ITEM
1. BUSINESS
Formation
Samsara
Luggage, Inc. (the “Company” or “Samsara”) was incorporated on May 7, 2007 under the name, “Darkstar
Ventures, Inc.” under the laws of the State of Nevada. From the date of its formation
until May 2011, the Company did not have any business activity except for the development of its website and locating companies
through which it could offer products. Once its proprietary website was officially launched in July 2011, the Company engaged
in the business of marketing eco-friendly health and wellness products, such as air and water filtration systems, organic baby
products, and eco-friendly beds and linens through affiliate marketing arrangements.
On
May 14, 2015, the founder of the Company, Chizkiyau Lapin, sold all of his shares of common stock of the Company, then constituting
51% of the issued and outstanding shares of common stock of the Company, to Mr. Avraham Bengio. Beginning in April 2016, the Company
began to focus, through its wholly-owned Israeli subsidiary, Bengio Urban Renewal Ltd. (“Bengio Urban Renewal”), in
the area of real estate development, particularly on the urban renewal market in Israel. As a result of the business activities
of Bengio Urban Renewal, the Company’s Form 10-K for the fiscal year ended July 31, 2016, which was filed on November 14,
2016, stated that the Company was no longer a “shell” company as defined in Rule 12b-2 of the Exchange Act.
Merger
Transaction
On
November 12, 2019, the Company completed its merger with the Delaware corporation that was previously known as “Samsara
Luggage, Inc.” (“Samsara Delaware”) in accordance with the terms of the Merger Agreement and Plan of Merger,
dated as of May 10, 2019, (the “Merger Agreement”) by and among the Company, Samsara Delaware, and Avraham Bengio,
pursuant to which Samsara Delaware merged with and into the Company, with the Company being the surviving corporation (the “Merger”).
Following the completion of the Merger, the business of the Company going forward became the business of Samsara Delaware prior
to the Merger, namely, the development and sale of smart luggage products.
The
Company filed (1) Articles of Merger with the Secretary of State of the State of Nevada in which the Company amended its Articles
of Incorporation to change the Company’s name from “Darkstar Ventures, Inc.” to “Samsara Luggage, Inc.”
(the “Name Change”); and (2) a Certificate of Amendment with the Secretary of State of the State of Nevada in which
the Company increased the number of authorized shares of common stock of the Company from 2,000,000,000 shares of common stock
to 5,000,000,000 shares of common stock.
In
connection with the Merger, the Company and Avraham Bengio entered into an Assignment and Assumption Agreement pursuant to which
the Company sold 100% of the issued and outstanding shares of the Company’s wholly-owned
Israeli subsidiary, Bengio Urban Renewal and all of the Company’s interest in Bengio Urban Renewal (including all
debts and liabilities owed by the Company to Bengio Urban Renewal and the debts of Bengio Urban Renewal to the Company) to Avraham
Bengio, the former CEO and principal shareholder of the Company (prior to the Merger).
At
the effective time of the Merger, each share of common stock of Samsara, $0.0001 par value, was converted into the right to receive
458.124 shares of the Company’s common stock, such that the shareholders of Samsara Delaware were issued new shares of the
Company representing approximately 80% of the issued and outstanding shares of the Company’s common stock following the
completion of the Merger. The exchange rate was determined through arms’-length negotiations between the Company and Samsara
Delaware.
On
November 13, 2019, the Board of Directors of the Company (the “Board”) amended Section 3 of Article VII of the bylaws
of the Company to change the fiscal year end-date of the Company from July 31 to December 31.
Address
and Market for Securities
Our
principal executive offices are located at the following address: One University Plaza, Suite 505, Hackensack, NJ 07601. Our telephone
number is (877) 421-1574. Our website is www.samsaraluggage.com.
Our
common shares are quoted on the OTC Pink market of OTC Markets under the symbol “SAML.” On January 29, 2020, the closing
price for shares of our common shares as reported on the OTC Pink was $0.0052 per share.
Bankruptcy,
Receivership or Similar Proceeding
We
have never declared bankruptcy, have never been in receivership, and have never been involved in any legal actions or proceedings.
Transactions
during 2019
Share
Purchase Agreements
On
September 26, 2019, the Company entered into share purchase agreements with five non-U.S. investors pursuant to which the investors
invested an aggregate amount of $500,000 in the Company, and the Company issued to the investors shares of common stock at a price
per share equal to $0.0024. In addition, the Company issued to one of the investors additional shares of common stock valued at
$50,000, at the $0.0024 price per share, as a finder’s fee for the transaction. The investors advanced the aggregate purchase
price to the Company in May 2019. The aggregate number of shares of common stock issued to the investors upon closing was 229,166,666.
The shares were issued to the investors after the Company increased its authorized share capital as part of the Merger. As part
of this transaction, the Company also granted the investors warrants to purchase an aggregate amount of 104,166,666 shares of
common stock of the Company at an exercise price equal to US$0.0048 per share. The warrants are exercisable during a period of
one year from the date of grant.
