephone number, number of shares
you are purchasing, and the price you are paying for your
shares.
All checks for subscriptions must be made payable
to Tego
Cyber Inc.
25
Acceptance of Subscriptions
Upon the Company’s acceptance of a Subscription Agreement and
receipt of full payment, the Company shall countersign the
Subscription Agreement and issue a stock certificate along with a
copy of the Subscription Agreement.
Right to Reject Subscriptions
We have the right to accept or reject subscriptions in whole or in
part, for any reason or for no reason. All monies from rejected
subscriptions will be returned immediately by us to the subscriber,
without interest or deductions. Subscriptions for securities will
be accepted or rejected within 48 hours after we receive
them.
No Minimum Subscription
There is no minimum number of shares that must be sold under the
offering. As such, there is no guarantee that the Company will
raise any funds from the offering.
Penny Stock Regulation
Our Common Shares are not quoted on any stock exchange or quotation
system. The SEC has adopted rules that regulate broker-dealer
practices in connection with transactions in penny stocks. Penny
stocks are generally equity securities with a price of less than
$5.00 (other than securities registered on certain national
securities exchanges or quoted on the NASDAQ system, provided that
current price and volume information with respect to transactions
in such securities is provided by the exchange
system).
The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from those rules,
to deliver a standardized risk disclosure document prepared by the
SEC, that:
●
contains
a description of the nature and level of risk in the market
for penny stocks in both public offerings and secondary
trading;
●
contains
a description of the broker’s or dealer’s duties to the
customer and of the rights and remedies available to the
customer with respect to a violation of such
duties;
●
contains
a brief, clear, narrative description of a dealer
market, including “bid” and “ask”
prices for penny stocks and the significance of the spread
between the bid and ask price;
●
contains
a toll-free telephone number for inquiries on
disciplinary actions;
●
defines
significant terms in the disclosure document or in the conduct
of trading penny stocks; and,
●
contains
such other information and is in such form (including
language, type, size, and format) as the SEC shall require by
rule or regulation.
|
|
|
|
The
broker-dealer also must provide the customer with the following,
prior to proceeding with any transaction in a penny
stock:
●
bid
and offer quotations for the penny stock;
●
details
of the compensation of the broker-dealer and its salesperson
in the transaction;
●
the
number of shares to which such bid and ask prices apply, or
other comparable information relating to the depth and
liquidity of the market for such stock; and,
●
monthly
account statements showing the market value of each penny
stock held in the customer’s account.
In addition, the penny stock rules require that prior to a
transaction in a penny stock not otherwise exempt from those rules,
the broker-dealer must make a special written determination that
the penny stock is a suitable investment for the purchaser and
receive the purchaser’s written acknowledgment of the receipt
of a risk disclosure statement and a signed and dated copy of a
written suitability statement. These disclosure requirements
will have the effect of reducing the trading activity in the
secondary market for our stock because it will be subject to these
penny stock rules. Therefore, stockholders may have difficulty
selling those securities.
Registration Rights
We have not granted registration rights to any
persons.
26
DILUTION
Net tangible book value per share represents the amount of the
Company’s tangible assets less total liabilities, divided
by 12,406,236 shares of Common
Stock outstanding as of June 30, 2020 pursuant to the financials
enclosed herein. Net tangible book value dilution per share
represents the difference between the amount per share paid by
purchasers of the Shares in this offering assuming the offering
price of $0.25 per share of Common Stock and the pro forma net
tangible book value per share of Common Stock immediately after
completion of the offering.
After giving effect to the sale of the 10,000,000 shares offered by
the Company hereunder, at an Offering Price of $0.25 per share the
pro forma net tangible book value of the Company at June 30, 2020,
would have been $0.20 per share, representing an immediate increase
in tangible book value of $0.195 per share to existing shareholders
and an immediate dilution of $.305 per share to purchasers of the
Shares.
The following table illustrates the foregoing information with
respect to new investors on a per share basis:
|
|
10,000,000
Shares
(100%)
|
7,500,000
Shares
(75%)
|
5,000,000
Shares
(50%)
|
2,500,000
Shares
(25%)
|
1,000,000
Shares
(10%)
|
|
Offering
price per share
|
$0.25
|
0.25
|
0.25
|
0.25
|
0.25
|
|
Net
tangible book value per share before Offering
|
$0.005
|
0.005
|
0.005
|
0.005
|
0.005
|
|
Increase
per share attributable to new investors
|
$0.195
|
0.151
|
0.101
|
0.051
|
0.020
|
|
Pro
forma net tangible book value per share after Offering
|
$0.207
|
0.156
|
0.106
|
0.056
|
0.025
|
|
Dilution
per share to new investors
|
$0.043
|
0.094
|
0.144
|
0.194
|
0.225
|
DESCRIPTION OF PROPERTY
Our executive offices are located at 8565 South Eastern Avenue,
Suite 150 Las Vegas, Nevada 89123. We currently rent this space on
a month to month basis. This space is sufficient to meet our
needs, however, once we expand our business to a significant
degree, we will have to find a larger space. Due t We do not
foresee any significant difficulties in obtaining any required
additional space. We do not currently own any real
property.
|
|
DESCRIPTION OF SECURITIES
Common Stock
Our Articles of Incorporation authorize us to issue fifty million
(50,000,000) shares of common stock, par value $0.001.
The
following statements relating to the capital stock set forth the
material terms of the securities of the Company. Reference is also
made to the more detailed provisions of the certificate of
incorporation and the by-laws, copies of which are filed as
exhibits to this registration statement.
Voting Rights
Except as otherwise required by law or as may be provided by the
resolutions of the board of directors authorizing the issuance of
Common Stock, all rights to vote and all voting power shall be
vested in the holders of Common Stock. Each share of Common
Stock shall entitle the holder thereof to one vote.
27
No Cumulative Voting
Except as may be provided by the resolutions of the board of
directors authorizing the issuance of Common Stock, cumulative
voting by any shareholder is expressly denied.
No Preemptive Rights
Preemptive rights shall not exist with respect to shares of Common
Stock or securities convertible into shares of Common Stock of the
Company.
Dividends
We have not paid any cash dividends on our Common Stock since
inception and presently anticipate that all earnings, if any, will
be retained for development of our business and that no dividends
on our Common Stock will be declared in the foreseeable future. Any
future dividends will be subject to the discretion of our Board of
Directors and will depend upon, among other things, future
earnings, operating and financial condition, capital requirements,
general business conditions and other pertinent facts. Therefore,
there can be no assurance that any dividends on our Common Stock
will be paid in the future.
Rights upon Liquidation, Dissolution or Winding-Up of the
Company
Upon any liquidation, dissolution or winding-up of the Company,
whether voluntary or involuntary, the remaining net assets of the
Company shall be distributed pro rata to the holders of the Common
Stock.
Preferred Stock
The Company has no preferred stock authorized.
Warrants and Options
The Company has not issued any warrants or options.
Holders
As of September 18, 2020, we have 12,906,236 issued
and outstanding shares of Common Stock, which are held by 65
shareholders of record.
Securities Authorized for Issuance Under Equity Compensation
Plans
None
Transfer Agent and Registrar
Tego Cyber Inc. has appointed Signature Stock Transfer Inc. as its
transfer agent. Signature’s address is 14673 Midway Road,
Suite #220, Addison, Texas, 75001. The transfer agent is
responsible for all record-keeping and administrative functions in
connection with the common shares.
No Public Market for Common Stock
There is currently no public trading market for our Common Stock
and no such market may ever develop. While we intend to seek and
obtain quotation of our Common Stock for trading on the OTC Markets
(“OTCQB”), there is no assurance that our application
will be approved. An application for quotation on the OTCQB must be
submitted by one or more market makers who: 1) are approved by the
Financial Industry Regulatory Authority (“FINRA”); 2)
who agree to sponsor the security; and 3) who demonstrate
compliance with SEC Rule 15(c)2-11 before initiating a quote in a
security on the OTCQB. In order for a security to be eligible for
quotation by a market maker on the OTCQB, the security must be
registered with the SEC and the company must be current in its
required filings with the SEC. There are no listing requirements
for the OTCQB and accordingly no financial or minimum bid price
requirements. We intend to cause a market maker to submit an
application for quotation to the OTCQB upon the effectiveness of
this Registration Statement of which this Prospectus forms a part.
However, we can provide no assurance that our shares will be traded
on the bulletin board or, if traded, that a public market will
materialize.
28
Admission to Quotation on the OTC Bulletin Board
If the
Company meets the qualifications, it intends to apply for quotation
of its securities on the OTC Bulletin Board. The OTC Bulletin Board
differs from national and regional stock exchanges in that it (1)
is not situated in a single location but operates through
communication of bids, offers and confirmations between
broker-dealers and (2) securities admitted to quotation are offered
by one or more broker-dealers rather than the "specialist" common
to stock exchanges. To qualify for quotation on the OTC Bulletin
Board, an equity security must have one registered broker-dealer,
known as the market maker, willing to list bid or sale quotations
and to sponsor the company listing. In addition, the Company must
make available adequate current public information as required by
applicable rules and regulations.
In
certain cases the Company may elect to have its securities
initially quoted in the Pink Sheets published by Pink OTC Markets
Inc. In general there is greater liquidity for traded securities on
the OTC Bulletin Board, and less through quotation on the Pink
Sheets. It is not possible to predict where, if at all, the
securities of the Company will be traded following the
effectiveness of this registration statement.
Penny Stock Regulation
Penny
stocks generally are equity securities with a price of less than
$5.00 per share other than securities registered on national
securities exchanges or listed on the Nasdaq Stock Market, provided
that current price and volume information with respect to
transactions in such securities are provided by the exchange or
system. The penny stock rules impose additional sales practice
requirements on broker-dealers who sell such securities to persons
other than established customers and accredited investors
(generally those with assets in excess of $1,000,000 or annual
income exceeding $200,000, or $300,000 together with their spouse).
For transactions covered by these rules, the broker-dealer must
make a special suitability determination for the purchase of such
securities and have received the purchaser's written consent to the
transaction prior to the purchase. Additionally, for any
transaction involving a penny stock, unless exempt, the rules
require the delivery, prior to the transaction, of a disclosure
schedule prescribed by the SEC relating to the penny stock market.
The broker-dealer also must disclose the commissions payable to
both the broker-dealer and the registered representative and
current quotations for the securities. Finally, monthly statements
must be sent disclosing recent price information on the limited
market in penny stocks. Because of these penny stock rules,
broker-dealers may be restricted in their ability to sell the
Company’s common stock. The foregoing required penny stock
restrictions will not apply to the Company’s common stock if
such stock reaches and maintains a market price of $5.00 per share
or greater.
Additional Information
We refer you to our Articles of Incorporation, Bylaws, and the
applicable provisions of the Nevada Revised Statues for a more
complete description of the rights and liabilities of holders of
our securities.
INFORMATION WITH RESPECT TO REGISTRANT
THE
FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ TOGETHER WITH THE
CONSOLIDATED FINANCIAL STATEMENTS OF THE COMPANY AND THE NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS INCLUDED ELSEWHERE IN THIS
REGISTRATION STATEMENT ON FORM S-1. THIS DISCUSSION SUMMARIZES THE
SIGNIFICANT FACTORS AFFECTING OUR OPERATING RESULTS, FINANCIAL
CONDITIONS AND LIQUIDITY AND CASH-FLOW SINCE
INCEPTION.
DESCRIPTION OF BUSINESS
The Company Overview
Tego
Cyber Inc. is early stage provider of advanced cyberthreat intelligence for larger
business enterprises. We currently offer a suite of related
cyber security services including vulnerability assessments,
penetration testing, vCISO services, dark web monitoring,
cybersecurity policy creation and review as well as ongoing
enterprise employee training. We are also developing a threat
intelligence platform which will work cohesively to improve the
operational efficiency of an enterprise’s existing cyber
security infrastructure. The platform, currently in beta testing,
will be available for sale upon completion.
29
Corporate History and General Information about the
Company
Tego
Cyber Inc. was incorporated in the State of Nevada on September 6,
2019. Our year end is June 30. We are a development stage
enterprise. Our principal office is located at 8565 S. Eastern
Avenue, Suite 150, Las Vegas, NV 89123. Our telephone number is
855-939-0100 and our e-mail contact is info@tegocyber.com. Our
website can be viewed at www.tegocyber.com.
We created Tego to take advantage of the potential growth within
the cyber security industry by capitalizing on our founding
team’s established experience and reputation within the
industry
Business and Market Summary
Organizations
are increasingly at risk of being compromised as recent trends
within cybersecurity statistics reveal huge increases in attacks
leaving a trail of hacked and breached data. Cybersecurity issues
continue to be a day-to-day struggle, for many businesses where
commonalities of attacks within the digital and growing virtual
workplace includes many end point opportunities such as local
networks, laptop, tablet, and desktop computers, mobile, industrial
control systems and more recently the expanding IoT (Internet of
Things).
Digital
risk protection is both a technical and business issue. It is a
technical issue because any type of digital device can be accessed
by cyber-criminals. It is also a business issue as many enterprises
still have limited experience and lack awareness on the importance
of securing personal customer and or private corporate
information.
The Industry/Marketplace
The
market for digital risk solutions is highly fragmented, intensely
competitive, and constantly evolving. In terms of overall
cyberthreats, a Juniper Research report on cybercrime
from 2019, suggests that the cost of such malicious attacks will
rise to US$5 trillion by 2024. To successfully defend against the
malicious intent they face, it is necessary for the enterprise to
adopt cybersecurity awareness, prevention, and security best
practices, as a part of their corporate culture, to reduce and
eliminate the inevitable financial risks presented by daily
threats, attacks and breaches.
Overall,
the cybersecurity marketplace is large. A consensus of current 2020
projections peg this market growing at a CAGR of 8% from USD $ 173
billion to USD $274 billion in 2026. The earlier stage, Threat Intelligence market segment
within, is presently estimated to be worth USD $ 5.1 billion and is
projected to grow at a CAGR of 19.7% to USD $12.53 billion by
2026.
The Company’s Presence in the Market
As an
emerging provider of 'intelligent' threat intelligence and
associated services, we will rely heavily on the established
reputation and combined experience of our management
team, specifically within
intelligent, automated, and self-healing cyber security platforms.
Members of our management team are globally recognized
international speakers on cyber security specifically focusing on
the topics of threat intelligence, ransomware, DDoS, cyber-crime
trends, and cyber security careers and appear regularly as
conference speakers and television security experts. We maintain a
current web presence and share an online blog delivering the latest
information on trends, threats, solutions, and general
cybersecurity information.
Our Products & Services
Services
The following services are currently available to enterprise
clients:
Vulnerability Assessments - Vulnerability Assessments are crucial
in helping organizations identify what critical and high
vulnerabilities may exist within their environments. Many clients
have been surprised to discover devices on their networks that were
not purchased by the organization and in some instanced, created a
way for bad actors to breach the organization’s network. The
vulnerability assessment is the first step in creating a complete
strategy to protect the organization
30
Penetration Testing - A penetration test is an authorized simulated
cyber-attack on the customer’s premise, network or devices to
evaluate the security posture of the organization. The penetration
test scope can vary widely from physical security tests to remote
network testing based on the client’s needs.
vCisco - All organizations regardless of size need a cybersecurity
leader to drive the cybersecurity strategy and reduce risk for the
company. With Tego Cyber, your organization will work with a highly
experienced virtual Chief Information Security Officer
("CISO"), not a cybersecurity analyst or cybersecurity
manager.
DarkWeb Monitoring - Keeping an eye on compromised credentials is
key in protecting an organization from credentialed cyber-attacks.
Studies have found that people are notoriously bad at reusing
passwords across accounts and when a employee’s personal
password is compromised, it can lead to a compromise of the
organization's security if the employee
has recycled the password.
Cybersecurity Policy Creation & Review - Creating
organizational policies on data security, data retention, and data
destruction are important for companies that request sensitive
information from customers. Additionally, organizations should
create policies to govern employee usage of technology, email
systems, and in some cases, social media.
Tabletop Exercises - Does your organization and employees know what
to do if a cyber-attack occurs? A table-top exercise will take the
company and key employees through the process so should an attack
happen, the organization is prepared to react and begin taking
appropriate steps towards recovery.
The following product is currently under
development:
Tego Threat Intelligence Platform
The Tego Threat Intelligence
Platform blocks bad traffic
before it reaches your network. The Tego Threat Intelligence
Platform pulls in raw cyber threat intelligence from highly trusted
sources including FBI Infragard, U.S. Department of Homeland
Security, Abuse.CH, and SpamHAUS. Using a proprietary process the
platform compiles, analyzes, and then delivers that data to an
enterprise network in a format that is timely, informative,
relevant, and compatible. Other platforms currently in the
marketplace only identify potential threats, they do not provide
specific details needed to counteract the threat such as the source
and type of threat. The Tego Threat Intelligence Platform takes the
process one step further by providing this additional critical
information allowing network managers to proactively address any
potential vulnerabilities saving time and money. The first version
of the platform to be released will integrate with the widely
accepted SPLUNK® platform
to provide real-time threat
intelligence to macro enterprises using SPLUNK® architecture. Planned future developments
include developing the Tego Threat Intelligence Platform for
compatibility with other SIEM systems and
platforms.