License
Agreement
On
July 18, 2019, the Company entered into a License Agreement (“License Agreement”) with the Sterling/Winters Company,
a California corporation, doing business as Meharey MIVI LLC (“Licensor”). Pursuant to the License Agreement, The
Licensor licensed to the Company the name, likeness, and visual representation associated with Tommy Meharey for an initial term
of three years with an option to renew the term for an additional five years. The Company is required to pay the Licensor royalties
of 10% of the Company’s net sales of licensed products, with annual minimum royalty payments of $25,000 due upon signing,
on August 1, 2020, and on August 1, 2021. The Company is also obligated to pay the Licensor brand participation payments of $25,000
per year, including an initial payment upon signing and additional payments on the first and second anniversaries of the effective
date of the License Agreement. In addition, the Company agreed to grant the Licensor warrants to purchase five percent (5%) of
the issued and outstanding shares of the Company calculated as of immediately following the consummation of the Merger.
Convertible
Loan Agreement (YAII PN, Ltd.)
On
June 5, 2019, the Company entered into a Securities Purchase Agreement (“SPA”) with YAII PN, Ltd. (the “Investor”),
pursuant to which the Investor agreed to provide the Company with a convertible loan in the aggregate amount of $1,100,000 in
three tranches, and the Company agreed to issue convertible debentures and a warrant to the Investor. The first tranche of the
loan in the amount of $200,000 was provided upon signature of the SPA. The second tranche in the amount of $300,000 was provided
following the Company’s filing of its Registration Statement on Form S-4 in connection with the Merger with Samsara Delaware.
The third tranche in the amount of $600,000 was provided following the consummation of the Merger.
Each
tranche of the loan will bear interest at an annual rate of ten percent (10%) and will be repayable after two years. Each tranche
of the loan will be convertible after six months into shares of Company’s common stock at a conversion price equal to $0.003
per share.
As
part of the transaction, the Company issued to the Investor a warrant to purchase 91,666,666 shares of common stock, at an exercise
price equal to $0.003. The term of the warrant is five years from the issue date. The warrant may be exercised by cash payment
or through cashless exercise by the surrender of warrant shares having a value equal to the exercise price of the portion of the
warrant being exercised.
The
SPA and the convertible debentures contain events of default, including, among other things, failure to repay the loan amount
by the maturity date, and bankruptcy and insolvency events, that could result in the acceleration of the Investor’s right
to convert the loan amount into shares of common stock.
Convertible
Loan Agreement (Moshe Zuk)
On
March 24, 2019, the Company entered into a Convertible Loan Agreement with Moshe Zuk (the “Lender”). Under the agreement,
the Lender provided the Company with a loan in the amount of fifty thousand dollars ($50,000). The Company undertook to repay
the loan principal, plus annual interest of 12%, within one year. The Lender may convert the loan plus interest into shares of
the Company’s common stock at a price per share based on the lower of (a) a discount of twenty percent (20%) to the valuation
of the Company at the Company’s first financing round, or (b) a one million dollar ($1,000,000) valuation.
Business
Strategy
Samsara
designs, manufacturers, and sells high quality luggage products to meet the evolving needs of frequent travelers. The Company
also seeks to present new technologies within the aluminum luggage industry, including an aluminum “smart” suitcase.
Samsara
believes that aluminum is an untapped segment within the premium luggage market, with only few manufacturers currently in the
industry. Samsara’s aluminum suitcase contains a 6061aluminum alloy that combines titanium, magnesium and zinc to create
a lightweight and durable natural material. The structure of the suitcase is designed to provide both convenience and ample storage
space. The suitcase contains an ergonomic design with a flat top that can be used as a desk allowing the user to work on the go.
The suitcase also contains a variety of storage options, including an opening log and a wheel design that creates additional packing
space. The suitcase’s interior includes packing bags, toiletry bag, garment bag, and gym bag, all illuminated by an interior
LED light. The suitcase comes in two colors, black and gray.
Furthermore,
the suitcase contains an anodized coating, which is an electrolytic process that increases the natural oxide layer of the suitcase.
The coated surface provides extra protection and a long-lasting appearance. It provides strength without adding weight and protects
the suitcase from scratches, corrosion and weather damage. The anodized coating also gives the suitcase its color.
The
“smart” components of the suitcase include a LED light control inside the suitcase, and an alert system that informs
the owner of the suitcase’s location if the suitcase is opened. Samsara’s proprietary mobile application
connects to sensors in the suitcase for 24/7 connectivity. The suitcase’s battery status and LED interior light can be remotely
monitored via the mobile application. The suitcase also contains a battery and charging port for charging laptops and
mobile phones, that is USB-C compatible.
Research
and Development
Samsara
performs research and development in the fields of materials, design, and technology to develop new features and functionality,
such as Wi-Fi hotspots, SIM cards, GPS, Bluetooth, RFID, built-in batteries, digital scaling, tracking systems, and automated
locking.
Samsara’s
R&D team is also exploring ways to add new Internet of Things (IoT) components to its existing smart luggage product such
as a Samsara online community platform and integration with airline and airport systems. Additionally, Samsara’s
R&D team is exploring new composite materials to use in Samsara’s luggage products.
Samsara
works with 3 designers on an ongoing basis, and with NOA Labs Ltd., a Hong Kong company. Samsara’s R&D activities
are overseen by David Dahan.