31
We
believe the Tego Threat
Intelligence Platform will advance the practice of cyber
security while becoming a critical component of a modern security
infrastructure. The platform has many digital risk protection
applications from ingestion by SIEM (Security Information and Event
Management) software applications to integration with hardware
devices. It ingests raw threat intelligence data from multiple open
feed sources for processing within where it compiles, de-risks and
reformats, then delivers in context and real-time, the threat
intelligence data to the client's software or hardware devices.
The first product to be released is an
application that will integrate with the SPLUNK SIEM to provide
real-time threat intelligence updates to assist companies with
identifying, understanding, and resolving malicious data traffic
and activities within their network. A simple diagram of how the
SPLUNK app will work follows.
Pricing
Services.
The majority of our services will be offered on flat monthly fee
basis or limited engagement period as necessary to
complete the scope of work Vulnerability Assessments,
Penetration Testing, Tabletop Exercisesand Cybersecurity Policy
Creation & Review engagements typically will last 2 to 3 weeks
per engagement and may further depend on the scope of the testing
required. vCiso engagements will last 6 months on average and will
be offered at a flat monthly fee. We will offer DarkWeb
Monitoring as an accessible service to all clients at a low monthly
fee
32
Products
We
license our platform through a recurring fee
arrangement where revenue is recognized on an annual basis
following deployment to the customer. We also derive revenue from
maintenance and support services on the licensed products. We
recognize this revenue on a monthly basis as maintenance and
support services are provided to customers. Purchasers of the
Tego Threat Intelligence
Platform will be invoiced at $75,000 per annum per
installation.
Our revenue to date has been from one general cyber security
contract which existed prior to the creation of Tego and belonged
to our CEO on an individual basis which was then transferred into
the Company upon incorporation.
Competition
We
compete with an array of established and emerging security software
and services vendors. As organizations increasingly embrace cloud
platforms, IoT and other new networking technologies, they are
becoming increasingly exposed to ever evolving cybercrimes. The
introduction of new technologies and market entrants will continue
to fuel an intense competitive environment as companies seek
solutions to cybersecurity breaches.
Our
competitors include vulnerability management and external
assessment vendors, diversified security software and services
vendors, and providers of threat intelligence platforms that
compete with some of the features present in our solution such as
Anomali, Recorded Future and Threat Quotient.
We
compete based on several factors, including product functionality;
scope of offerings; performance; brand, reputation, and customer
satisfaction; ease of implementation, use and service; price,
scalability, reliability, and security.
We
believe that we will compete favorably with respect to these
factors and are well positioned as an emerging provider of digital
risk protection, data analysis, and professional
services.
Strategic Partners and Suppliers
Our
channel partners will provide us with additional leverage by
assisting in closing customer transactions as part of larger
security purchases, sourcing new prospects and securing maintenance
renewals. Our first product
integration is with Splunk Inc., a leader in Gartner’s
2020 Magic Quadrant (MQ) for Security Information and Event
Management (SIEM). Splunk is recognized worldwide for the highest
overall ability to execute. Thousands of organizations use Splunk
as their SIEM for security monitoring, advanced threat detection,
incident investigation and forensics, incident response, SOC
automation and a wide range of security analytics and operations
use cases.
The Tego Threat
Intelligence Platform is an application that will be deployed and
hosted initially in Splunk’s SplunkBase. Essentially, SplunkBase is an app store for Splunk
users. You develop your app, submit it for approval and then post
it up to SplunkBase so that Splunk users can download and utilize
the app. https://splunkbase.splunk.com/apps/ Splunk
does not require developers to apply or have an agreement with
Splunk to develop for its platform. Information on Splunk’s
developer program can be found at
https://dev.splunk.com/enterprise/docs/welcome/
Operations
We will
continue to develop the Tego
Threat Intelligence Platform, including through the
introduction of an SOC (Security Operations Center). We expect
continued growth in the number of cloud and SaaS operations
experts, to further our goal of delivering the best experience for
our SaaS and TEGO Threat
Intelligence Platform customers. Accordingly, personnel
related costs within our SaaS development, threat intelligence
platform, sales, and operations teams, will increase in line with
our projected ARR and service revenue model.
Sales and Marketing
We
leverage the uniqueness of our solution to create brand preference
and build a strong sales pipeline while cultivating customer
relationships to help drive revenue growth efficiently and
effectively. Our go-to-market strategy targets those companies that
are found on the Gartner Magic Quadrant and Forrester reports as
these have the largest market share. Initially we will focus on
integration within the SIEM market as this is where the data for
all devices (hardware and software) resides for the enterprise
customer.
Sales
We will
sell our products and services through a direct inside sales team,
a direct field sales team and indirect channel partner
relationships. Teams will be designed to efficiently sell to
organizations of all sizes and will initially focus on new customer
acquisitions. As we expand, they will pursue, up-selling and
cross-selling opportunities of new offerings to existing
customers.
Teams
will be organized by geography as well as by target organization
size. The inside and field sales teams will focus on small and
middle-market transactions, while larger or more complex
transactions will be handled by highly trained sales consulting
engineers to help define customer use cases, manage solution
evaluations, and train channel partners.
33
Our
sales force will work directly with, and be involved in sales to,
substantially all of the end customers of our channel partners and
we may sometimes engage a channel partner solely to assist with
finalizing a purchase if for example the customer is working on
broader software initiative with that channel partner. As growth
allows, we intend to invest in a dedicated sales team focused on
U.S. federal, state, and local government entities.
Marketing
We will
focus our marketing efforts on increasing the strength of the
‘TEGO’ brand, communicating product advantages and
business benefits, generating leads for our sales teams and channel
partners while driving product adoption. We will deliver targeted
content to demonstrate our threat intelligence platform and use
digital advertising methods to deliver opportunities to our sales
teams. We will engage with existing customers to provide education
and awareness to promote expanded use of our software. We will work
with our own researchers, as well as the broader security
community, to share important information about vulnerabilities and
threats through the online community, social media, and traditional
public relations.
Intellectual Property
To
protect our unpatented proprietary technologies and processes, we
rely on trade secret laws and confidentiality agreements with our
employee(s), consultants, channel partners and vendors. At present
our only intellectual property is the Tego Threat Intelligence Platform which
is currently still in development. The company will rely on
provisional patents in the near term, filing for full patent
protection, as necessary.
Subsidiaries
The
Company has no subsidiaries.
Employees
We
currently employ one full-time employee who is also the CEO, CFO,
Secretary and Treasurer of the Company and has responsibility for
all segments of our business. Additionally, we have four contracted
consultants.
Legal Proceedings
We know of no material, existing or pending legal proceedings
against our Company, nor are we involved as a plaintiff in any
material proceeding or pending litigation. There are no proceedings
in which our directors, officers or any affiliates, or any
registered or beneficial shareholder, is an adverse party or has a
material interest adverse to our interest.
Jumpstart Our Business Startups Act
In
April, 2012, the Jumpstart Our Business Startups Act ("JOBS Act")
was enacted into law. The JOBS Act provides, among other
things:
Exemptions
for emerging growth companies from certain financial disclosure and
governance requirements for up to five years and provides a new
form of financing to small companies;
Amendments
to certain provisions of the federal securities laws to simplify
the sale of securities and increase the threshold number of record
holders required to trigger the reporting requirements of the
Securities Exchange Act of 1934;
Relaxation
of the general solicitation and general advertising prohibition for
Rule 506 offerings;
Adoption
of a new exemption for public offerings of securities in amounts
not exceeding $50 million; and
Exemption
from registration by a non-reporting company of offers and sales of
securities of up to $1,000,000 that comply with rules to be adopted
by the SEC pursuant to Section 4(6) of the Securities Act and
exemption of such sales from state law registration, documentation
or offering requirements.
34
In
general, under the JOBS Act, a company is an emerging growth
company if its initial public offering ("IPO") of common equity
securities was effected after December 8, 2011 and the company had
less than $1 billion of total annual gross revenues during its last
completed fiscal year. A company will no longer qualify as an
emerging growth company after the earliest of
(i) the
completion of the fiscal year in which the company has total annual
gross revenues of $1 billion or more,
(ii)
the completion of the fiscal year of the fifth anniversary of the
company's IPO;
(iii)
the company's issuance of more than $1 billion in nonconvertible
debt in the prior three-year period, or
(iv)
the company becoming a "larger accelerated filer" as defined under
the Securities Exchange Act of 1934.
The
JOBS Act provides additional new guidelines and exemptions for
non-reporting companies and for non-public offerings. Those
exemptions that impact the Company are discussed
below.
Financial Disclosure. The financial disclosure in a
registration statement filed by an emerging growth company pursuant
to the Securities Act of 1933 will differ from registration
statements filed by other companies as follows:
(i)
audited financial statements required for only two fiscal
years;
(ii)
selected financial data required for only the fiscal years that
were audited;
(iii)
executive compensation only needs to be presented in the limited
format now required for smaller reporting companies.
(A
smaller reporting company is one with a public float of less than
$75 million as of the last day of its most recently completed
second fiscal quarter).
However,
the requirements for financial disclosure provided by Regulation
S-K promulgated by the Rules and Regulations of the SEC already
provide certain of these exemptions for smaller reporting
companies. The Company is a smaller reporting company. Currently a
smaller reporting company is not required to file as part of its
registration statement selected financial data and only needs
audited financial statements for its two most current fiscal years
and no tabular disclosure of contractual obligations.
The
JOBS Act also exempts the Company's independent registered public
accounting firm from complying with any rules adopted by the Public
Company Accounting Oversight Board ("PCAOB") after the date of the
JOBS Act's enactment, except as otherwise required by SEC
rule.
The
JOBS Act also exempts an emerging growth company from any
requirement adopted by the PCAOB for mandatory rotation of the
Company's accounting firm or for a supplemental auditor report
about the audit.
Internal Control Attestation. The JOBS Act also provides an
exemption from the requirement of the Company's independent
registered public accounting firm to file a report on the Company's
internal control over financial reporting, although management of
the Company is still required to file its report on the adequacy of
the Company's internal control over financial
reporting.
Section
102(a) of the JOBS Act exempts emerging growth companies from the
requirements in §14A(e) of the Securities Exchange Act of 1934
for companies with a class of securities registered under the 1934
Act to hold shareholder votes for executive compensation and golden
parachutes.
35
Other Items of the JOBS Act. The JOBS Act also provides that
an emerging growth company can communicate with potential investors
that are qualified institutional buyers or institutions that are
accredited to determine interest in a contemplated offering either
prior to or after the date of filing the respective registration
statement. The Act also permits research reports by a broker or
dealer about an emerging growth company regardless if such report
provides sufficient information for an investment decision. In
addition the JOBS Act precludes the SEC and FINRA from adopting
certain restrictive rules or regulations regarding brokers, dealers
and potential investors, communications with management and
distribution of a research reports on the emerging growth company
IPO.
Section
106 of the JOBS Act permits emerging growth companies to submit
1933 Act registration statements on a confidential basis provided
that the registration statement and all amendments are publicly
filed at least 21 days before the issuer conducts any road show.
This is intended to allow the emerging growth company to explore
the IPO option without disclosing to the market the fact that it is
seeking to go public or disclosing the information contained in its
registration statement until the company is ready to conduct a
roadshow.
Election to Opt Out of Transition Period. Section 102(b)(1)
of the JOBS Act exempts emerging growth companies from being
required to comply with new or revised financial accounting
standards until private companies (that is, those that have not had
a 1933 Act registration statement declared effective or do not have
a class of securities registered under the 1934 Act) are required
to comply with the new or revised financial accounting
standard.
The
JOBS Act provides a company can elect to opt out of the extended
transition period and comply with the requirements that apply to
non-emerging growth companies but any such an election to opt out
is irrevocable. The Company has elected not to opt out of the
transition period.
LEGAL PROCEEDINGS
We know of no material, existing or pending legal proceedings
against our Company, nor are we involved as a plaintiff in any
material proceeding or pending litigation. There are no proceedings
in which our directors, officers or any affiliates, or any
registered or beneficial shareholder, is an adverse party or has a
material interest adverse to our interest.
MANAGEMENT’S DISCUSSION AND ANALYSIS
The following discussion of our financial condition and results of
operations should be read in conjunction with the financial
statements and related notes to the financial statements included
elsewhere in this Registration Statement. Some of the
statements under “Management’s Discussion and
Analysis,” “Description of Business” and
elsewhere herein may include forward-looking statements which
reflect our current views with respect to future events and
financial performance. These statements include forward-looking
statements both with respect to us specifically and the renewable
energy industry in general. Statements which include the words
“expect,” “intend,” “plan,”
“believe,” “project,”
“anticipate,” “will,” and similar
statements of a future or forward-looking nature identify
forward-looking statements for purposes of the federal securities
laws or otherwise. The safe harbor provisions of the federal
securities laws do not apply to any forward-looking statements
contained in this Registration Statement. All forward-looking
statements address such matters that involve risks and
uncertainties. Accordingly, there are or will be important factors
that could cause our actual results to differ materially from those
indicated in these statements. We undertake no obligation to
publicly update or review any forward-looking statements, whether
as a result of new information, future developments or otherwise.
If one or more of these or other risks or uncertainties
materialize, or if our underlying assumptions prove to be
incorrect, actual results may vary materially from what we
projected. Any forward-looking statements you read herein reflect
our current views with respect to future events and are subject to
these and other risks, uncertainties and assumptions relating to
our written and oral forward-looking statements attributable to us
or individuals acting on our behalf and such statements are
expressly qualified in their entirety by this
paragraph.
The
Company is an early-stage company and was incorporated in the State
of Nevada in 2019. During the fiscal year ended June 30, 2020, the
Company generated revenues of $2,325 and incurred operating losses
of $77,202 as part of its operating activities.
We
believe that our current cash and cash equivalents, anticipated
cash flow from operations and the proceeds from the sale of the
maximum amount of shares being offered hereunder will only be
sufficient to meet our anticipated cash needs for the next 18-24
months. Our management has determined that the maximum amount of
funds received from this offering would be sufficient to cover our
intended plan of operations contemplated hereby.
36
Results of Operations
From September 6, 2019 (inception) to Year Ended June 30,
2020
Revenues
We are in our development stage and only generated $2,325 of
revenue from September 6, 2019 (inception) to year ended June 30,
2020.
Operating Expenses
We incurred total operating expenses of $79,527 from September 6,
2019 (inception) to year ended June 30, 2020. All of these expenses
related to general and administrative expenses, which included
professional fees of $26,429 relating to legal and accounting costs
incurred as part of the incorporation process of the Company. There
is no historical financial data for the Company.
Net Loss
We incurred a net loss of $77,202 from September 6, 2019 (date of
inception) to year ended June 30, 2020.
Liquidity and
Capital Resources
As at June 30, 2020, the Company has a working capital surplus of
$65,110, a net loss of $77,202 and has earned limited revenue to
cover its operating costs. We have $81,872 cash on hand and our
burn rate is approximately $15,000 per month. Presently, our
operations are being funded by funds previously raised and we
believe our currently available capital resources are sufficient to
sustain our operations for a minimum of three (3) months.
The Company intends to fund future operations through equity
financing arrangements. The ability of the Company to realize its
business plan is dependent upon, among other things, obtaining
additional financing to continue operations, and development of its
business plan. In response to these problems, management intends to
raise additional funds through public or private placement
offerings. These factors, among others, raise substantial doubt
about the Company’s ability to continue as a going concern.
The accompanying financial statements do not include any
adjustments that might result from the outcome of this
uncertainty.
We believe we will require a minimum of $240,000
to proceed with our business plan and remain in operation
for at least the next 12 months, see Cash Requirements page
41. As the platform comes online and
starts to generate revenue, we will be hiring additional staff
which will increase our monthly capital requirements, however, we
believe the revenue generated from our operations should cover any
additional expenditures. Beginning the week of October 19, 2020 our
plan of operations for the remainder of the fiscal year (June
30th)
is as follows:
Week 1: Complete development of the Tego Threat Intelligence
Platform for Splunk integration; prepare the Splunk platform for
beta testing.
Week 2: Commence beta testing of the Splunk
integration.
Week 3: Continue beta testing of the Splunk
integration.
Week 4: Finish beta testing of the Splunk
integration.
Week 5: Bug fixes on Splunk integration based on beta
feedback.
Week 6: Continue bug fixes on Splunk
integration.
Week 7: Complete bug fixes on Splunk integration and submit
application for hosting on SplunkBase.
Week 8: Christmas Break.