Manufacturing
Samsara
utilizes two manufacturers in China to manufacture its smart luggage products, GDF / Ming Hing Industries Development Ltd., which
manufactures the suitcase, and ABO Electronics (Shen Zhen) Co., Ltd., which manufactures the smart unit. In addition,
Samsara utilizes to contractors to provide order fulfilment services, FBA Sourcing China (DAPIGOO CO LTD), located in China, and
Preferred Depot, located in the United States.
Marketing
and Sales
Samsara
has recently begun selling its smart luggage products direct-to-consumer (D2C) via its own website. In
addition, Samsara has entered into an agreement with T.C.M. International Trade Ltd. pursuant to which T.C.M. is responsible for
having Samsara’s products available for purchase on leading e-commerce websites. Currently, Samsara’s products
are available for purchase on Amazon.com. T.C.M. has agreed to pay Samsara a fixed fee for each unit of product sold
via an online platform, which price is linked to volume of sales.
Samsara
has entered into a licensing agreement with MIVI, a brand by kiWW® founded by Kathy Ireland and Tommy Meharey to introduce
an exclusive collection of smart luggage products under the Kathy Ireland brand. Kathy Ireland will serve as a member of Samsara’s
Advisory Board and the partnership will include various marketing and public relations activities including online promotions,
digital and social media campaigns, and televised initiatives to support the joint brand’s exposure on both a national and
global level.
Competition
Samsara’s
primary competitors offering aluminum suitcases in the carry-on luggage market include Away, Rimowa, Samsonite (Tumi), and Zero
Halliburton.
Competitor
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Product
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Price
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Features
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Away
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Aleon
21” Carry-On Aluminum Hardside Luggage
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$
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549
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● Dimensions:
20.9 x 15.7 x 9.0 inches, Weight: 10.6 lbs, Volume: 2098 cubic inches
● Lightweight
and extremely durable Aircraft Grade Aluminum Frame and Body with two TSA-Approved Resettable Combination Locks
● Interior
Compression Packing System will keep items from shifting to the bottom, and prevent wrinkles
● A
telescoping handle, 360-degree spinner wheels, double reinforced square corners for extra space, a fitted rubber seal
makes the case water-resistant and airtight; piano hinges extend the length of the case for added durability
● 10-year
Worry Free Warranty
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Rimowa
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Rimowa
Topas IATA Carry- On Luggage 21” Inch Multi-wheel 32L TSA Lock Spinner Suitcase Silver
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$
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799
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● Dimensions:
21.7“x7.9“x15.7“inch
● 4
wheel spinners for smooth-rolling mobility in any direction
● The
height-adjustable Flex-Divider system on the interior can also be set to accomodate the exact volume of your luggage and
keeps your belongings in the greatest possible order
● Integrated
in the case, the innovative TSA lock that can be opened without damage during security checks
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Competitor
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Product
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Price
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Features
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Zero
Halliburton
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Zero
Halliburton Geo Aluminum 3.0 International Carry-On (Silver)
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$
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850
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● Dimensions:
15x8x21”
● Made
in USA from imported Materials. Utilizes premium anodized aluminum that is as strong as steel but only one-fourth the
weight. Innovative and unique double-rib design provides additional strength and durability as well as optimum protection
of its contents. The intuitive 3-stage dual-button handle system allows for quicker release for both left and right-handed
travelers.
● Designed
to securely close using two TSA accepted combination locks that are integrated into the draw-bolt latches. Seals airtight
with the addition of a neoprene gasket seal around the opening’s perimeter.
● The
spinner wheels provide convenient and controlled ‘by-your-side’ mobility for easy traveling. Our superior
piano hinge is used to keep the shells of each case in alignment and adds additional strength and integrity to the seal.
● The
interior is divided into two compartments with flat panels in place to hold clothes securely and discreetly. Our signature
lining is stain-resistant and non-abrasive to clothes.
● Our
newly introduced ZH Global Tracking allows your case to be tracked anywhere in the world, providing additional peace of
mind for your travel.
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Samsonite
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Samsonite
LITE-BOX ALU SPINNER (4 WHEELS) 55CM
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$
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667
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● Dimensions:
55 x 40 x 23 cm (including handles, wheels, bottom glides, side pockets and other external parts)
● Volume:
40 L
● Weight:
4.7 kg
● Warranty:
Limited 10 year global warranty
● Model:
Spinner (4 wheels)
● Colour:
Aluminium
● Material:
100% High-end anodized aluminium
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Intellectual
Property
Samsara
owns a design patent on its carry-on luggage product, issued in Israel (60249) on April 6, 2017, in the United States (136531)
on October 3, 2017, in Europe (004385086-0001) on October 10, 2017, and in China (315400) on October 29, 2017. Samsara
also owns registered trademarks on the “Samsara” and “Samsara Luggage” trade names.