Week 9: Retain and onboard cybersecurity engineer #1; launch Splunk
integration on SplunkBase; begin documentation of technical
requirements for integration of platform for
ElasticSIEM.
Week 10: Commence marketing of Splunk platform; hire marketing
team; commence develop marketing plan and marketing
material.
Week 11: Continue developing marketing plan; onboard marketing
team; commence product training; begin development of integration
with ElasticSIEM.
Week 12: Continue developing marketing plan; complete onboard
marketing team; complete product training.
Week 13: Launch Splunkbase
integration.
Week 14: Continue onboarding sales team, continue
training,
Week 15: Begin beta testing for ElasticSIEM
integration.
Week 16: Continue beta testing of ElasticSIEM platform; retain and
onboard Cybersecurity Engineer #2.
Week 17: Complete beta testing of ElasticSIEM
integration.
Week 18: Bug fixes of ElasticSIEM integration; Onboard
additional development team.
Week 19: Continue bug fixes of ElasticSIEM platform onboard
additional sales team for ElasticSIEM
integration.
Week 20: Complete bug fixes of ElasticSIEM
integration.
Week 21: Launch ElasticSIEM integration; retain and onboard
Cybersecurity Engineer #3.
Week 22: Commence technical documentation for IBM QRadar
SIEM.
Week 23: Commence development of IBM QRadar
integration.
Week
26: Spring Break/Easter Holiday (Anticipated).
Week
24: Complete development of IBM QRadar
integration.
Week
25: Commence beta testing of IBM QRadar
integration.
Week
27: Continue beta testing IBM QRadar integration; retain and
onboard Cybersecurity Engineer #4
Week
28: Complete beta testing of IBM QRadar
integration.
Week
29: Begin bug fixes for IBM QRadar integration; onboard additional
sales team.
Week
30: Continue bug fixes for IBM QRadar.
Week
31: Complete bug fixes for IBM QRadar
integration.
Week
32: Complete bug fix development for IBM QRadard integration,
retain and onboard Cybersecurity Engineer #5
Week
33: Launch IBM QRadar integration.
Week
34: Commence technical documentation of AlienValut
SIEM.
Week
35: Begin development of AlientVault SIEM
integration.
Week
36: Continue development of AlientVault SIEM
Cash Flow from Operating Activities
From September 6, 2019 (inception) to year ended June 30,
2020, the cash flows used in the Company’s operating
activities was $62,615. The use of cash flows for operating
activities between these periods is not significant for the
purposes of comparison.
Cash Flow from Investing Activities
From September 6, 2019 (inception) to year ended June 30,
2020, the net cash used in investing activities by the
Company was $18,250.
Cash Flow from Financing Activities
From September 6, 2019 (inception) to year ended June 30,
2020, the net cash provided by financing activities by the
Company was $145,812. The cash provided by financing activities is
related to increases in proceeds received from sales of our common
stock.
Going Concern
We have
not attained profitable operations and are dependent upon obtaining
financing to pursue any extensive activities. For these reasons,
our auditors stated in their report on our audited financial
statements that they have substantial doubt that we will be able to
continue as a going concern without further financing.
37
Contractual Obligations
We are
a smaller reporting company as defined by Rule 12b-2 of the
Securities Exchange Act of 1934 and are not required to provide the
information under this item.
Future
Financings
We will
continue to rely on equity sales of our common shares and debt
proceeds in order to continue to fund our business operations.
Issuances of additional shares will result in dilution to existing
stockholders. There is no assurance that we will achieve any
additional sales of the equity securities or arrange for debt or
other financing to fund our operations and other
activities.
Expected Purchase or Sale of Significant Equipment
We do
not anticipate the purchase or sale of any significant equipment,
as such items are not required by us at this time or in the next
twelve months.
Off-Balance Sheet Arrangements
We have
no significant off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our
financial condition, changes in financial condition, revenues or
expenses, results of operations, liquidity, capital expenditures or
capital resources that are material to stockholders.
Disagreements with Accountants on Accounting and Financial
Disclosure
Other
than the disclosure of uncertainty regarding the ability for us to
continue as a going concern which was included in our
accountant’s report on the financial statements for the
period from September 6, 2019
(inception) to year ended June 30, 2020; Buckley
Dodds’s report on the financial statements of the Company for
the years ended June 30, 2020 did not contain an adverse opinion or
a disclaimer of opinion, nor were they qualified or modified as to
uncertainty, audit scope, or accounting principles.
In
connection with the audit and review of the financial statements of
the Company from September 6, 2019
(inception) to year ended June 30, 2020, there were no
disagreements on any matter of accounting principles or practices,
financial statement disclosures, or auditing scope or procedures,
which disagreements if not resolved to their satisfaction would
have caused them to make reference in connection with Buckley
Dodds’s opinion to the subject matter of the
disagreement.
In
connection with the audited financial statements of the Company
from September 6, 2019 (inception) to
year ended June 30, 2020, there have been no reportable
events with the Company as set forth in Item 304(a)(1)(v) of
Regulation S-K.
The
Company provided a copy of the foregoing disclosures to Buckley
Dodds prior to the date of filing of this Registration Statement on
Form S-1, and requested that Buckley Dodds furnish it with a letter
addressed to the Securities & Exchange Commission stating
whether or not it agreed with the statements in this Registration
Statement on Form S-1. A copy of the letter furnished in response
to that request is filed herewith.
Critical Accounting Policies
This
summary of significant accounting policies is presented to assist
in understanding the financial statements. The financial statements
and notes are representations of the Company’s management,
who are responsible for their integrity and objectivity. These
accounting policies conform to US GAAP and have been consistently
applied in the preparation of the financial
statements.
38
Basis of Preparation
The
accompanying financial statements have been prepared to present the
statements of financial position, the statements of operations and
comprehensive loss, statements of changes in shareholders’
deficit and cash flows of the Company for the period ended June 30,
2020, and have been prepared in accordance with US
GAAP.
Use of Estimates
In
preparing financial statements in conformity with US GAAP,
management makes estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent
assets and liabilities at the dates of the financial statements, as
well as the reported amounts of revenues and expenses during the
reporting periods. Management makes these estimates using the best
information available at the time the estimates are made. However,
actual results could differ materially from those
estimates.
Concentrations of Credit Risk
Financial
instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of cash and
accounts receivable. During the period ended June 30, 2020,
substantially all of the Company’s cash was held by major
financial institutions located in the United States, which
management believes are of high credit quality. With respect to
accounts receivable, the Company extended credit based on an
evaluation of the customer’s financial condition. The Company
generally did not require collateral for accounts receivable and
maintained an allowance for doubtful accounts of accounts
receivable if necessary.
Cash
Cash
consists of cash held at major financial institutions and is
subject to insignificant risk of changes in value.
Receivables and Allowance for Doubtful Accounts
Trade
accounts receivable are recorded at net realizable value and do not
bear interest. No allowance for doubtful accounts was made during
the period ended June 30, 2020, based on management’s best
estimate of the amount of probable credit losses in accounts
receivable. The Company evaluates its allowance for doubtful
accounts based upon knowledge of its customers and their compliance
with credit terms. The evaluation process includes a review of
customers’ accounts on a regular basis. The review process
evaluates all account balances with amounts outstanding for more
than 60 days and other specific amounts for which information
obtained indicates that the balance may be uncollectible. As of
June 30, 2020, there was no allowance for doubtful accounts and the
Company does not have any off-balance-sheet credit exposure related
to its customers.
Fair Value of Financial Instruments
Accounting
Standards Codification (“ASC”) 820 “Fair Value
Measurements and Disclosures”, adopted January 1, 2008,
defines fair value, establishes a three-level valuation hierarchy
for disclosures of fair value measurement and enhances disclosure
requirements for fair value measures. The Company’s financial
instruments include cash, current receivables and payables. These
financial instruments are measured at their respective fair values.
The three levels are defined as follows:
Level 1
- inputs to the valuation methodology are quoted prices for
identical assets or liabilities in active markets.
Level 2
- inputs to the valuation methodology include quoted prices for
similar assets and liabilities in active markets, and inputs that
are observable for the assets or liability, either directly or
indirectly, for substantially the full term of the financial
instruments.
Level 3
- inputs to the valuation methodology are unobservable and
significant to the fair value.
For
cash, accounts receivables, subscription receivables, and accounts
payable and accrued liabilities, it is management’s opinion
that the carrying values are a reasonable estimate of fair value
because of the short period of time between the origination of such
instruments and their expected realization and if applicable, their
stated interest rate approximates current rates
available.
Management
believes it is not practical to estimate the fair value of related
party receivables and payables because the transactions cannot be
assumed to have been consummated at arm’s length, the terms
are not deemed to be market terms, there are no quoted values
available for these instruments, and an independent valuation would
not be practical due to the lack of data regarding similar
instruments, if any, and the associated potential
costs.
39
Revenue Recognition
Accounting
Standards Update (“ASU”) No. 2014-09, Revenue from
Contracts with Customers (“Topic 606”), was
adopted by the Company as of September 6, 2019. The
Company’s revenue recognition disclosure reflects its updated
accounting policies that are affected by this new standard. The
Company applied the “modified retrospective” transition
method for open contracts for the implementation of Topic 606. As
revenues are and have been primarily from consulting and management
services, and the Company has no significant post-delivery
obligations, this new standard did not result in a material
recognition of revenue on the Company’s accompanying
financial statements for the cumulative impact of applying this new
standard. The Company made no adjustments to its previously
reported total revenues, as those periods continue to be presented
in accordance with its historical accounting practices under Topic
605, Revenue
Recognition.
Revenue
from providing consulting and management services under Topic 606
is recognized in a manner that reasonably reflects the delivery of
services to customers in return for expected consideration and
includes the following elements:
●
executed contracts
with the Company’s customers that it believes are legally
enforceable;
●
identification of
performance obligations in the respective contract;
●
determination of
the transaction price for each performance obligation in the
respective contract;
●
allocation of the
transaction price to each performance obligation; and
●
recognition of
revenue only when the Company satisfies each performance
obligation.
These
five elements as applied to the Company’s consulting and
management services results in revenue recorded as services are
provided.
Income Taxes
The
Company uses the asset and liability method of accounting for
income taxes pursuant to ASC 740 “Income Taxes”. ASC
740 requires an asset and liability approach for financial
accounting and reporting for income taxes and allows recognition
and measurement of deferred tax assets based upon the likelihood of
realization of tax benefits in future years. Under the asset and
liability approach, deferred taxes are provided for the net tax
effects of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the
amounts used for income tax purposes. Valuation allowances are
provided for deferred tax assets if it is more likely than not
these items will either expire before the Company is able to
realize their benefits, or that future deductibility is uncertain.
The provision for income taxes represents current taxes payable net
of the change during the period in deferred tax assets and
liabilities.
Foreign Currency Translation
The
Company’s functional and reporting currency is United States
dollars (“USD”). The Company maintains its financial
statements in the functional currency. Monetary assets and
liabilities denominated in currencies other than the functional
currency are translated into the functional currency at rates of
exchange prevailing at the balance sheet dates. Transactions
denominated in currencies other than the functional currency are
translated into the functional currency at the exchange rates
prevailing at the dates of the transaction. Exchange gains or
losses arising from foreign currency transactions are included in
the determination of net income (loss) for the respective
periods.
Earnings per Share
Basic
earnings per share are computed by dividing income available to
common shareholders by the weighted-average number of common shares
outstanding during the period. Diluted earnings per share is
computed similar to basic earnings per share except that the
denominator is increased to include the number of additional common
shares that would have been outstanding if the potential common
shares had been issued and if the additional common shares were
dilutive. If applicable, diluted earnings per share assume the
conversion, exercise or issuance of all common stock instruments
unless the effect is to reduce a loss or increase earnings per
share. The Company had no dilutive securities for the period ended
June 30, 2020.
40
Recently Issued Accounting Pronouncements
In June
2018, the Financial Accounting Standards Board (the
“FASB”) issued ASU 2018-07, “Compensation –
Stock Compensation (Topic 718): Improvements to Nonemployee
Share-Based Payment Accounting”, to include share-based
payment transactions for acquiring goods and services from
nonemployees. ASU 2018-07 simplifies the accounting for nonemployee
share-based payments, aligning it more closely with the accounting
for employee awards. These changes become effective for the
Company’s fiscal year beginning July 1, 2020. Early
application is permitted. At this time, the Company does not expect
this standard to affect the Company’s financial position,
results of operations or cash flows and disclosures.
Other
recent accounting pronouncements issued by the FASB (including its
Emerging Issues Task Force) did not or are not expected to have a
material impact on the Company's present or future financial
statements.
Cash Requirements
We anticipate that our current cash and cash equivalents,
anticipated cash flow from operations and the proceeds from the
sale of the maximum amount of shares being offered hereunder will
be sufficient to meet our anticipated cash needs for the next 48
months. If we are able to sell only 75%, 50% or 25% of our offered
shares, we anticipate that we will only be able to meet our
anticipated cash needs for the next 36 months, 24 months or 12
months, respectively. There is no minimum number of shares that
must be sold and there is no guarantee that the Company will raise
any funds from the offering.
We estimate that our maximum and minimum amount of expenses over
the next 12 months will be approximately $2,500,000 and
$240,000 respectively as described in the table below.
These estimates may change significantly depending on the nature of
our future business activities and our ability to raise additional
capital from shareholders or other sources. Some of these estimates
will be paid for out of the proceeds of this offering, assuming we
are successful in raising any such proceeds.
|
Description
|
Target
completion
date or period
|
Estimated
maximum
expenses
|
Estimated
minimum
expenses
|
|
General,
administrative and marketing
|
12
months
|
$100,000
|
$30,000
|
|
Working
capital
|
12
months
|
$1,000,000
|
$90,000
|
|
Project
development capital
|
12
months
|
$1,150,000
|
$60,000
|
|
General
legal, accounting and consultants
|
12
months
|
$250,000
|
$60,000
|
|
TOTAL
|
12 months
|
$2,500,000
|
$240,000
|
The
foregoing chart sets forth estimates of the Company’s total
maximum and minimum operational expenses for the initial 12-month
period following effectiveness of this offering. The minimum
expenses represent basic G&A expenses associated with minimal
rents and office expenses, working capital for professional fees
associated with project development expenses and general legal,
accounting and consultant expenses. The amounts are not limited to
proceeds received under this offering, if any, and therefore in
order to reach our targets, we will need additional funds in the
form of financing or revenues.
41
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS
Identification of Directors and Executive Officers
The following table sets forth the names and ages of our current
directors and executive officers:
|
Name and Age
|
|
Position(s) Held
|
|
Date of Appointment
|
|
Other Public Company Directorships
|
|
Shannon
Wilkinson, 43
|
|
Director
Chief
Executive Officer
Chief
Financial Officer
Secretary
Treasurer
|
|
September 6, 2019
|
|
None
|
|
Troy
Wilkinson, 44
|
|
Director
President
|
|
September 6, 2019
|
|
None
|
|
Michael
De Valera, 55
|
|
Director
|
|
September 6, 2019
|
|
None
|
Term of Office
Should a vacancy exist, the Company’s Board of Directors has
the power to nominate and appoint a director or directors to fill
such vacancy, and each shall hold office until the next annual
meeting of stockholders and until his/her successor shall have been
duly elected and qualified.
Background and Business Experience
Shannon Wilkinson – Director, Chief Executive Officer,
Chief Financial Officer, Secretary and Treasurer
Shannon Wilkinson
is a graduate from the University of Nevada, Las Vegas with a
Bachelor's in Management Information Systems. She also earned her
Master’s in Information Systems Management from the
University of Phoenix. Shannon spent the first 12 years of her
career overseas working for the United Nations Department of
Peacekeeping Operations building mission critical software
platforms. Upon her return to the US in February 2013, Shannon
joined SocialWellth as Director of Software Development leading
development teams in building software platforms for some of the
largest healthcare organizations. She remained in that position
until summer of 2015 when she left to co-found Axiom Cyber
Solutions where she was responsible for the software development
arm of the company, developing Axiom’s cloud based
Polymorphic Cyber Defense Platform. She exited Axiom Cyber
Solutions in June 2019 when Axiom was acquired by a private equity
firm. In September 2019, Shannon co-founded Tego Cyber Inc. with a
mission to develop an innovative threat intelligence platform and
continue developing automated cybersecurity solutions to help
companies respond to the ever-changing cyber threat landscape.
Shannon works full time (30+ hours per week) in her capacity as
Director, CEO, CFO, Secretary and Treasurer of Tego Cyber
Inc.
Shannon was
selected as the 2018 Las Vegas Women in Technology - Cybersecurity,
2017 Las Vegas Women in Technology Entrepreneur as well as appeared
in the MyVEGAS Magazine Top 100 Women of Las Vegas in 2017 and
2018.