Government
Regulations
Several
aspects of Samsara’s smart luggage products, including its battery, locks and LED lights, are subject to the requirements
of federal law relating to aviation and homeland security, as well as international regulation of electronic devices. Part 15
of the FCC Rules requires operation of electronic equipment not to cause harmful interference and to accept any interference received,
including interference that may cause undesired operation. The Transportation Security Administration (TSA) recommends that only
TSA approved locks be used on luggage, to avoid risk of TSA agents breaking the lock for inspection. The European Union requires
all electronic devices to comply with the Restriction of Hazardous Substances (ROHS) regulations which restricts the use of specific
hazardous materials found in electrical and electronic products. BS EN 62471 gives universal best-practice recommendations for
the photobiological safety of electric lamps and lighting systems, including LED lights. This standard specifies exposure limits,
measurement techniques and classification systems to control photobiological and light hazards. The EU radio equipment directive
establishes a regulatory framework for placing radio equipment on the market, setting requirements for safety and health, electromagnetic
compatibility, and the efficient use of the radio spectrum. Additionally, smart luggage products are subject to airline
regulations applicable to manufacturing materials, size and weight.
Samsara
believes that it is in substantial compliance with the laws and regulations which regulate its business, as detailed below:
Air
Travel Regulations
The
Samsara Luggage Carry-on case complies with all airline regulations applicable to manufacturing materials, size and weight. Additionally,
it incorporates all the electronic parts into one removeable unit, leaving an option for the suitcase to be completely electronic
free, if needed, in compliance with the airline regulations of January 2018, requesting passengers to remove batteries from checked-in
smart luggage.
Samsara
carry-on locks, bearing the Travel Sentry logo, meet TSA recommendations for accepted locks which can be opened by the TSA without
being broken.
Electronic
Equipment
On
March 12, 2018, Samsara received a Grant of Equipment Authorization Certification Issued Under the Authority of the Federal Communications
Commission stating that the Samsara smart unit is in compliance with the FCC part 15c (Regulating the interference of electronic
equipment during operation).
On
April 17, 2018, Samsara received a Certificate of Compliance with the European Union RoHS regulations (regulating and restricting
the use of certain hazardous substances in electrical and electronic equipment).
On
January 25, 2018, Samsara received an Attestation of Global Compliance with regulation EN 62471 (regulation of the photo biological
safety of lamps and lamp systems).
On
February 27, 2018, Samsara received the EU-RED (Radio Equipment Directive) Certificate of Conformity (regulating radio equipment,
electromagnetic compatibility, and the efficient use of the radio spectrum.)
Employees
Samsara
does not have any employees. All of its business activities are performed by independent contractors and third-party
service providers.
WHERE
YOU CAN GET ADDITIONAL INFORMATION
We
are required to file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange
Commission (the “SEC”). You may read and copy our reports or other filings made with the SEC at the SEC’s Public
Reference Room, located at 100 F Street, N.E., Washington, DC 20549. You can obtain information on the operations of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. You can also access these reports and other filings electronically on the
SEC’s web site, www.sec.gov.
If
you would like to request documents from Samsara, please send a request in writing or by telephone to Samsara at the following
address:
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Samsara
Luggage, Inc.
One University Plaza, Suite 505
Hackensack, NJ 07601
Telephone: 1-877-421-1574
Attn: Atara Dzikowski
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ITEM
1A. RISK FACTORS
Samsara
has a limited operating history, has incurred significant operating losses since its inception and expects to incur significant
losses for the foreseeable future. Samsara may never generate significant revenue or become profitable or, if Samsara achieves
profitability, it may not be able to sustain it.
Samsara
has a limited operating history and has generated limited revenues to date. Samsara is dependent upon additional capital
resources for the continuation of its planned principal operations, which are subject to significant risks and uncertainties,
including failing to secure funding to expand commercialization of its products or failing to profitably operate the business.
Samsara
has incurred significant operating losses since its inception. Samsara’s net losses were $3,142,000 and $1,604,000 for
the years ended December 31, 2019, and December 31, 2018, respectively. As of December 31, 2019, Samsara had an accumulated deficit
of $18,648,000. Substantially all of Samsara’s losses have resulted from expenses incurred in connection with
its research and development programs and from general and administrative costs associated with Samsara’s operations. Samsara
expects to continue to incur losses for the foreseeable future and anticipates these losses will increase substantially as Samsara
continues to develop and commercialize its products.
To
become and remain profitable, Samsara must succeed in developing and commercializing products that generate significant revenue. This
will require Samsara to be successful in a range of challenging activities, including manufacturing, and marketing and selling
products. Samsara may never succeed in these activities and, even if it does, may never generate revenues that are
significant enough to achieve profitability. In addition, Samsara has not yet demonstrated an ability to successfully overcome
many of the risks and uncertainties frequently encountered by companies in new and rapidly evolving fields. Because of the numerous
risks and uncertainties associated with smart luggage product development, Samsara is unable to accurately predict the timing
or amount of increased expenses or when, or if, Samsara will be able to achieve profitability. Even if Samsara does achieve profitability,
it may not be able to sustain or increase profitability on a quarterly or annual basis. Samsara’s failure to become and
remain profitable would depress the value of Samsara and could impair its ability to raise capital, expand its business, maintain
its research and development efforts, diversify its product candidates or even continue its operations. A decline in the value
of Samsara could also cause stockholders to lose all or part of their investment.
The
report of Samsara’s independent registered public accounting firm expresses substantial doubt about the ability of Samsara
to continue as a going concern.
Samsara’s
independent registered public accounting firm indicated in its report on Samsara’s financial statements for the period ended
December 31, 2019, that conditions exist that raise substantial doubt about Samsara’s ability to continue as a “going
concern.” A going concern paragraph included in Samsara’s independent registered public accounting firm’s report
on its consolidated financial statements could impair investor perceptions and Samsara’s ability to finance its operations
through the sale of equity, incurring debt, or other financing alternatives. Samsara’s ability to continue as a going concern
will depend upon many factors beyond Samsara’s control including the availability and terms of future funding. If
Samsara is unable to achieve its goals and raise the necessary funds to finance its operations, its business would be jeopardized,
and Samsara may not be able to continue.
Samsara
will require substantial additional financing to achieve its goals, and a failure to obtain this necessary capital when needed
and on acceptable terms, or at all, could force Samsara to delay, limit, reduce or terminate its product development programs,
commercialization efforts or other operations.
Samsara
expects its expenses to increase in connection with its ongoing activities. Samsara also expects to incur significant
commercialization expenses related to product manufacturing, marketing, sales and distribution. Samsara cannot reasonably estimate
the actual amounts necessary to successfully complete the development and commercialization of its products. Furthermore,
following the completion of the Merger, Samsara will incur the additional costs associated with operating as a public company.
Accordingly, Samsara will need to obtain substantial additional funding in connection with its continuing operations. If Samsara
is unable to raise capital when needed or on attractive terms, Samsara could be forced to delay, reduce or eliminate its research
and development programs or any future commercialization efforts.
Samsara
has based its estimates on assumptions that may prove to be wrong, and Samsara could use its capital resources sooner than it
currently expects. Samsara’s operating plans and other demands on its cash resources may change as a result of many factors
currently unknown to Samsara, and Samsara may need to seek additional funds sooner than planned, through public or private equity
or debt financings or other capital sources, including potentially government funding, collaborations, licenses and other similar
arrangements. In addition, Samsara may seek additional capital due to favorable market conditions or strategic considerations
even if Samsara believes it has sufficient funds for its current or future operating plans. Attempting to secure additional financing
may divert Samsara’s management from its day-to-day activities, which may adversely affect Samsara’s ability to develop
its product.
Samsara’s
future capital requirements will depend on many factors, including:
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the
costs and timing of manufacturing for Samsara’s products, including commercial manufacturing of its products;
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the
costs of obtaining, maintaining and enforcing Samsara’s intellectual property rights;
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Samsara’s
efforts to enhance operational systems and hire additional personnel to satisfy its obligations as a public company, including
enhanced internal controls over financial reporting;
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the
costs associated with hiring additional personnel and consultants as Samsara’s research and development activities increase;
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the
timing and amount of the milestone or other payments Samsara must make to the licensors and other third parties from whom
Samsara has licensed or acquired technology;
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the
costs and timing of establishing or securing sales and marketing capabilities for its products;
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Samsara’s
ability to achieve market acceptance and adequate market share and revenue for its products; and
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the
terms and timing of establishing and maintaining collaborations, licenses and other similar arrangements.
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In
addition, Samsara’s products may not achieve commercial success.
Accordingly,
Samsara will need to continue to rely on additional financing to achieve its business objectives. Adequate additional financing
may not be available to Samsara on acceptable terms, or at all. In addition, Samsara may seek additional capital due to favorable
market conditions or strategic considerations, even if Samsara believes it has sufficient funds for its current or future operating
plans.
Raising
additional capital may cause dilution to Samsara’s stockholders, restrict Samsara’s operations or require Samsara
to relinquish rights to its technologies or product candidates.
Until
such time, if ever, as Samsara can generate substantial product revenues, Samsara expects to finance its cash needs through equity
offerings, debt financings or other capital sources, including potentially government funding, collaborations, licenses and other
similar arrangements. To the extent that Samsara raises additional capital through the sale of equity or convertible debt securities,
existing stockholders’ ownership interest will be diluted, and the terms of these securities may include liquidation or
other preferences that adversely affect stockholders’ rights as a common stockholder. Debt financing and preferred equity
financing, if available, may involve agreements that include covenants limiting or restricting Samsara’s ability to take
specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.
If
Samsara raises funds through future collaborations, licenses and other similar arrangements, Samsara may have to relinquish valuable
rights to its future revenue streams or products, or grant licenses on terms that may not be favorable to Samsara and/or that
may reduce the value of Samsara’s common stock.
Risks
Relating to Samsara’s Strategy and Industry
Samsara’s
success depends on independent contractors to manufacture and supply Samsara with its smart luggage products, and to label, package,
and ship these products.
Samsara
has retained third party manufacturers to manufacture and supply Samsara with its smart luggage products. Samsara relies
on independent contractors for the supply of its smart luggage products and for the labeling, packaging, and shipping of these
products. Samsara may not be successful in developing relationships with these independent contractors. In
addition, these third party contractors may not dedicate sufficient resources or give sufficient priority to satisfying Samsara’s
requirements or needs. There is limited history upon which to base any assumption as to the likelihood that Samsara
will prove successful in selecting qualified third party independent contractors or in negotiating any agreements with them. If
Samsara is unsuccessful in addressing these risks, its results of operations could be adversely affected.