Troy Wilkinson – Director and President
Troy Wilkinson
began his career in January 2000 as a Law Enforcement officer with
the Conway Police Department where he remained until June 2007 when
he joined a Joint Terrorism Task Force as a lead bomb investigator
and violent crime homicide detective. In December 2008 Troy was
recruited by the U.S. State Department to train police officers in
Kosovo on cybercrime related matters where he earned a reputation
as a top cybercrime investigator. Together with a team of
international investigators he built the first IT forensics lab in
the European Union Mission in Kosovo. After returning home to the
U.S. in February 2013, Troy joined SocialWellth as its
Infrastructure Security Director. He remained in that position
until June 2014 when he accepted the position of Director of
Information Technology for Litigation Services, LLC. In the summer
of 2015, he co-founded Axiom Cyber Solutions with his wife Shannon
Wilkinson and left in December of 2018 to accept the position of
Executive Director of Information Security (CISO) with
International Cruise and Excursion where he remained until August
2019. In addition to his role as Director and President of Tego
Cyber Inc., Troy currently is the Global Head of Cybersecurity
Operations for Interpublic Group of Companies (IPG) where he is
responsible for all aspects of cyber defense for over 60,000 users
in more than 130 countries. Troy spends 8-10 hours per week working
with Tego in his capacity as Director and
President.
Troy is a worldwide
keynote speaker on cybersecurity, co-authored an Amazon Best
Seller, and is featured on several news sources as a cybersecurity
expert. Troy has contributed to numerous national syndicated
publications on cybersecurity topics including ransomware, DDoS,
cyber-crime trends, and cyber security careers.
42
Michael De Valera – Director
Michael De Valera
has over thirty years of experience providing information
technology services. In 1989 he co-founded Internet Computers, Inc.
where he remained as one of the founding principles until January
2006 when he left to start his own company TechnoMedia Consulting,
Inc. where he remains the sole principal to this day. TechnoMedia
Consulting, Inc. provides information technology services for
companies and organizations that are either too small to have their
own dedicated IT departments or simply realize that specialized
functionality is more efficiently and economically provided by a
third party. His clients cover a broad range of organizations and
industries. His undergraduate BA Finance studies, majoring in
Finance and Economics, were at the University of Pennsylvania
Wharton School of Finance. Michael currently dedicates up to 5
hours a week to Tego Cyber Inc. and will allocate more time when
first product is launched. Michael has
traveled extensively around the world and his personal interests
include wine and cooking.
Term of Office
Each
director serves for a term of one year and until his successor is
elected at the Annual Shareholders’ Meeting and is qualified,
subject to removal by the shareholders. Each
officer serves for a term of one year and until his successor is
elected at a meeting of the Board of Directors and is qualified.
Each member of the Advisory Board serves at the discretion of the
Board of Directors.
Employees
We
have two executive officers. These individuals are not obligated to
devote any specific number of hours to our matters and intend to
devote only as much time as they deem necessary to our affairs. At
this time, our Chief Executive Officer is devoted full time to the
Company and our President devotes approximately 8-10 hours per week
to the Company. The amount of time they will devote in any time
period will vary based on the stage of the business and progress
the company is making. Accordingly, once we are beyond the
developmental phase our management will spend more time on our
affairs.
Limitation of Liability and Indemnification Matters
Insofar
as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise,
we have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy
as expressed in the Securities Act, and is, therefore,
unenforceable.
Identification of Significant Employees
We have no significant employees other than the aforementioned
Officers and Directors.
Family Relationship
Shannon and Troy Wilkinson are husband and wife. Other than the
foregoing, we currently do not have any officers or directors of
our Company who are related to each other.
Involvement in Certain Legal Proceedings
During the past ten years no director, executive officer, promoter
or control person of the Company has been involved in the
following:
(1)
A petition under the Federal bankruptcy laws or any state
insolvency law which was filed by or against, or a receiver, fiscal
agent or similar officer was appointed by a court for the business
or property of such person, or any partnership in which he was a
general partner at or within two years before the time of such
filing, or any corporation or business association of which he was
an executive officer at or within two years before the time of such
filing;
(2)
Such person was convicted in a criminal proceeding or is a named
subject of a pending criminal proceeding (excluding traffic
violations and other minor offenses);
(3)
Such person was the subject of any order, judgment, or decree, not
subsequently reversed, suspended or vacated, of any court of
competent jurisdiction, permanently or temporarily enjoining him
from, or otherwise limiting, the following activities:
|
|
i.
|
Acting as a futures commission merchant, introducing broker,
commodity trading advisor, commodity pool operator, floor broker,
leverage transaction merchant, any other person regulated by the
Commodity Futures Trading Commission, or an associated person of
any of the foregoing, or as an investment adviser, underwriter,
broker or dealer in securities, or as an affiliated person,
director or employee of any investment company, bank, savings and
loan association or insurance company, or engaging in or continuing
any conduct or practice in connection with such
activity;
|
|
|
|
|
|
|
ii.
|
Engaging in any type of business practice; or
|
|
|
|
|
|
|
iii.
|
Engaging in any activity in connection with the purchase or sale of
any security or commodity or in connection with any violation of
Federal or State securities laws or Federal commodities
laws;
|
43
(4)
Such person was the subject of any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any Federal or
State authority barring, suspending or otherwise limiting for more
than 60 days the right of such person to engage in any activity
described in paragraph (f)(3)(i) of this section, or to be
associated with persons engaged in any such activity;
|
|
(5)
Such person was found by a court of competent jurisdiction in a
civil action or by the Commission to have violated any Federal or
State securities law, and the judgment in such civil action or
finding by the Commission has not been subsequently reversed,
suspended, or vacated;
(6)
Such person was found by a court of competent jurisdiction in a
civil action or by the Commodity Futures Trading Commission to have
violated any Federal commodities law, and the judgment in such
civil action or finding by the Commodity Futures Trading Commission
has not been subsequently reversed, suspended or
vacated;
(7)
Such person was the subject of, or a party to, any Federal or State
judicial or administrative order, judgment, decree, or finding, not
subsequently reversed, suspended or vacated, relating to an alleged
violation of:
|
|
i.
|
Any Federal or State securities or commodities law or regulation;
or
|
|
|
|
|
|
|
ii.
|
Any
law or regulation respecting financial institutions or insurance
companies including, but not limited to, a temporary or permanent
injunction, order of disgorgement or restitution, civil money
penalty or temporary or permanent cease-and-desist order, or
removal or prohibition order; or
|
|
|
|
|
|
|
iii.
|
Any law or regulation prohibiting mail or wire fraud or fraud in
connection with any business entity; or
|
(8)
Such person was the subject of, or a party to, any sanction or
order, not subsequently reversed, suspended or vacated, of any
self-regulatory organization (as defined in Section 3(a)(26) of the
Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as
defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C.
1(a)(29))), or any equivalent exchange, association, entity or
organization that has disciplinary authority over its members or
persons associated with a member.
Independence of
Directors
The
Board of Directors is currently composed of three members. Ms.
Shannon Wilkinson, Mr. Troy Wilkinson and Mr. Michael De Valera.
Ms. Wilkinson and Mr. Wilkinson do not qualify as an
independent Directors in accordance with the published listing
requirements of the NASDAQ Global Market as they both hold officer
positions. Mr. Michael De Valera does qualify as independent
directors as he is not an officer of the Company. The NASDAQ
independence definition includes a series of objective tests, such
as that the Director is not, and has not been for at least three
years, one of the Company’s employees and that neither the
Director, nor any of his family members has engaged in various
types of business dealings with us. In addition, the Board of
Directors has not made a subjective determination as to each
Director that no relationships exist which, in the opinion of the
Board of Directors, would interfere with the exercise of
independent judgment in carrying out the responsibilities of a
Director, though such subjective determination is required by the
NASDAQ rules. Had the Board of Directors made these determinations,
the Board of Directors would have reviewed and discussed
information provided by the Directors and the Company with regard
to each Director’s business and personal activities and
relationships as they may relate to the Company and its
management
44
Committees
We do not currently have an audit, compensation or nominating
committee. The Board of Directors as a whole currently acts as our
audit, compensation and nominating committees. We intend to
establish an audit, compensation and nominating committee of our
Board of Directors once we expand the Board to include one or more
independent directors and intend to adopt a charter for each
committee.
Our audit committee shall be primarily responsible for reviewing
the services performed by our independent auditors, evaluating our
accounting policies and our system of internal controls. Our
compensation committee shall assist the Board in reviewing and
approving the compensation structure, including all forms of
compensation, relating to our directors and executive officers and
periodically reviewing and approving any long-term incentive
compensation or equity plans, programs or similar arrangements. Our
nominating committee shall assist the Board in selecting
individuals qualified to become our directors and in determining
the composition of the Board and its committees.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires our
directors and executive officers and persons who beneficially own
more than ten percent of a registered class of our equity
securities to file with the SEC initial reports of ownership and
reports of change in ownership of our common stock and other equity
securities. Officers, directors and greater than ten percent
stockholders are required by SEC regulations to furnish us with
copies of all Section 16(a) forms they file. Since inception, we
have not had a class of equity securities registered under the
Securities Exchange Act of 1934, as amended. Hence, compliance with
Section 16(a) thereof by our officers and directors was not
required.
Risk Oversight
Effective risk oversight is an important priority of the Board of
Directors. Because risks are considered in virtually every business
decision, the Board of Directors discusses risk throughout the year
generally or in connection with specific proposed actions. The
Board of Directors’ approach to risk oversight includes
understanding the critical risks in the Company’s business
and strategy, evaluating the Company’s risk management
processes, allocating responsibilities for risk oversight among the
full Board of Directors, and fostering an appropriate culture of
integrity and compliance with legal responsibilities.
Corporate Governance
The Company promotes accountability for adherence to honest and
ethical conduct; endeavors to provide full, fair, accurate, timely
and understandable disclosure in reports and documents that the
Company files with the SEC and in other public communications made
by the Company; and strives to be compliant with applicable
governmental laws, rules and regulations. The Company has not
formally adopted a written code of business conduct and ethics that
governs the Company’s employees, officers and Directors as
the Company is not required to do so.
In lieu of an Audit Committee, the Company’s Board of
Directors is responsible for reviewing and making recommendations
concerning the selection of outside auditors, reviewing the scope,
results and effectiveness of the annual audit of the Company's
financial statements and other services provided by the
Company’s independent public accountants. The Board of
Directors reviews the Company's internal accounting controls,
practices and policies.
Code of Ethics
Our
Board of Directors has not adopted a code of ethics. We anticipate
that we will adopt a code of ethics when we increase either the
number of our Directors or the number of our
employees.
|
|
EXECUTIVE COMPENSATION
|
Name and Principal Position
|
Fiscal Year
Ended 6/30
|
Salary
($)
|
Bonus
($)
|
Stock Awards
($)
|
Option Awards
($)
|
Non-Equity Incentive Plan Compensation
($)
|
Nonqualified Deferred Compensation Earnings
($)
|
All Other Compensation
($)
|
Total
($)
|
|
Shannon Wilkinson(1)(2)
|
2020
|
$29,700
|
-0-
|
$3,000
|
-0-
|
-0-
|
-0-
|
-0-
|
$32,700
|
|
CEO,
CFO, Secretary, Treasurer, and Director
|
|
|
|
|
|
|
|
|
|
|
Troy Wilkinson(2)
|
2020
|
-0-
|
-0-
|
$3,000
|
-0-
|
-0-
|
-0-
|
-0-
|
$3,000
|
|
President
and Director
|
|
|
|
|
|
|
|
|
|
|
Michael De Valera(2)
|
2020
|
-0-
|
-0-
|
$1,000
|
-0-
|
-0-
|
-0-
|
-0-
|
$1,000
|
|
Director
|
|
|
|
|
|
|
|
|
|
(1) Shannon
Wilkinson receives a salary of $5,000 per month; there is no formal
employment contract in place for her
employment.
(2) Each of
Shannon Wilkinson, Troy Wilkinson and
Michael De Valera received a stock award of founders shares at
inception for their contributions to the conceptual plans of the
Company. There are no arrangements for any future awards to be
earned or issued.
45
Narrative Disclosure to Summary Compensation Table
We compensate our CEO, Shannon Wilkinson, $5,000 per month.
There is no formal contract in place for her employment. Other than
the foregoing, there are no employment contracts,
compensatory plans or arrangements, including payments to be
received from the Company with respect to any executive officer,
that would result in payments to such person because of his or her
resignation, retirement or other termination of employment with the
Company, or its subsidiaries, any change in control, or a change in
the person’s responsibilities following a change in control
of the Company.
Outstanding Equity Awards at Fiscal Year-End
There are no current outstanding equity awards to our executive
officers.
Long-Term Incentive Plans
There are no arrangements or plans in which we provide pension,
retirement or similar benefits for directors or executive
officers.
Compensation of Directors
Our directors receive no annual salary or bonus for their service
as members of the Company’s board of directors.
Security Holders Recommendations to Board of Directors
Shareholders can direct communications to our Chief Executive
Officer, Shannon Wilkinson, at our executive offices. However,
while we appreciate all comments from shareholders, we may not be
able to individually respond to all communications. We attempt to
address shareholder questions and concerns in our press releases
and documents filed with the SEC so that all shareholders have
access to information about us at the same time. Ms.
Wilkinson collects and evaluates all shareholder
communications. All communications addressed to our directors and
executive officers will be reviewed by those parties unless the
communication is clearly frivolous.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the
number of shares of our common stock owned beneficially as of
September 18, 2020, by: (i) each of our directors; (ii) each of our
named executive officers; and (iii) each person or group known by
us to beneficially own more than 5% of our outstanding shares of
common stock. Unless otherwise indicated, the shareholders listed
below possess sole voting and investment power with respect to the
shares they own. Unless otherwise specified, the address of
each of the persons set forth below is care of the Company at the
address 8565 South Eastern Avenue, Suite 150, Las Vegas, Nevada,
89123.
Beneficial ownership has been determined in accordance with Rule
13d-3 under the Exchange Act. Under this rule, certain shares may
be deemed to be beneficially owned by more than one person (if, for
example, persons share the power to vote or the power to dispose of
the shares). In addition, shares are deemed to be beneficially
owned by a person if the person has the right to acquire shares
(for example, upon exercise of an option or warrant) within 60 days
of the date as of which the information is provided. In computing
the percentage ownership of any person, the amount of shares is
deemed to include the amount of shares beneficially owned by such
person by reason of such acquisition rights. As a result, the
percentage of outstanding shares of any person as shown in the
following table does not necessarily reflect the person’s
actual voting power at any particular date.
46
|
Name and Address of Beneficial Owner
|
Title
of Class
|
Amount
and Nature
of Beneficial
Ownership (1) (#)
|
Percent of
Class (2) (%)
|
Percent
of
Class if Offering fully subscribed (7) (%)
|
|
Shannon Wilkinson (3)
|
Common
|
3,000,000
|
23.24%
|
13.09%
|
|
Troy Wilkinson (4)
|
Common
|
3,000,000
|
23.24%
|
13.09%
|
|
Michael De Valera (5)
|
Common
|
1,020,000
|
7.9%
|
4.45%
|
|
All Officers, Directors and Beneficial Owners as a Group (3
persons)
|
Common
|
7,020,000
|
54.38%
|
30.63%
|
|
5%
Holders
Stephen Seminew (6)
|
Common
|
1,000,000
|
7.75%
|
4.37%
|
(1)
The number and percentage of shares beneficially owned is
determined under rules of the SEC and the information is not
necessarily indicative of beneficial ownership for any other
purpose. Under such rules, beneficial ownership includes any shares
as to which the individual has sole or shared voting power or
investment power and also any shares, which the individual has the
right to acquire within 60 days through the exercise of any stock
option or other right. The persons named in the table have sole
voting and investment power with respect to all shares of common
stock shown as beneficially owned by them, subject to community
property laws where applicable and the information contained in the
footnotes to this table.
(2)
Based on 12,906,236 issued and outstanding shares of common stock
as of September 18, 2020.
(3)
Shannon Wilkinson is a Director and the Company's CEO, CFO,
Secretary and Treasurer. Her beneficial ownership includes
3,000,000 common shares.
(4)
Troy Wilkinson is a Director and the Company’s President. His
beneficial ownership includes 3,000,000 common shares.
(5)
Michael De Valera is member of the Company’s Board of
Directors. His beneficial ownership includes 1,020,000 common
shares directly owned.
(6)
Stephen Semeniw is an early independent investor in the Company.
His beneficial ownership includes 1,000,000 common shares directly
owned.
(7)
Based on 12,906,236 issued and outstanding shares of
common stock as of September 18, 2020 and assumes all 10,000,000
shares in the offering is fully subscribed.
Changes in Control
There are no present arrangements or pledges of the Company’s
securities, which may result in a change in control of the
Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Related Party Transactions
Related party transactions are measured at the exchange amount,
which is the amount of consideration established and agreed to by
the related parties. Related parties are natural persons or other
entities that have the ability, directly, or indirectly, to control
another party or exercise significant influence over the party in
making financial and operating decisions. Related parties include
other parties that are subject to common control or that are
subject to common significant influences.
On the date of incorporation 8,000,000 shares were issued to
directors and founders at par value as per the following in
exchange for concept and services valued at $8,000: Shannon
Wilkinson, Director, CEO, CFO, Secretary, Treasurer: 3,000,000;
Troy Wilkinson, Director, President: 3,000,000; Michael De Valera,
Director: 1,000,000; and Stephen Seminew, Co-Founder
1,000,000.
During the period ended June 30, 2020, there were transactions
incurred between the Company and Shannon Wilkinson, Director, CEO,
CFO, Secretary and Treasurer for management fees of $29,700 and
reimbursement of expenses incurred on behalf of the Company. As of
June 30, 2020, included in due to related parties, is $1,308 due to
this officer.
47
During the period ended June 30, 2020, there were transactions
incurred between the Company and Troy Wilkinson, Director and
President of the Company for management fees of $3,000 and
reimbursement of expenses incurred on behalf of the Company. As of
June 30, 2020, included in due to related parties, is $50 due to
this officer.
During the period ended June 30, 2020, there were transactions
incurred between the Company and other related parties for
management fees of $2,000.
Other than the foregoing, none of the directors or executive
officers of the Company, nor any person who owned of record or was
known to own beneficially more than 5% of the Company’s
outstanding shares of its Common Stock, nor any associate or
affiliate of such persons or companies, has any material interest,
direct or indirect, in any transaction that has occurred during the
past fiscal year, or in any proposed transaction, which has
materially affected or will affect the Company.
With regard to any future related party transaction, we plan to
fully disclose any and all related party transactions in the
following manner:
|
●
|
Disclosing such transactions in reports where
required;
|
|
●
|
Disclosing in any and all filings with the SEC, where
required;
|
|
●
|
Obtaining disinterested directors consent; and
|
|
●
|
Obtaining shareholder consent where required.
|
Review, Approval or Ratification of Transactions with Related
Persons
Given our small size and limited financial resources, we have not
adopted formal policies and procedures for the review, approval or
ratification of transactions, such as those described above, with
our executive officers, Directors and significant stockholders.
However, all of the transactions described above were approved and
ratified by our Board of Directors. In connection with the approval
of the transactions described above, our Board of Directors, took
into account several factors, including their fiduciary duties to
the Company; the relationships of the related parties described
above to the Company; the material facts underlying each
transaction; the anticipated benefits to the Company and related
costs associated with such benefits; whether comparable products or
services were available; and the terms the Company could receive
from an unrelated third party.
We intend to establish formal policies and procedures in the
future, once we have sufficient resources and have appointed
additional Directors, so that such transactions will be subject to
the review, approval or ratification of our Board of Directors, or
an appropriate committee thereof. With regard to any future
related party transaction, we plan to fully disclose any and all
related party transactions in the following manner:
●
Disclosing such transactions in reports where
required;
●
Disclosing in any and all filings with the SEC, where
required;
●
Obtaining disinterested directors consent; and
●
Obtaining shareholder consent where required.
Director Independence
Quotations
for the Company’s common stock are entered on the
Over-the-Counter Bulletin Board inter-dealer quotation system,
which does not have director independence requirements. For
purposes of determining director independence, the Company applied
the definitions set out in NASDAQ Rule 4200(a)(15). Under NASDAQ
Rule 4200(a)(15), a director is not considered to be independent if
he or she is also an executive officer or employee of the
corporation. As a result, the Company has one independent director,
Michael De Valera, as our other directors, Shannon Wilkinson and
Troy Wilkinson, are each also an executive officer of the
Company.
48
LEGAL MATTERS
Horwitz + Armstrong, a Professional Law Corporation of Lake Forest,
California is acting as our
counsel in connection with the registration of our securities under
the Securities Act, and as such, will pass upon the validity of the
securities offered in this offering.
EXPERTS
Buckley Dodds LLP, our independent registered public accountant,
has audited our financial statements included in this prospectus
and Registration Statement to the extent and for the periods set
forth in their audit report. Buckley Dodds LLP has presented its
report with respect to our audited financial statements. The
Company has included such financial statements in the prospectus
and elsewhere in the registration statement in reliance on the
report of October 20, 2020, given their authority as
experts in accounting and auditing.
COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our Articles of Incorporation and Nevada law provide that none of
our officers or directors will be personally liable to the Company
or its stockholders for any damages as a result of any act or
failure to act in his or her capacity as an officer or director
unless it is proven that:
●
The
officer’s or director’s act or failure to act
constituted a breach of his or her fiduciary duties as an officer
or director; and,
●
The
breach of those duties involved intentional misconduct, fraud or a
knowing violation of law.
These provisions eliminate our rights and those of our stockholders
to recover damages from an officer or director for his or her
breach of a fiduciary duty unless such breach involved intentional
misconduct, fraud or a knowing violation of law. The limitations
summarized above, however, do not affect our ability or that of our
stockholders to seek non-monetary remedies, such as an injunction
or rescission, against an officer or director for his or her acts
or failure to act.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to our directors, officers and
other persons pursuant to the foregoing provisions, we have been
advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as
expressed in the Securities Act and is therefore
unenforceable.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus, which constitutes a part of the registration
statement, does not contain all of the information set forth in the
registration statement and the exhibits thereto. Statements
contained in this prospectus as to the contents of any contract or
other document that is filed as an exhibit to the registration
statement are not necessarily complete and each such statement is
qualified in all respects by reference to the full text of such
contract or document. For further information with respect to us
and the common stock, reference is hereby made to the registration
statement and the exhibits thereto, which may be inspected and
copied at the principal office of the SEC, 100 F Street NE,
Washington, D.C. 20549, and copies of all or any part thereof may
be obtained at prescribed rates from the Commission’s Public
Reference Section at such addresses. Also, the SEC maintains a
World Wide Web site on the Internet at http://www.sec.gov that
contains reports and other information regarding registrants that
file electronically with the SEC. We also make available free of
charge our annual, quarterly and current reports, and other
information upon request. To request such materials, please contact
Ms. Shannon Wilkinson, Chief Executive Officer.
49
TEGO CYBER, INC.
September 6, 2019 (Inception) through June 30, 2020
|
Report of Independent Registered Public Accounting
Firms
|
F-2
|
|
Balance Sheet as of June 30, 2020
|
F-3
|
|
Statement of Operations and Comprehensive Loss for the period
September 6, 2019 to June 30, 2020
|
F-4
|
|
Statement of Changes in Shareholders’ Deficit for the period
September 6, 2019 to June 30, 3030
|
F-5
|
|
Statement of Cash Flows for the period September 6, 2019 to June
30, 2020
|
F-6
|
|
Notes to Financial Statements
|
F-7
|
F-1
REPORT
OF INDEPENDENT PUBLIC ACCOUNTING FIRM
To the Shareholders
and Board of Directors of Tego Cyber Inc.
Opinion on the Financial
Statements
We have audited the
accompanying balance sheet of Tego Cyber Inc. (the
“Company”) as of June 30, 2020, and the related
statements of operations and comprehensive loss, changes in
shareholders’ equity, and cash flows for the period from
September 6, 2019 (date of inception) to June 30, 2020 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 June 30, 2020, and the results of its operations and
its cash flows for the period from September 6, 2019 (date of
inception) to June 30, 2020, in conformity with accounting
principles generally accepted in the United States of
America.
Basis
for Opinion
These financial
statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these
financial statements based on our audit. We 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 auditing 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 audit, 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
including 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.
Emphasis
of Matter
The accompanying
financial statements have been prepared assuming that Tego Cyber
Inc. will continue as a going concern. As discussed in Note 3 to
the financial statements, the Company’s significant operating
losses raise substantial doubt about its ability to continue as a
going concern. The financial statements do not include any
adjustments that might result form the outcome of this
uncertainty.
|
Vancouver, British
Columbia
|
Buckley Dodds
LLP
|
|
October
20, 2020
|
Chartered
Professional Accountants
|
F-2
TEGO
CYBER INC.
BALANCE
SHEET
(Expressed
in US Dollars)
|
|
June
30,
2020
|
|
ASSETS
|
|
|
Current
assets
|
|
|
Cash
|
$81,872
|
|
Accounts
receivable
|
150
|
|
Total current
assets
|
82,022
|
|
Software
|
21,500
|
|
TOTAL
ASSETS
|
$103,522
|
|
|
|
|
LIABILITIES
& SHAREHOLDERS’ DEFICIT
|
|
|
Current
liabilities
|
|
|
Accounts payable
and accrued liabilities
|
$15,554
|
|
Due to related
parties
|
1,358
|
|
|
|
|
TOTAL
LIABILITIES
|
16,912
|
|
|
|
|
SHAREHOLDERS’
EQUITY
|
|
|
|
|
|
Common
shares
50,000,000 shares
authorized
$0.001 par
value
12,406,236 shares
issued and outstanding at June 30, 2020
|
12,406
|
|
Additional paid in
capital
|
175,906
|
|
Subscriptions
receivable
|
(24,500)
|
|
Accumulated
deficit
|
(77,202)
|
|
TOTAL
SHAREHOLDERS’ EQUITY
|
86,610
|
|
|
|
|
TOTAL
LIABILITIES & SHAREHOLDERS’ EQUITY
|
$103,522
|
The accompanying
notes are an integral part of these financial
statements
F-3
TEGO
CYBER INC.
STATEMENT
OF OPERATIONS AND COMPREHENSIVE LOSS
(Expressed
in US Dollars)
|
|
From
September 6,
2019 (date of inception)
to June 30,
2020
|
|
REVENUE
|
|
|
Consulting
fees
|
$2,325
|
|
|
|
|
OPERATING
EXPENSES
|
|
|
Adverting
& promotion
|
13,944
|
|
Bank
charges & fees
|
777
|
|
Consultants
& contractors
|
263
|
|
Legal
& accounting
|
26,429
|
|
Management
fees
|
34,700
|
|
Meals
& entertainment
|
268
|
|
Office
& administration
|
798
|
|
Rent
& utilities
|
351
|
|
Subscriptions
& dues
|
493
|
|
Travel
& hotel
|
677
|
|
Website
& internet
|
827
|
|
TOTAL
OPERATING EXPENSES
|
79,527
|
|
|
|
|
NET
LOSS
|
$(77,202)
|
|
BASIC
AND DILUTED LOSS PER COMMON SHARE
|
$(0.01)
|
|
WEIGHTED
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
|
7,790,648
|
The accompanying
notes are an integral part of these financial
statements
F-4
TEGO
CYBER INC.
STATEMENT
OF CHANGES IN SHAREHOLDERS’ EQUITY
JUNE
30, 2020
(Expressed
in US Dollars)
|
|
Number
of
Shares
|
Common
Stock
Amount
|
Additional
Paid-In Capital
|
Subscriptions
Receivable
|
Accumulated
Deficit
|
Total
Shareholders'
Equity
|
|
Balance,
September 6, 2019 (date of inception)
|
-
|
$-
|
$-
|
$-
|
$-
|
$-
|
|
Shares issued to
founders for services
|
8,000,000
|
8,000
|
-
|
-
|
-
|
8,000
|
|
Shares issued for
services
|
1,000,000
|
1,000
|
9,000
|
-
|
-
|
10,000
|
|
Shares issued for
cash
|
3,406,236
|
3,406
|
166,906
|
(24,500)
|
-
|
145,812
|
|
Shares issued for
cash
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Net loss for period
ended June 30, 2020
|
-
|
-
|
-
|
-
|
(77,202)
|
(77,202)
|
|
Balance,
June 30, 2020
|
12,406,236
|
$12,406
|
$175,906
|
$(24,500)
|
$(77,202)
|
$86,610
|
The accompanying
notes are an integral part of these financial
statements
F-5
TEGO
CYBER INC.
STATEMENT
OF CASH FLOWS
(Expressed
in US Dollars)
|
|
From
September 6,
2019 (date of inception)
to June 30,
2020
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|
|
Net loss for the
year
|
$(77,202)
|
|
Items not affecting
cash
|
|
|
Shares
issued for services
|
18,000
|
|
Changes in non-cash
working capital items:
|
|
|
Accounts
receivable
|
(150)
|
|
Accounts
payable and accrued liabilities
|
12,304
|
|
Due to
related parties
|
1,358
|
|
NET
CASH USED IN OPERATING ACTIVITIES
|
(45,690)
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|
|
Software
|
(18,250)
|
|
NET
CASH USED IN INVESTING ACTIVITIES
|
(18,250)
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|
|
Proceeds from
shares issued
|
145,812
|
|
NET
CASH PROVIDED BY FINANCING ACTIVITIES
|
145,812
|
|
|
|
|
NET
INCREASE IN CASH
|
81,872
|
|
CASH
AT BEGINNING OF THE PERIOD
|
-
|
|
CASH
AT END OF THE PERIOD
|
$81,872
|
|
|
|
|
Non-cash
investing and financing activities:
|
|
|
Software
included in accounts payable
|
$3,250
|
|
Shares
issued included in subscriptions receivable
|
$24,500
|
F-6
TEGO
CYBER INC.
NOTES
TO FINANCIAL STATEMENTS
JUNE
30, 2020
(Expressed
in US Dollars)
NOTE
1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
Tego Cyber Inc.
(the “Company”) was incorporated on September 6, 2019
in the State of Nevada. The Company has developed an automated
threat intelligence defense platform that provides real-time
protection against cyber-threats. The Company is focused on filling
the cyber-security skills gap with automated cyber defense
solutions, including a monthly software subscription to users of
the multiple router and firewall manufacturers.
The Company’s
head office is at at 8565 S. Eastern Ave. #150, Las Vegas, Nevada,
89123.
NOTE
2 – BASIS OF PRESENTATION
The accompanying
audited financial statements have been prepared in accordance with
generally accepted accounting principles in the United States of
America (“US GAAP”). In the opinion of management, the
financial statements include all adjustments of a normal recurring
nature necessary for a fair statement of the results for the period
presented.
The accompanying
financial statements have been prepared to present the balance
sheet, the statement of operations and comprehensive loss,
statement of changes in shareholders’ equity and the
statement of cash flows of the Company for the period from
September 6, 2019 to June 30, 2020. The accompanying audited
financial statements have been prepared in accordance with US GAAP
using Company-specific information where available and allocations
and estimates where data is not maintained on a Company-specific
basis within its books and records. Due to the allocations and
estimates used to prepare the financial statements, they may not
reflect the financial position, cash flows and results of
operations of the Company in the future or its operations, cash
flows and financial position.
The preparation of
financial statements in accordance with US GAAP requires the use of
estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent assets and
liabilities known to exist as of the date the financial statements
are published, and the reported amounts of revenues and expenses
during the reporting period. Uncertainties with respect to such
estimates and assumptions are inherent in the preparation of the
Company’s financial statements; accordingly, it is possible
that the actual results could differ from these estimates and
assumptions and could have a material effect on the reported
amounts of the Company’s financial position and results of
operations.
NOTE
3 – GOING CONCERN UNCERTAINTY
The accompanying
financial statements have been prepared on a going concern basis,
which contemplates the realization of assets and satisfaction of
liabilities in the normal course of the business. The Company has
incurred material losses from operations and has an accumulated
deficit. At June 30, 2020, the Company had a working capital
surplus of $65,110. For the period ended June 30, 2020, the Company
sustained net losses and generated negative cash flows from
operations. In March 2020, the World Health Organization recognized
the outbreak of COVID-19 as a global pandemic. The COVID-19
pandemic and government actions implemented to contain the further
spread of COVID-19 have severely restricted economic activity
around the world. These factors, among others, raise substantial
doubt about the Company’s ability to continue as a going
concern. The financial statements do not include any adjustments
relating to the recoverability and classification of recorded asset
amounts or the amounts and classification of liabilities that may
be necessary should the Company be unable to continue as a going
concern. These adjustments could be material. The Company’s
continuation as a going concern is contingent upon its ability to
earn adequate revenues from operations and to obtain additional
financing. There is no assurance that the Company will be able to
obtain such financings or obtain them on favorable
terms.
NOTE
4 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of
significant accounting policies is presented to assist in
understanding the financial statements. The financial statements
and notes are representations of the Company’s management,
who are responsible for their integrity and objectivity. These
accounting policies conform to US GAAP and have been consistently
applied in the preparation of the financial
statements.
Basis of Preparation
The accompanying
financial statements have been prepared to present the balance
sheet, the statement of operations and comprehensive loss,
statement of changes in shareholders’ equity and statement of
cash flows of the Company for the period ended from September 6,
2019 to June 30, 2020, and have been prepared in accordance with US
GAAP.
F-7
TEGO
CYBER INC.
NOTES
TO FINANCIAL STATEMENTS
JUNE
30, 2020
(Expressed
in US Dollars)
NOTE
4 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Use of Estimates
In preparing
financial statements in conformity with US GAAP, management makes
estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosures of contingent assets and
liabilities at the dates of the financial statements, as well as
the reported amounts of revenues and expenses during the reporting
periods. Management makes these estimates using the best
information available at the time the estimates are made. However,
actual results could differ materially from those
estimates.