Samsara
does not have long term commitments from suppliers and other independent contractors.
Ssmsara
may experience shortages of supplies and inventory because Samsara orders goods and services via purchase orders and has not signed
long-term contracts with its suppliers. Samsara currently utilizes the services of two manufacturers in China, one
for the manufacture of the suitcase and the other for the manufacture of the smart unit. In addition, Samsara utilizes
the services of two contractors, one in China and one in the United States, for the provision of order fulfillment services. Samsara’s
success is dependent on Samsara’s ability to timely provide its customers with Samsara’s smart luggage products. Although
Samsara directly markets these products, Samsara is dependent on its suppliers and other independent contractors for the manufacture
and supply of Samsara’s smart luggage products and for the labeling, packaging, and shipment of these products. No
assurance can be given that Samsara will enter into agreements with other suppliers for the supply of its smart luggage products
at acceptable levels of quality and price, or with other independent contractors who will provide Samsara with order fulfillment
services at acceptable levels of quality and price. While Samsara currently has and anticipates continuing to have
good relationships with its suppliers and other independent contractors, if Samsara is unable to secure additional
sources of supply or order fulfillment services from one or more independent contractors on a timely basis and on acceptable terms,
Samsara’s results of operations could be adversely affected.
The
selling of smart luggage products is subject to current governmental regulations.
Several
aspects of Samsara’s smart luggage products, including its battery, locks and LED lights, are subject to the requirements
of federal law relating to aviation and homeland security, as well as international regulation of electronic devices. Part 15
of the FCC Rules requires operation of electronic equipment not to cause harmful interference and to accept any interference received,
including interference that may cause undesired operation. The Transportation Security Administration (TSA) recommends that only
TSA approved locks be used on luggage, to avoid risk of TSA agents breaking the lock for inspection. The European Union requires
all electronic devices to comply with the Restriction of Hazardous Substances (ROHS) regulations which restricts the use of specific
hazardous materials found in electrical and electronic products. BS EN 62471 gives universal best-practice recommendations for
the photobiological safety of electric lamps and lighting systems, including LED lights. This standard specifies exposure limits,
measurement techniques and classification systems to control photobiological and light hazards. The EU radio equipment directive
establishes a regulatory framework for placing radio equipment on the market, setting requirements for safety and health, electromagnetic
compatibility, and the efficient use of the radio spectrum.
Additionally,
smart luggage products are subject to airline regulations applicable to manufacturing materials, size and weight. While
Samsara believes that it is and will be in substantial compliance with the laws and regulations which regulate its business, the
failure to comply with any of these laws or regulations, or the imposition of new laws or regulations could negatively impact
Samsara’s proposed business.
Samsara
faces intense competition and many of its competitors have substantially greater resources than Samsara has.
Samsara
operates in a highly competitive environment. In addition, the competition in the market for smart luggage products
may intensify. There are numerous well-established companies based in the United States with longer operating histories,
significantly greater resources and name recognition, and a larger base of distributors and retailers. In addition,
there are smaller entrepreneurial companies who are developing products that will compete with the smart luggage products that
Samsara currently sells. As a result, these competitors may have greater credibility with Samsara’s potential
customers. They also may be able to adopt more aggressive pricing policies and devote greater resources to the development,
promotion, and sale of their products. These competitors may make it difficult for Samsara to market and sell its
products and compete in the smart luggage market, which could harm Samsara’s business.
Samsara
depends on market acceptance of its smart luggage products. If these products do not gain market acceptance, Samsara’s
ability to compete will be adversely affected.
Samsara’s
success depends in large part on Samsara’s ability to successfully market its smart luggage products. No assurances
can be given that Samsara will be able to successfully market its smart luggage products or achieve consumer acceptance. Moreover,
failure to successfully commercialize its smart luggage products on a timely and cost-effective basis will have a material adverse
effect on Samsara’s ability to compete in its targeted market.
Failure
to meet customers’ expectations or deliver expected performance could result in losses and negative publicity, which would
harm Samsara’s business.
If
the smart luggage products which Samsara sells fail to perform in the manner expected by its customers, then Samsara’s revenues
may be delayed or lost due to adverse customer reaction. In addition, negative publicity about Samsara and its products
could adversely affect Samsara’s ability to attract or retain customers. Furthermore, disappointed customers may initiate
claims for damages against Samsara, regardless of Samsara’s responsibility for their disappointment.
Samsara
needs to retain key personnel to support its services and ongoing operations.
The
marketing and sale of Samsara’s smart luggage products will continue to place a significant strain on Samsara’s limited
personnel, management, and other resources. Samsara’s future success depends upon the continued services of its
executive officers and the hiring of key employees and contractors who have critical industry experience and relationships that
Samara will need to rely on to implement its business plan. The loss of the services of any of Samsara’s officers
or the lack of availability of other skilled personnel would negatively impact Samsara’s ability to market and sell its
smart luggage products, which could adversely affect Samsara’s financial results and impair Samsara’s growth.
If
Samsara cannot build and maintain strong brand loyalty to its products, its business may suffer.