Concentrations of Credit Risk
Financial
instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of cash and
accounts receivable. As at June 30, 2020, substantially all of the
Company’s cash was held by major financial institutions
located in the United States, which management believes are of high
credit quality. With respect to accounts receivable, the Company
extended credit based on an evaluation of the customer’s
financial condition. The Company generally did not require
collateral for accounts receivable and maintained an allowance for
doubtful accounts of accounts receivable if necessary.
Cash
Cash consists of
cash held at major financial institutions and is subject to
insignificant risk of changes in value.
Receivables and Allowance for Doubtful Accounts
Trade accounts
receivable are recorded at net realizable value and do not bear
interest. No allowance for doubtful accounts was made during the
period ended June 30, 2020, based on management’s best
estimate of the amount of probable credit losses in accounts
receivable. The Company evaluates its allowance for doubtful
accounts based upon knowledge of its customers and their compliance
with credit terms. The evaluation process includes a review of
customers’ accounts on a regular basis. The review process
evaluates all account balances with amounts outstanding for more
than 60 days and other specific amounts for which information
obtained indicates that the balance may be uncollectible. As of
June 30, 2020, there was no allowance for doubtful accounts and the
Company does not have any off-balance-sheet credit exposure related
to its customers.
Software
Software is stated
at cost less accumulated amortization and is depreciated using the
straight-line method over the estimated useful life of the asset.
The estimated useful life of the asset is 5 years and is not
depreciated until it is available for use by the
Company.
Leases
The Company
determines if an arrangement is a lease at inception. Operating and
financing right-of-use assets and lease liabilities are included on
the balance sheet. Right-of-use assets represent the
Company’s right to use an underlying asset for the lease term
and lease liabilities represent the Company’s obligation to
make lease payments arising from the lease. Right-of-use assets and
liabilities are recognized at commencement date based on the
present value of lease payments over the lease term. The Company
uses its incremental borrowing rate, based on the information
available at the commencement date, in determining the present
value of future lease payments. Right-of-use assets include any
prepaid lease payments and exclude any lease incentives and initial
direct costs incurred. Operating lease expenses are recognized on a
straight-line basis over the term of the lease, consisting of
interest accrued on the lease liability and depreciation of the
right-of-use asset. The lease terms may include options to extend
or terminate the lease is it is reasonably certain the Company will
exercise that option. As at June 30, 2020, the Company had no
leases.
Fair Value of Financial Instruments
Accounting
Standards Codification (“ASC”) 820 “Fair Value
Measurements and Disclosures”, adopted January 1, 2008,
defines fair value, establishes a three-level valuation hierarchy
for disclosures of fair value measurement and enhances disclosure
requirements for fair value measures. The Company’s financial
instruments include cash, current receivables and payables. These
financial instruments are measured at their respective fair values.
The three levels are defined as follows:
F-8
TEGO
CYBER INC.
NOTES
TO FINANCIAL STATEMENTS
JUNE
30, 2020
(Expressed
in US Dollars)
NOTE
4 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Fair Value of Financial Instruments (continued)
Level 1 - inputs to
the valuation methodology are quoted prices for identical assets or
liabilities in active markets.
Level 2 - inputs to
the valuation methodology include quoted prices for similar assets
and liabilities in active markets, and inputs that are observable
for the assets or liability, either directly or indirectly, for
substantially the full term of the financial
instruments.
Level 3 - inputs to
the valuation methodology are unobservable and significant to the
fair value.
For cash, accounts
receivable, accounts payable and accrued liabilities and due to
related parties, it is management’s opinion that the carrying
values are a reasonable estimate of fair value because of the short
period of time between the origination of such instruments and
their expected realization and if applicable, their stated interest
rate approximates current rates available.
Revenue Recognition
Revenue from
providing consulting and management services is recognized in a
manner that reasonably reflects the delivery of services to
customers in return for expected consideration and includes the
following elements:
—
executed contracts
with the Company’s customers that it believes are legally
enforceable;
—
identification of
performance obligations in the respective contract;
—
determination of
the transaction price for each performance obligation in the
respective contract;
—
allocation of the
transaction price to each performance obligation; and
—
recognition of
revenue only when the Company satisfies each performance
obligation.
These five elements
as applied to the Company’s consulting services results in
revenue recorded as services are provided.
Income Taxes
The Company uses
the asset and liability method of accounting for income taxes
pursuant to ASC 740 “Income Taxes”. ASC 740 requires an
asset and liability approach for financial accounting and reporting
for income taxes and allows recognition and measurement of deferred
tax assets based upon the likelihood of realization of tax benefits
in future years. Under the asset and liability approach, deferred
taxes are provided for the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax
purposes. Valuation allowances are provided for deferred tax assets
if it is more likely than not these items will either expire before
the Company is able to realize their benefits, or that future
deductibility is uncertain. The provision for income taxes
represents current taxes payable net of the change during the
period in deferred tax assets and liabilities.
Foreign Currency Translation
The Company’s
functional and reporting currency is United States dollars
(“USD”). The Company maintains its financial statements
in the functional currency. Monetary assets and liabilities
denominated in currencies other than the functional currency are
translated into the functional currency at rates of exchange
prevailing at the balance sheet dates. Transactions denominated in
currencies other than the functional currency are translated into
the functional currency at the exchange rates prevailing at the
dates of the transaction. Exchange gains or losses arising from
foreign currency transactions are included in the determination of
net income (loss).
Earnings (Loss) per Share
Basic earnings
(loss) per share is computed by dividing income (loss) available to
common shareholders by the weighted-average number of common shares
outstanding during the period. Diluted earnings (loss) per share is
computed similar to basic earnings (loss) per share except that the
denominator is increased to include the number of additional common
shares that would have been outstanding if the potential common
shares had been issued and if the additional common shares were
dilutive. If applicable, diluted earnings (loss) per share assume
the conversion, exercise or issuance of all common stock
instruments unless the effect is to reduce a loss or increase
earnings (loss) per share. The Company had no dilutive securities
for the period ended June 30, 2020.
F-9
TEGO
CYBER INC.
NOTES
TO FINANCIAL STATEMENTS
JUNE
30, 2020
(Expressed
in US Dollars)
NOTE
4 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Recently Issued Accounting Pronouncements
In June 2016, the
Financial Accounting Standards Board (the “FASB”)
issued ASU 2016-13, “Measurement of Credit Loss on Financial
Instruments”, ASU 2016-13 replaces the current incurred loss
impairment methodology with the expected credit loss impairment
model, which requires consideration of a broader range of
reasonable and supportable information to estimate expected credit
losses over the life of the instrument instead of only when losses
are incurred. This standard applies to financial assets measured at
amortized cost and investments in leases recognized by the lessor.
At this time, the Company does not expect this standard to affect
the Company’s balance sheet, results of operations or cash
flows and disclosures.
Other recent
accounting pronouncements issued by the FASB (including its
Emerging Issues Task Force) did not or are not expected to have a
material impact on the Company's present or future financial
statements.
NOTE
5 – SOFTWARE
Software consisted
of the following at June 30, 2020:
|
|
Cost
|
Accumulated
Amortization
|
June 30,
2020
|
|
|
|
|
|
|
Software,
net
|
$21,500
|
$-
|
$21,500
|
As of June 30,
2020, the software is not in use and no depreciation has been
recorded for the period then ended.
NOTE
6 – RELATED PARTY TRANSACTIONS
Related party
transactions are measured at the exchange amount, which is the
amount of consideration established and agreed to by the related
parties. Related parties are natural persons or other entities that
have the ability, directly, or indirectly, to control another party
or exercise significant influence over the party in making
financial and operating decisions. Related parties include other
parties that are subject to common control or that are subject to
common significant influences.
On the date of
incorporation 8,000,000 shares were issued to directors and
founders at par value as per the following in exchange for concept
and services valued at $8,000: Shannon Wilkinson, Director, CEO,
CFO, Secretary, Treasurer: 3,000,000; Troy Wilkinson, Director,
President: 3,000,000; Michael De Valera, Director: 1,000,000; and
Stephen Seminew, Co-Founder 1,000,000.
During the period
ended June 30, 2020, there were transactions incurred between the
Company and Shannon Wilkinson, Director, CEO, CFO, Secretary and
Treasurer for management fees of $29,700 and reimbursement of
expenses incurred on behalf of the Company. As of June 30, 2020,
included in due to related parties, is $1,308 due to this
officer.
During the period
ended June 30, 2020, there were transactions incurred between the
Company and Troy Wilkinson, Director and President of the Company
for management fees of $3,000 and reimbursement of expenses
incurred on behalf of the Company. As of June 30, 2020, included in
due to related parties, is $50 due to this officer.
During the period
ended June 30, 2020, there were transactions incurred between the
Company and other related parties for management fees of
$2,000.
NOTE
7 – COMMON SHARES
At June 30, 2020,
the Company’s authorized capital consisted of 50,000,000 of
common shares with a $0.001 par value and 12,406,236 shares were
issued and outstanding.
On November 4,
2019, the Company issued 8,000,000 shares to the founders with a
fair value of $8,000 in exchange for services.
On November 15,
2019, the Company issued 1,000,000 shares to two non-related
parties with a fair value of $10,000 in exchange for
services.
F-10
TEGO
CYBER INC.
NOTES
TO FINANCIAL STATEMENTS
JUNE
30, 2020
(Expressed
in US Dollars)
NOTE
7 – COMMON SHARES (CONTINUED)
During the period
from November 15, 2019 to June 30, 2020, the Company completed
various private placements whereby a total of 3,406,236 common
shares were issued at a price of $0.05 per share for a total value
of $170,312. As at June 30, 2020, $24,500 of the subscriptions
still remains receivable.
NOTE
8 – COMMITMENTS AND CONTINGENCIES
The Company leases
its corporate office located at 8565 S. Eastern Ave. #150, Las
Vegas, Nevada. The initial lease term is for 12 months commencing
on September 8, 2019 after which the term is on a month-to-month
basis. After the initial term, the Company may cancel the lease
agreement at any time by providing 30 days written notice. The
Company has elected the short-term lease practical expedient of 12
months and has not recorded a lease.
NOTE
9 – INCOME TAXES
As of June 30,
2020, the Company was in a loss position; therefore no deferred tax
liability was recognized related to the undistributed earnings
subject to withholding tax.
Net operating loss
carry forward of the Company, amounted to $77,202 for the period
ended June 30, 2020. The net operating loss carry forwards are
available to be utilized against future taxable income for years
through calendar year 2040. In assessing the reliability of
deferred income tax assets, management considers whether it is more
likely than not that some portion or all of the deferred income tax
assets will not be realized. The ultimate realization of deferred
tax assets is dependent upon the generation of future taxable
income during the periods in which those temporary differences
become deductible. Management considers the scheduled projected
future taxable income, and tax planning strategies in making this
assessment.
NOTE
10 – SUBSEQUENT EVENTS
Subsequent to June
30, 2020, the Company issued a total of 370,000 shares for total
cash proceeds of $15,000.
The recent outbreak
of the coronavirus, also known as “COVID-19”, has
spread across the globe and is impacting worldwide economic
activity. Conditions surrounding the coronavirus continue to
rapidly evolve and government authorities have implemented
emergency measures to mitigate the spread of the virus. The
outbreak and the related mitigation measures may have an adverse
impact on global economic conditions as well as on the
Company’s business activities. The extent to which the
coronavirus may impact the Company’s business activities will
depend on future developments, such as the ultimate geographic
spread of the disease, the duration of the outbreak, travel
restrictions, business disruptions, and the effectiveness of
actions taken in the United States and other countries to contain
and treat the disease. These events are highly uncertain and as
such, the Company cannot determine their financial impact at this
time.
F-11
PROSPECTUS
TEGO CYBER, INC.
8565 South Eastern Avenue, Suite 150
Las Vegas, Nevada 89123
Tel. (855)
939-0100
10,000,000 shares of Common Stock
[●],
2020
DEALER PROSPECTUS DELIVERY OBLIGATION
Until _______________, 2020, all dealers that effect transactions
in these securities, whether or not participating in this offering,
may be required to deliver a Prospectus. This is in addition to the
dealers’ obligation to deliver a Prospectus when acting as
underwriters and with respect to their unsold allotments or
subscriptions.
[RESALE PROSPECTUS ALTERNATIVE PAGE]
The information in this Prospectus is not complete and may be
changed. We may not sell these securities until the Registration
Statement filed with the Securities and Exchange Commission is
effective. This Prospectus is not an offer to sell these securities
and is not soliciting an offer to buy these securities in any
jurisdiction where an offer or sale is not permitted.
TEGO CYBER, INC.
8565 South Eastern Avenue, Suite 150
Las Vegas, Nevada 89123
Tel. (855)
939-0100
PRELIMINARY PROSPECTUS
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS
EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE
SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
4,386,236 shares of Common Stock
Our existing shareholders (the “Selling Shareholders”)
are offering for resale, 4,386,236 shares of Common Stock. Our
Common Stock is presently not traded on any market or securities
exchange. The 4,386,236 shares of our Common Stock can be sold
by the Selling Shareholders at a fixed price of $0.25 per share
until our shares are quoted on the OTC Bulletin Board and
thereafter at prevailing market prices or privately negotiated
prices. There can be no assurance that a market maker will agree to
file the necessary documents with The Financial Industry
Regulatory Authority (“FINRA”), which operates the OTC
Electronic Bulletin Board, nor can there be any assurance that such
an application for quotation will be approved. We have agreed to
bear the expenses relating to the registration of the shares for
the Selling Shareholders.
Each of the selling shareholders have been advised that they will
be affected by the applicable provisions of the Securities Exchange
Act of 1934, including, without limitation, Regulation M, which may
limit the timing of purchases and sales of any of the securities by
the selling shareholders or any such other person. We have
instructed our selling shareholders that they may not purchase any
of our securities while they are selling shares under this
registration statement. Additionally, we have included the
foregoing language in the Selling Shareholder
Prospectus.
The Selling Shareholders and any broker or dealer participating in
the sale of shares on behalf of the Selling Shareholders may be
deemed to be "underwriters" within the meaning of the Securities
Act of 1933, in which case any profit on the sale of shares by them
or commissions received by such broker or dealer may be deemed to
be underwriting compensation under the Securities Act of
1933.
This Prospectus covers the resale offering by the Selling
Shareholders of 4,386,236 shares of Common Stock. The Company is
concurrently conducting a primary offering for 10,000,000 shares,
which is covered in a separate public offering
prospectus.
THE PURCHASE OF THE SECURITIES OFFERED THROUGH THIS PROSPECTUS
INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY READ AND
CONSIDER THE SECTION OF THIS PROSPECTUS ENTITLED “RISK
FACTORS” BEFORE BUYING ANY SHARES OF TEGO CYBER, INC. COMMON
STOCK.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE
SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
You should rely only on the information contained in this
Prospectus and in any Prospectus supplement we may file after the
date of this Prospectus. We have not authorized anyone to provide
you with different information. If anyone provides you with
different or inconsistent information, you should not rely on it.
We will not make an offer to sell these securities in any
jurisdiction where an offer or sale is not permitted. The
information contained in this Prospectus is accurate only as of the
date of this Prospectus, regardless of the time of delivery of this
Prospectus or of any sale of our securities.
The date of this Prospectus is
[●],
2020.
[RESALE PROSPECTUS ALTERNATIVE PAGE]
50
TABLE OF CONTENTS
|
|
Page
|
|
Prospectus Summary
|
1
|
|
The Offering
|
4
|
|
Risk Factors
|
5
|
|
Determination of Offering Price
|
5
|
|
Use of Proceeds
|
23
|
|
Plan of Distribution; Terms of the Offering
|
25
|
|
Dilution
|
27
|
|
Description of Property
|
27
|
|
Description of Securities
|
27
|
|
Description of Our Business
|
29
|
|
Management’s Discussion and Analysis
|
36
|
|
Directors, Executive Officers, Promoters and Control
Persons
|
42
|
|
Executive Compensation
|
45
|
|
Security Ownership of Certain Beneficial Owners and
Management
|
46
|
|
Certain Relationships and Related Transactions
|
47
|
|
Legal Matters
|
49
|
|
Experts
|
49
|
|
Commission Position of Indemnification for Securities Act
Liabilities
|
49
|
|
Where you can find more Information
|
49
|
|
Index to Financial Statements
|
F-1
|
51
You should rely only on the information contained or incorporated
by reference to this Prospectus in deciding whether to purchase our
Common Stock. We have not authorized anyone to provide
you with information different from that contained or incorporated
by reference to this Prospectus. Under no circumstances should the
delivery to you of this Prospectus or any sale made pursuant to
this Prospectus create any implication that the information
contained in this Prospectus is correct as of any time after the
date of this Prospectus. To the extent that any facts or events
arising after the date of this Prospectus, individually or in the
aggregate, represent a fundamental change in the information
presented in this Prospectus, this Prospectus will be updated to
the extent required by law.
[RESALE PROSPECTUS ALTERNATIVE PAGE]
SUMMARY OF THIS OFFERING
|
Securities being offered
|
|
Up to 4,386,236 shares of Common Stock. Our Common Stock is
described in further detail in the section of this Prospectus
titled “DESCRIPTION OF SECURITIES – Common
Stock.”
|
|
|
|
|
|
Number of shares outstanding before the offering
|
|
12,906,236 shares of Common Stock issued and outstanding as of
September 18, 2020.
|
|
|
|
|
|
Net Proceeds to the Company
|
|
We will not receive proceeds from the resale of shares by the
Selling Shareholders.
|
|
|
|
|
|
Risk factors
|
|
An investment in our Common Stock involves a high degree of risk.
You should carefully consider the risk factors set forth under
“Risk Factors” section hereunder and the other
information contained in this Prospectus before making an
investment decision regarding our Common Stock.
|
[RESALE PROSPECTUS ALTERNATE PAGE]
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of our common
shares by the Selling Shareholders. The Selling Shareholders will
receive all of the net proceeds from the sales of common shares
offered by them under this Prospectus.
[RESALE PROSPECTUS ALTERNATE PAGE]
SELLING SHAREHOLDERS
The persons listed in the following table plan to offer the shares
shown opposite their respective names by means of this Prospectus.
The owners of the shares to be sold by means of this Prospectus are
referred to as the "Selling Shareholders”. These shares will
be sold at a fixed price of $0.25 per share until our shares are
quoted on the OTCQB and thereafter at prevailing market prices or
privately negotiated prices.
The following table sets forth the name of the Selling
Shareholders, the number of shares of Common Stock beneficially
owned by each of the Selling Shareholders as of September 18, 2020
and the number of shares of Common Stock being offered by the
Selling Shareholders. The Selling Shareholders may offer all or
part of the shares for resale from time to time, however, the
Selling Shareholders are under no obligation to sell all or any
portion of such shares nor are the Selling Shareholders obligated
to sell any shares immediately upon effectiveness of this
Prospectus.
52
|
Name of Selling Shareholder
|
Position, Office or Other Material Relationship
|
Shares Beneficially Owned Prior to the Offering
|
Shares to be Offered(1)
|
Shares Beneficially Owned After the
Offering (1)(2)
|
Percentage Beneficially Owned after the
Offering (3)
|
|
Michael Wen
Chan
|
|
500,000
|
500,000
|
500,000
|
|
|
Richard
Smith
|
|
500,000
|
500,000
|
500,000
|
2.18%
|
|
Jan
Kasparec
|
|
300,000
|
300,000
|
300,000
|
2.18%
|
|
Stéphane
Thauvette
|
|
300,000
|
300,000
|
300,000
|
1.31%
|
|
1246544 B.C.
Ltd.
|
|
200,000
|
200,000
|
200,000
|
1.31%
|
|
Steven
Smolinsky
|
|
200,000
|
200,000
|
200,000
|
0.87%
|
|
Medwyn
Blazer
|
|
199,800
|
199,800
|
199,800
|
0.87%
|
|
Andrew
Smith
|
|
150,000
|
150,000
|
150,000
|
0.87%
|
|
Beryl
Smith
|
|
150,000
|
150,000
|
150,000
|
0.65%
|
|
Michael
Rigoni
|
|
120,000
|
120,000
|
120,000
|
0.65%
|
|
Dixon
Rice
|
|
100,000
|
100,000
|
100,000
|
0.52%
|
|
Mary Jo
Rice
|
|
100,000
|
100,000
|
100,000
|
0.44%
|
|
Nanhi
Rice
|
|
100,000
|
100,000
|
100,000
|
0.44%
|
|
Vokoun
Developments
|
|
100,000
|
100,000
|
100,000
|
0.44%
|
|
Audrey
Chan
|
|
99,920
|
99,920
|
99,920
|
0.44%
|
|
Íslensk
fjárfesting ehf.
|
|
99,820
|
99,820
|
99,820
|
0.44%
|
|
Doug
Thomas
|
|
99,600
|
99,600
|
99,600
|
0.44%
|
|
Les
Weinstein
|
|
80,000
|
80,000
|
80,000
|
0.43%
|
|
Maura
Keenan
|
|
50,000
|
50,000
|
50,000
|
0.35%
|
|
Kari
Laurent
|
|
50,000
|
50,000
|
50,000
|
0.22%
|
|
Wolodymyr
Pshyk
|
|
44,000
|
44,000
|
44,000
|
0.22%
|
|
Michael
Ekue
|
|
40,320
|
40,320
|
40,320
|
0.18%
|
|
Daniel
Ekue
|
|
40,320
|
40,320
|
40,320
|
0.18%
|
|
Robbert-Jan
Voogt
|
|
40,160
|
40,160
|
40,160
|
0.18%
|
|
Jeffrey
Adams
|
|
40,000
|
40,000
|
40,000
|
0.18%
|
|
Kary
Adams
|
|
40,000
|
40,000
|
40,000
|
0.17%
|
|
Robert
Chisholm
|
|
40,000
|
40,000
|
40,000
|
0.17%
|
|
Kuhl Entertainment
Inc.
|
|
40,000
|
40,000
|
40,000
|
0.17%
|
|
Gordon
Monk
|
|
40,000
|
40,000
|
40,000
|
0.17%
|
|
Jonathan
Teed
|
|
40,000
|
40,000
|
40,000
|
0.17%
|
|
Libor
Volf
|
|
30,000
|
30,000
|
30,000
|
0.17%
|
|
Pavlo
Pshyk
|
|
20,320
|
20,320
|
20,320
|
0.13%
|
|
1189622 B.C.
Ltd.
|
|
20,000
|
20,000
|
20,000
|
0.09%
|
|
Angele
Beausoleil
|
|
20,000
|
20,000
|
20,000
|
0.09%
|
|
Clint
Carver
|
|
20,000
|
20,000
|
20,000
|
0.09%
|
|
Karen
DeValera
|
|
20,000
|
20,000
|
20,000
|
0.09%
|
|
Peter
Fentiman
|
|
20,000
|
20,000
|
20,000
|
0.09%
|
|
James
Gruzlewski
|
|
20,000
|
20,000
|
20,000
|
0.09%
|
|
Sandra
Jones
|
|
20,000
|
20,000
|
20,000
|
0.09%
|
|
Rob
Klovance
|
|
20,000
|
20,000
|
20,000
|
0.09%
|
|
Jessica
Lee
|
|
20,000
|
20,000
|
20,000
|
0.09%
|
|
Brian
Lewis
|
|
20,000
|
20,000
|
20,000
|
0.09%
|
|
Timothy
Washington
|
|
20,000
|
20,000
|
20,000
|
0.09%
|
|
Mark
Webster
|
|
20,000
|
20,000
|
20,000
|
0.09%
|
|
Thorir
Kjartansson
|
|
19,940
|
19,940
|
19,940
|
0.09%
|
|
Sabri
Vllasaliu
|
|
19,936
|
19,936
|
19,936
|
0.09%
|
|
Kyle
Berry
|
|
12,000
|
12,000
|
12,000
|
0.09%
|
|
Bhaskar
Sharma
|
|
10,100
|
10,100
|
10,100
|
0.05%
|
|
Sung
Choi
|
|
10,000
|
10,000
|
10,000
|
0.04%
|
|
Russell
Clarke
|
|
10,000
|
10,000
|
10,000
|
0.04%
|
|
Charisse
Collier-Cooper
|
|
10,000
|
10,000
|
10,000
|
0.04%
|
|
James
Ferrenburg
|
|
10,000
|
10,000
|
10,000
|
0.04%
|
|
Tammy
Ferrenburg
|
|
10,000
|
10,000
|
10,000
|
0.04%
|
|
International
Consultants and Investigation Inc.
|
|
10,000
|
10,000
|
10,000
|
0.04%
|
|
Allyson
Oury
|
|
10,000
|
10,000
|
10,000
|
0.04%
|
|
Jeremy
Teraoka
|
|
10,000
|
10,000
|
10,000
|
0.04%
|
|
Junko
Teraoka
|
|
10,000
|
10,000
|
10,000
|
0.04%
|
|
Shawn
Wachter
|
|
10,000
|
10,000
|
10,000
|
0.04%
|
|
Angela
Webb
|
|
10,000
|
10,000
|
10,000
|
0.04%
|
|
Nic
Weldon
|
|
10,000
|
10,000
|
10,000
|
0.04%
|
|
Diane
Wilkinson
|
|
10,000
|
10,000
|
10,000
|
0.04%
|
|
|
|
|
|
|
|
|
TOTALS
|
|
4,386,236
|
4,386,236
|
4,386,236
|
19.15%
|
(1)
Beneficial ownership is determined in accordance with Rule 13d-3
under the Securities Act, and includes any shares as to which the
Selling Shareholder has sole or shared voting power or investment
power, and also any shares which the Selling Shareholder has the
right to acquire within 60 days of the date hereof, whether through
the exercise or conversion of any stock option, convertible
security, warrant or other right. The indication herein that shares
are beneficially owned is not an admission on the part of the
stockholder that it is a direct or indirect beneficial owner of
those shares. Except as indicated in the footnotes to the table
above, each Selling Shareholder has voting and investment power
with respect to the shares set forth opposite such Selling
Shareholder’s name.
(2)
This table assumes that each Selling Shareholder will sell all
shares offered for sale by it under this registration
statement.
(3)
Percentages are based upon 22,906,236 shares of our common stock
assuming that all 10,000,000 shares are sold under our concurrent
direct public offering.
53
[RESALE PROSPECTUS ALTERNATE PAGE]
PLAN OF DISTRIBUTION; TERMS OF THE OFFERING
The Selling Shareholders and any of their pledgees, donees,
transferees, assignees and successors-in-interest may, from time to
time, sell any or all of their shares of common stock on any stock
exchange, market or trading facility on which the shares are traded
or quoted or in private transactions. These sales may be at fixed
or negotiated prices. The Selling Shareholders may use any one or
more of the following methods when selling shares:
●
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits investors;
●
block
trades in which the broker-dealer will attempt to sell the shares
as agent but may position and resell a portion of the block as
principal to facilitate the transaction;
●
purchases
by a broker-dealer as principal and resale by the broker-dealer for
its account;
●
an
exchange distribution in accordance with the rules of the
applicable exchange;
●
privately
negotiated transactions;
●
to
cover short sales made after the date that this Registration
Statement is declared effective by the Commission;
●
broker-dealers
may agree with the Selling Shareholders to sell a specified number
of such shares at a stipulated price per share;
●
a
combination of any such methods of sale; and
●
any
other method permitted pursuant to applicable law.
54
The Selling Shareholders may also sell shares under Rule 144 under
the Securities Act, if available, rather than under this
prospectus.
Broker-dealers engaged by the Selling Shareholders may arrange for
other brokers-dealers to participate in sales. Broker-dealers may
receive commissions or discounts from the Selling Shareholders (or,
if any broker-dealer acts as agent for the purchaser of shares,
from the purchaser) in amounts to be negotiated. The Selling
Shareholders do not expect these commissions and discounts to
exceed what is customary in the types of transactions
involved.
The Selling Shareholders may from time to time pledge or grant a
security interest in some or all of the Shares owned by them and,
if they default in the performance of their secured obligations,
the pledgees or secured parties may offer and sell shares of common
stock from time to time under this prospectus, or under an
amendment to this prospectus under Rule 424(b)(3) or other
applicable provision of the Securities Act of 1933 amending the
list of selling shareholders to include the pledgee, transferee or
other successors in interest as selling shareholders under this
prospectus.
Upon the Company being notified in writing by a Selling Shareholder
that any material arrangement has been entered into with a
broker-dealer for the sale of common stock through a block trade,
special offering, exchange distribution or secondary distribution
or a purchase by a broker or dealer, a supplement to this
prospectus will be filed, if required, pursuant to Rule 424(b)
under the Securities Act, disclosing (i) the name of each such
Selling Shareholders and of the participating broker-dealer(s),
(ii) the number of shares involved, (iii) the price at which such
the shares of common stock were sold, (iv) the commissions paid or
discounts or concessions allowed to such broker-dealer(s), where
applicable, (v) that such broker-dealer(s) did not conduct any
investigation to verify the information set out or incorporated by
reference in this prospectus, and (vi) other facts material to the
transaction. In addition, upon the Company being notified in
writing by a Selling Shareholder that a donee or pledgee intends to
sell more than 500 shares of common stock, a supplement to this
prospectus will be filed if then required in accordance with
applicable securities law.
The Selling Shareholders also may transfer the shares of common
stock in other circumstances, in which case the transferees,
pledgees or other successors in interest will be the selling
beneficial owners for purposes of this prospectus.
[RESALE PROSPECTUS ALTERNATE PAGE]
PROSPECTUS
TEGO CYBER, INC.
8565 South Eastern Avenue, Suite 150
Las Vegas, Nevada 89123
Tel. (855)
939-0100
4,386,236 shares of Common Stock
[●],
2020
DEALER PROSPECTUS DELIVERY OBLIGATION
Until _______________, 2020, all dealers that effect transactions
in these securities, whether or not participating in this offering,
may be required to deliver a Prospectus. This is in addition to the
dealers’ obligation to deliver a Prospectus when acting as
underwriters and with respect to their unsold allotments or
subscriptions.
55
PART II – INFORMATION NOT REQUIRED IN PROSPECTUS
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth estimated expenses expected to be
incurred in connection with the issuance and distribution of the
securities being registered. We will pay all such
expenses.
|
Securities
and Exchange Commission Registration Fee
|
$600.00
|
|
Audit
Fees and Expenses
|
$15,000.00
|
|
Legal
Fees and Expenses
|
$30,000.00
|
|
Transfer
Agent and Registration Fees and Expenses
|
$3,000.00
|
|
Miscellaneous
Expenses
|
$3,000.00
|
|
Total
|
$51,600.00*
|
|
*
Estimate Only
|
|
INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Our Articles of Incorporation provide for the indemnification of
our officers and directors to the extent provided by the Nevada
Revised Statutes (“NRS”), as follows.
Nevada Revised Statutes
Pursuant to Section 78.7502(1) of the NRS, a corporation may
indemnify any officer or director who was or is a party or is
threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, except an action by or in the
right of the corporation, by reason of the fact that he or she was
an officer or director of the corporation, against expenses,
including attorneys’ fees, judgments, fines, and settlements
actually and reasonably incurred by the officer or director in
connection with the action, suit or proceeding if that officer or
director is not liable pursuant to NRS 78.138 or acted in good
faith and in a manner he or she reasonably believed to be in or not
opposed to the best interests of the corporation and, in the case
of a criminal action or proceeding, had no reasonable cause to
believe the conduct was unlawful. The termination of any action,
suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent does not, of
itself, create a presumption that the officer or director is liable
pursuant to NRS 78.138 or did not act in good faith and in a manner
which he or she reasonably believed to be in or not opposed to the
best interests of the corporation or that, with respect to any
criminal action or proceeding, the officer or director had
reasonable cause to believe that his or her conduct was
unlawful.
Pursuant to Section 78.7502(2) of the NRS, a corporation may
indemnify any officer or director who was or is a party or is
threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that he or
she was an officer or director of the corporation, against
expenses, including attorneys’ fees and settlements actually
and reasonably incurred by the officer or director in connection
with the defense or settlement of the action or suit if that
officer or director is not liable pursuant to NRS 78.138 or acted
in good faith and in a manner he or she reasonably believed to be
in or not opposed to the best interests of the corporation.
Indemnification may not be made for any claim, issue or matter as
to which an officer or director has been adjudged by a court of
competent jurisdiction, after exhaustion of all appeals therefrom,
to be liable to the corporation or for amounts paid in settlement
to the corporation, unless and only to the extent that the court in
which the action or suit was brought or other court of competent
jurisdiction determines upon application that in view of all the
circumstances of the case, the officer or director is fairly and
reasonably entitled to indemnity for such expenses as the court
deems proper.
RECENT SALES OF UNREGISTERED SECURITIES.
During the period from inception to the filing of this registration
statement, the registrant has issued and/or sold the following
securities in various transactions exempt from
registration:
On November 4, 2019, the Company issued 8,000,000 shares to the
founders with a fair value of $8,000 in exchange for concept
development and services valued at $8,000.
On November 15, 2019, the Company issued 1,000,000 shares to two
non-related parties with a fair value of $10,000 in exchange for
services.
During the period from November 15, 2019 to the date of this
prospectus, the Company sold a total of 3,706,236 common shares in
a private placement to friends and family at a price of $0.05 per
share for a total value of $185,312.