Samsara
believes that the importance of brand recognition will increase as more companies produce smart luggage products. Development
and awareness of Samsara’s brand will depend largely on Samsara’s ability to successfully advertise and market its
products. If Samsara is unsuccessful, its products may not be able to gain widespread acceptance among consumers. A
failure to develop Samsara’s smart luggage products sufficiently could have a material adverse effect on Samsara’s
business, results of operations and financial condition.
Samsara
may be unable to protect its brand name.
Brand
recognition is critical in attracting consumers to Samsara’s products. Samsara has researched the availability
of the trademark “Samsara” and have not found any inherent obstacle to registering the trademark with the US patent
and trademark office. Nevertheless, if Samsara is unable to trademark its brand name or to adequately protect its trade
name against infringement or misappropriation, Samsara’s competitive position in the smart luggage market may be undermined,
which could lead to a significant decrease in the volume of products that we sell. Such a result would materially and
adversely affect Samsara’s results of operations.
Samsara
may incur losses as a result of claims that may be brought against Samsara due to defective products or as a result of product
recalls.
While
Samsara is not aware of any claims having been brought in connection with Samsara’s smart luggage products, Samsara may
be liable if the use of Samsara’s products causes injury, illness, or death. Samsara also may be required to
withdraw or recall some of its products if they are damaged or defective. A significant product liability judgment
against Samsara or a widespread product withdrawal or recall could have a material adverse effect on Samsara’s business
and financial condition.
If
a third party asserts that Samsara’s infringes upon its proprietary rights, Samsara could be required to redesign its products,
change suppliers, pay significant royalties, or enter into license agreements.
Although
presently Samsara is not aware of any such claims, a third party may assert that Samsara’s smart luggage products violate
its intellectual property rights. As the number of smart luggage products increases, infringement claims may become more common. Any
claims against Samsara, regardless of their merit, could:
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Be
expensive and time-consuming to defend;
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Result
in negative publicity;
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Force
Samsara to stop selling its products;
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Divert
management’s attention and Samsara’s other resources; and
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Require
Samsara to enter into royalty or licensing agreements in order to obtain the right to sell its products, which right may not
be available on terms acceptable to Samsara, if at all.
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In
addition, Samsara’s believes that any successful challenge to its use of a trademark or domain name could substantially
diminish Samsara’s ability to conduct business in a particular market or jurisdiction and thus could decrease Samsara’s
revenues and/or result in losses to Samsara’s business.
Samsara’s
lack of business diversification could result in the loss of your investment if revenues from Samsara’s primary products
decrease.
Currently,
Samsara’s business is focused on the marketing and sale of smart luggage products. Samsara does not have any
other lines of business or other sources of revenue if Samsara is unable to successfully implement its business plan. Samsara’s
lack of business diversification could cause you to lose all or some of your investment if Samsara is unable to generate significant
revenues by the sale of smart luggage products since Samsara does not have any other lines of business or alternative revenue
sources.
Samsara
relies on third parties to conduct many of its activities. Any failure by a third-party to conduct these activities and other
requirements and in a timely manner may delay or prevent Samsara’s ability to commercialize its products.
Samsara
is dependent on third parties to perform certain activities. Specifically, Samsara has used and relied on, and intends
to continue to use and rely on, GDF / Ming Hing Industries Development Ltd. and ABO Electronics (Shen Zhen) Co., Ltd.
for the manufacture of its luggage products, and on FBA Sourcing China (DAPIGOO CO LTD) and Preferred Depot for order fulfillment
services. While Samsara has signed purchase orders governing the activities of its third-party contractors, Samsara has limited
influence over their actual performance. There is no guarantee that any such third parties will devote adequate time
and resources to such activities or perform as contractually required. If any of these third parties fail to meet expected deadlines,
adhere to Samsara’s requirements, or otherwise performs in a substandard manner, Samsara’s ability to fulfill customer
orders for products may be undermined. In addition, many of the third parties with whom Samsara contracts may also have relationships
with other commercial entities, including Samsara’s competitors, for whom they may also be conducting development activities
that could harm Samsara’s competitive position.
If
any of Samsara’s relationships with these third parties terminate, Samsara may not be able to enter into arrangements with
alternative third parties or do so on commercially reasonable terms.
In
addition, Samsara may be unable to establish any agreements with third-party manufacturers or to do so on acceptable terms. Even
if Samsara is able to establish agreements with third-party manufacturers, reliance on third-party manufacturers entails additional
risks, including:
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failure
of third-party manufacturers to comply with regulatory requirements and maintain quality assurance;
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breach
of the manufacturing agreement by the third-party;
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failure
to manufacture Samsara’s product according to Samsara’s specifications;
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failure
to manufacture Samsara’s product according to Samsara’s schedule, or at all;
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misappropriation
of Samsara’s proprietary information, including Samsara’s trade secrets and know-how; and
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termination
or nonrenewal of the agreement by the third-party at a time that is costly or inconvenient for Samsara.