56
Exemption From Registration. The shares of Common Stock referenced
herein were issued in reliance upon one of the following
exemptions:
(a) The shares of Common Stock referenced herein were issued in
reliance upon the exemption from securities registration afforded
by the provisions of Section 4(a)(2) of the Securities Act of 1933,
as amended, ("Securities Act"), based upon the following: (a) each
of the persons to whom the shares of Common Stock were issued (each
such person, an "Investor") confirmed to the Company that it or he
is a sophisticated investor and has such background, education and
experience in financial and business matters as to be able to
evaluate the merits and risks of an investment in the securities,
(b) there was no public offering or general solicitation with
respect to the offering of such shares, (c) each Investor was
provided with certain disclosure materials and all other
information requested with respect to the Company, (d) each
Investor acknowledged that all securities being purchased were
being purchased for investment intent and were "restricted
securities" for purposes of the Securities Act, and agreed to
transfer such securities only in a transaction registered under the
Securities Act or exempt from registration under the Securities Act
and (e) a legend has been, or will be, placed on the certificates
representing each such security stating that it was restricted and
could only be transferred if subsequently registered under the
Securities Act or transferred in a transaction exempt from
registration under the Securities Act.
(b) The shares of
Common Stock referenced herein were issued pursuant to and in
accordance with Rule 903 of Regulation S of the Act. No commissions
were paid in connection with the completion of this offering,
except as noted above. We completed the offering of the shares
pursuant to Rule 903 of Regulation S of the Act on the basis that
the sale of the shares was completed in an "offshore transaction",
as defined in Rule 902(h) of Regulation S. We did not engage in any
directed selling efforts, as defined in Regulation S, in the United
States in connection with the sale of the shares. Each investor
represented to us that the investor was not a "U.S. person", as
defined in Regulation S, and was not acquiring the shares for the
account or benefit of a U.S. person. The agreement executed between
us and each investor included statements that the securities had
not been registered pursuant to the Act and that the securities may
not be offered or sold in the United States unless the securities
are registered under the Act or pursuant to an exemption from the
Act. Each investor agreed by execution of the agreement for the
shares: (i) to resell the securities purchased only in accordance
with the provisions of Regulation S, pursuant to registration under
the Act or pursuant to an exemption from registration under the
Act; (ii) that we are required to refuse to register any sale of
the securities purchased unless the transfer is in accordance with
the provisions of Regulation S, pursuant to registration under the
Act or pursuant to an exemption from registration under the Act;
and (iii) not to engage in hedging transactions with regards to the
securities purchased unless in compliance with the Act. All
certificates representing the shares were or upon issuance will be
endorsed with a restrictive legend confirming that the securities
had been issued pursuant to Regulation S of the Act and could not
be resold without registration under the Act or an applicable
exemption from the registration requirements of the
Act.
(c) The shares of common stock referenced herein were issued
pursuant to and in accordance with Regulation D Rule 506 and
Section 4(a)(2) of the Securities Act. We made this determination
in part based on the representations of Investors, which included,
in pertinent part, that such Investors were an “accredited
investor” as defined in Rule 501(a) under the Securities Act,
and upon such further representations from the Investors that (a)
the Investor is acquiring the securities for his, her or its own
account for investment and not for the account of any other person
and not with a view to or for distribution, assignment or resale in
connection with any distribution within the meaning of the
Securities Act, (b) the Investor agrees not to sell or otherwise
transfer the purchased securities unless they are registered under
the Securities Act and any applicable state securities laws, or an
exemption or exemptions from such registration are available, (c)
the Investor either alone or together with its representatives has
knowledge and experience in financial and business matters such
that he, she or it is capable of evaluating the merits and risks of
an investment in us, and (d) the Investor has no need for the
liquidity in its investment in us and could afford the complete
loss of such investment. Our determination is made based
further upon our action of (a) making written disclosure to each
Investor prior to the closing of sale that the securities have not
been registered under the Securities Act and therefore cannot be
resold unless they are registered or unless an exemption from
registration is available, (b) making written descriptions of the
securities being offered, the use of the proceeds from the offering
and any material changes in the Company’s affairs that are
not disclosed in the documents furnished, and (c) placement of a
legend on the certificate that evidences the securities stating
that the securities have not been registered under the Securities
Act and setting forth the restrictions on transferability and sale
of the securities, and upon such inaction of the Company
of any general solicitation or advertising for securities herein
issued in reliance upon Regulation D Rule 506 and Section 4(a)(2)
of the Securities Act.
(d) The shares of common stock referenced herein were issued
pursuant to and in accordance with Regulation D Rule 504 and
Section 4(a)(2) of the Securities Act. We made this determination
in part based on the fact that, at the time of each sale of stock,
the Company was not a blank check company, did not have to file
reports under the Securities Exchange Act of 1934 and sales of our
stock under this exemption did not exceed $1,000,000 of our
securities in any 12-month period. Our determination is made based
further upon our action of (a) making written disclosure to each
Investor prior to the closing of sale that the securities have not
been registered under the Securities Act and therefore cannot be
resold unless they are registered or unless an exemption from
registration is available, (b) making written descriptions of the
securities being offered, the use of the proceeds from the offering
and any material changes in the Company’s affairs that are
not disclosed in the documents furnished, and (c) placement of a
legend on the certificate that evidences the securities stating
that the securities have not been registered under the Securities
Act and setting forth the restrictions on transferability and sale
of the securities, and upon such inaction of the Company of any
general solicitation or advertising for securities herein issued in
reliance upon Regulation D Rule 504 and Section 4(a)(2) of the
Securities Act.
57
EXHIBITS.
The following is a list of exhibits filed as part of this
registration statement. Any statement contained in an incorporated
document shall be deemed to be modified or superseded for purposes
of this Registration Statement to the extent that a statement
contained herein or in any other subsequently filed incorporated
document modifies or supersedes such statement. Any such statement
so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Registration
Statement.
|
|
Exhibit
Number
|
|
Description
|
|
|
|
Articles of Incorporation filed with the Nevada Secretary of
State on September 6, 2019 (2)
|
|
|
|
|
Bylaws (2)
|
|
|
|
|
Opinion of Horwitz + Armstrong regarding the legality of the
securities being registered (1)
|
|
|
|
|
Form
Copy of the Company’s Subscription Agreement
(2)
|
|
|
|
|
Compilation
of Website or Software Developement Agreement and Addendum between
Company and Cistck, dated June 4, 2020
(1)
|
|
|
|
|
Auditor Consent (1)
|
|
|
|
|
Consent of Horwitz + Armstrong (included in Exhibit
5.1) (1)
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Labels Linkbase Document
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
(1)
Filed herewith.
(2)
Previously Filed.
|
||
UNDERTAKINGS.
(a) The
undersigned Registrant hereby undertakes to:
|
|
1.
|
To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration
statement:
|
|
|
i.
|
To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
|
|
|
ii.
|
To
reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no more
than 20% change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
registration statement.
|
|
|
iii.
|
To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
|
58
Provided
however, that:
|
|
A.
|
Paragraphs (a)(1)(i) and (a)(1)(ii) of this section do not apply if
the registration statement is on Form S-8, and the information
required to be included in a post-effective amendment by those
paragraphs is contained in reports filed with or furnished to the
Commission by the registrant pursuant to section 13 or section
15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the registration statement; and
|
|
|
B.
|
Paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do
not apply if the registration statement is on Form S-3 or Form F-3
and the information required to be included in a post-effective
amendment by those paragraphs is contained in reports filed with or
furnished to the Commission by the registrant pursuant to section
13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement, or is
contained in a form of prospectus filed pursuant to Rule 424(b)
that is part of the registration statement.
|
|
|
2.
|
That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
|
|
|
3.
|
To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
|
|
|
4.
|
If the registrant is a foreign private issuer, to file a
post-effective amendment to the registration statement to include
any financial statements required by Item 8.A. of Form 20-F at the
start of any delayed offering or throughout a continuous offering.
Financial statements and information otherwise required by Section
10(a)(3) of the Act need not be furnished, provided that the registrant includes in the
prospectus, by means of a post-effective amendment, financial
statements required pursuant to this paragraph (a)(4) and other
information necessary to ensure that all other information in the
prospectus is at least as current as the date of those financial
statements. Notwithstanding the foregoing, with respect to
registration statements on Form F-3, a post-effective amendment
need not be filed to include financial statements and information
required by Section 10(a)(3) of the Act or Rule 3-19 of this
chapter if such financial statements and information are contained
in periodic reports filed with or furnished to the Commission by
the registrant pursuant to section 13 or section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference
in the Form F-3.
|
|
|
5.
|
That, for the purpose of determining liability under the Securities
Act of 1933 to any purchaser:
|
|
|
i.
|
If the registrant is relying on Rule 430B:
|
|
|
A.
|
Each prospectus filed by the registrant pursuant to Rule
424(b)(3)shall be deemed to be part of the registration statement
as of the date the filed prospectus was deemed part of and included
in the registration statement; and
|
59
|
|
B.
|
Each prospectus required to be filed pursuant to Rule 424(b)(2),
(b)(5), or (b)(7) as part of a registration statement in reliance
on Rule 430B relating to an offering made pursuant to Rule
415(a)(1)(i), (vii), or (x) for the purpose of providing the
information required by section 10(a) of the Securities Act of 1933
shall be deemed to be part of and included in the registration
statement as of the earlier of the date such form of prospectus is
first used after effectiveness or the date of the first contract of
sale of securities in the offering described in the prospectus. As
provided in Rule 430B, for liability purposes of the issuer and any
person that is at that date an underwriter, such date shall be
deemed to be a new effective date of the registration statement
relating to the securities in the registration statement to which
that prospectus relates, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof. Provided, however, that no statement made in a
registration statement or prospectus that is part of the
registration statement or made in a document incorporated or deemed
incorporated by reference into the registration statement or
prospectus that is part of the registration statement will, as to a
purchaser with a time of contract of sale prior to such effective
date, supersede or modify any statement that was made in the
registration statement or prospectus that was part of the
registration statement or made in any such document immediately
prior to such effective date; or
|
|
|
ii.
|
If
the registrant is subject to Rule 430C, each prospectus filed
pursuant to Rule 424(b) as part of a registration statement
relating to an offering, other than registration statements relying
on Rule 430B or other than prospectuses filed in reliance on Rule
430A, shall be deemed to be part of and included in the
registration statement as of the date it is first used after
effectiveness. Provided, however, that no statement made in a
registration statement or prospectus that is part of the
registration statement or made in a document incorporated or deemed
incorporated by reference into the registration statement or
prospectus that is part of the registration statement will, as to a
purchaser with a time of contract of sale prior to such first use,
supersede or modify any statement that was made in the registration
statement or prospectus that was part of the registration statement
or made in any such document immediately prior to such date of
first use.
|
|
|
6.
|
That, for the purpose of determining liability of the registrant
under the Securities Act of 1933 to any purchaser in the initial
distribution of the securities: The undersigned registrant
undertakes that in a primary offering of securities of the
undersigned registrant pursuant to this registration statement,
regardless of the underwriting method used to sell the securities
to the purchaser, if the securities are offered or sold to such
purchaser by means of any of the following communications, the
undersigned registrant will be a seller to the purchaser and will
be considered to offer or sell such securities to such
purchaser:
|
|
|
i.
|
Any preliminary prospectus or prospectus of the undersigned
registrant relating to the offering required to be filed pursuant
to Rule 424;
|
|
|
ii.
|
Any free writing prospectus relating to the offering prepared by or
on behalf of the undersigned registrant or used or referred to by
the undersigned registrant;
|
|
|
iii.
|
The
portion of any other free writing prospectus relating to the
offering containing material information about the undersigned
registrant or its securities provided by or on behalf of the
undersigned registrant; and
|
|
|
iv.
|
Any other communication that is an offer in the offering made by
the undersigned registrant to the purchaser.
|
60
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form
S-1 and has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, on the
27th day of October, 2020.
TEGO CYBER, INC.
/s/ Shannon Wilkinson
By: Shannon Wilkinson
Title: Chief (Principal) Executive Officer and Chief
(Pincipal) Accounting Officer
/s/ Troy Wilkinson
By: Troy Wilkinson
Title: President
In
accordance with the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by or on behalf
of the following persons in the capacities and on the dates
stated.
|
Signature
|
Title
|
Date
|
|
|
|
|
|
/s/ Shannon Wilkinson
|
Director
|
October
27, 2020
|
|
By: Shannon Wilkinson
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Troy Wilkinson
|
Director
|
October
27, 2020
|
|
By: Troy Wilkinson
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Michael De Valera
|
Director
|
October
27, 2020
|
|
By: Michael De Valera
|
|
|
61
Exhibit
5.1
Horwitz + Armstrong
A Professional Law Corporation
|
14
Orchard, Suite 200
Lake
Forest, California 92630
T:
(949) 540-6540
F:
(949) 540-6578
|
October
27, 2020
Tego
Cyber Inc.
8565 S.
Eastern Avenue, Suite 150
Las
Vegas, NV, 89123
Ladies and Gentlemen:
You have requested our opinion as counsel to Tego Cyber Inc., a
Nevada corporation, (the “Company”) in connection with
the Company’s registration statement on Form S-1 filed with
the U.S. Securities and Exchange Commission (the
“Commission”) under the Securities Act of 1933, as
amended (the “Securities Act”) (File No.
333-248929) (the “Registration
Statement”). The Registration Statement relates to the
offering of 10,000,000 of the Company’s common shares, par
value $0.001 (the “Offering Shares”) and the resale of
an aggregate of 4,386,236 of the Company’s common shares, par
value $0.001, by selling shareholders (the “Resale
Shares”). This opinion is being furnished in accordance with
the requirements of Item 601(b)(5) of Regulation S-K under the
Securities Act.
In connection with this opinion, we have examined and relied upon
the originals or copies of such documents, corporate records, and
other instruments as we have deemed necessary or appropriate for
the purpose of this opinion, including, without limitation, the
following: (a) the articles of incorporation of the Company; (b)
the bylaws of the Company; and (c) the Registration Statement,
including all exhibits thereto.
In our examination, we have assumed the genuineness of all
signatures, the legal capacity of all natural persons, the
authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us
as certified or photostatic copies and the authenticity of the
originals of such documents, and the accuracy and completeness of
the corporate records made available to us by the Company. As to
any facts material to the opinions expressed below, with your
permission we have relied solely upon, without independent
verification or investigation of the accuracy or completeness
thereof, any certificates and oral or written statements and other
information of or from public officials, officers or other
representatives of the Company and others.
Based upon the foregoing and in reliance thereon, it is our opinion
that the Offering Shares of the Company are duly authorized and
will, upon the receipt of full payment, issuance and delivery in
accordance with the terms of the offering described in the
Registration Statement, be legally issued, fully paid and
non-assessable. In addition, it is our opinion that the Resale
Shares have been duly authorized and are duly and validly issued,
fully paid and non-assessable.
Page
2
The opinion expressed herein is limited to the laws of the State of
Nevada, including the Nevada Revised Statutes, all applicable
provisions of the statutory provisions, reported judicial decisions
interpreting those laws and federal securities laws. This opinion
is limited to the laws in effect as of the date hereof and is
provided exclusively in connection with the public offering
contemplated by the Registration Statement.
We assume no obligation to update or supplement this opinion letter
if any applicable laws change after the date of this opinion letter
or if we become aware after the date of this opinion letter of any
facts, whether existing before or arising after the date hereof,
that might change the opinions expressed above.
This opinion letter is furnished in connection with the filing of
the Registration Statement and may not be relied upon for any other
purpose without our prior written consent in each instance.
Further, no portion of this letter may be quoted, circulated or
referred to in any other document for any other purpose without our
prior written consent.
We hereby consent to the filing of this opinion with the Commission
as an exhibit to the Registration Statement and to the use of our
name as it appears in the Prospectus included in the Registration
Statement. In giving such consent, we do not thereby admit that we
come within the category of persons whose consent is required under
Section 7 of the Securities Act or the rules and regulations of the
Commission promulgated thereunder. This opinion is expressed as of
the date hereof unless otherwise expressly stated, and we disclaim
any undertaking to advise you of any subsequent changes in the
facts stated or assumed herein or of any subsequent changes in
applicable laws.
|
|
Very
Truly Yours,
/s/ Horwitz + Armstrong
Horwitz
& Armstrong
|
Exhibit
10.2
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
We consent to the use in this Registration Statement on Form S-1 of
our report dated October 20, 2020, relating to the financial
statements of Tego Cyber Inc. (which report expresses an
unqualified opinion and includes an explanatory paragraph related
to the preparation of the financial statements assuming that the
Company will continue as a going concern), appearing in the
Prospectus, which is part of this Registration Statement. We also
consent to the reference to us under the heading
“Experts”, in such Registration Statement.
|
Vancouver, British Columbia
|
Buckley
Dodds LLP
|
|
October 27, 2020
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Chartered
Professional Accountants
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