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Any
performance failure on the part of Samsara’s existing or future manufacturers could delay product development, and any related
remedial measures may be costly or time consuming to implement. Samsara does not currently have arrangements in place for redundant
supply or a second source for all required raw materials used in the manufacture of Samsara’s products. If Samsara’s
current third-party manufacturers cannot perform as agreed, Samsara may be required to replace such manufacturers and Samsara
may be unable to replace them on a timely basis or at all. Samsara’s current and anticipated future dependence
upon others for the manufacture of Samsara’s products may adversely affect Samsara’s future profit margins and Samsara’s
ability to commercialize any products on a timely and competitive basis.
Samsara’s
reliance on third parties requires Samsara to share its trade secrets, which increases the possibility that Samsara’s trade
secrets will be misappropriated or disclosed.
Because
Samsara currently relies on third parties to manufacture its products, Samsara must, at times, share its proprietary technology
and confidential information, including trade secrets, with them. Samsara seeks to protect its proprietary technology, in part,
by entering into confidentiality agreements, consulting agreements or other similar agreements with its advisors, employees, consultants
and contractors prior to beginning research or disclosing proprietary information. These agreements typically limit the rights
of the third parties to use or disclose Samsara’s confidential information. Despite the contractual provisions employed
when working with third parties, the need to share trade secrets and other confidential information increases the risk that such
trade secrets may become known by Samsara’s competitors, are intentionally or inadvertently incorporated into the technology
of others or are disclosed or used in violation of these agreements. Given that Samsara’s proprietary position is based,
in part, on Samsara’s know-how and trade secrets, and despite Samsara’s efforts to protect its trade secrets, a competitor’s
discovery of Samsara’s proprietary technology and confidential information or other unauthorized use or disclosure would
impair Samsara’s competitive position and may have a material adverse effect on Samsara’s business, financial condition,
results of operations and prospects.
Samsara
may seek to enter into collaborations, licenses and other similar arrangements and may not be successful in doing so, and even
if Samsara is, it may not realize the benefits of such relationships.
Samsara
may seek to enter into collaborations, joint ventures, licenses and other similar arrangements for the development or commercialization
of Samsara’s products, due to capital costs required to develop or commercialize the products or manufacturing constraints.
Samsara may not be successful in its efforts to establish such collaborations for Samsara’s products. In addition, Samsara
faces significant competition in seeking appropriate strategic partners, and the negotiation process can be time consuming and
complex. Further, any future collaboration agreements may restrict Samsara from entering into additional agreements with potential
collaborators. Samsara cannot be certain that, following a strategic transaction or license, Samsara will achieve an economic
benefit that justifies such transaction.
Even
if Samsara is successful in its efforts to establish such collaborations, the terms that Samsara agrees upon may not be favorable
to Samsara, and Samsara may not be able to maintain such collaborations.
In
addition, any potential future collaborations may be terminable by Samsara’s strategic partners, and Samsara may not be
able to adequately protect its rights under these agreements. Furthermore, strategic partners may negotiate for certain rights
to control decisions regarding the development and commercialization of Samsara’s products, if approved, and may not conduct
those activities in the same manner as Samsara would. Any termination of collaborations Samsara enters into in the future, or
any delay in entering into collaborations related to Samsara’s products, could delay the development and commercialization
of Samsara’s products and reduce their competitiveness if they reach the market, which could have a material adverse effect
on Samsara’s business, financial condition and results of operations.
Samsara
currently has a limited marketing and sales organization and has limited experience as a company in commercializing products,
and Samsara may have to invest significant resources to develop these capabilities. If Samsara is unable to establish marketing
and sales capabilities or enter into agreements with third parties to market and sell its products, Samsara may not be able to
generate product revenue.
Samsara
has limited internal sales, marketing and distribution capabilities. Samsara has limited experience as a company in
the marketing, sale and distribution of smart luggage products and there are significant risks involved in building and managing
a sales organization, including Samsara’s ability to hire, retain and incentivize qualified individuals, generate sufficient
sales leads, provide adequate training to sales and marketing personnel and effectively manage a geographically dispersed sales
and marketing team. Any failure or delay in the development of Samsara’s internal sales, marketing and distribution capabilities
would adversely impact the commercialization of these products. Samsara may not be able to enter into collaborations or hire consultants
or external service providers to assist Samsara in sales, marketing and distribution functions on acceptable financial terms,
or at all. In addition, Samsara’s product revenues and its profitability, if any, may be lower if Samsara relies on third
parties for these functions than if Samsara were to market, sell and distribute any products that Samsara develops itself. Samsara
likely will have little control over such third parties, and any of them may fail to devote the necessary resources and attention
to sell and market Samsara’s products effectively. If Samsara is not successful in commercializing its products, either
on its own or through arrangements with one or more third parties, Samsara may not be able to generate any future product revenue
and Samsara would incur significant additional losses.
Business
disruptions could seriously harm Samsara’s future revenue and financial condition and increase its costs and expenses.
Samsara’s
operations could be subject to earthquakes, power shortages, telecommunications failures, water shortages, floods, hurricanes,
typhoons, fires, extreme weather conditions, medical epidemics and other natural or manmade disasters or business interruptions,
for which Samsara is predominantly self-insured. Samsara relies on third- party manufacturers to produce Samsara’s products
whose operations may be disrupted by a man-made or natural disaster or other business interruption. The occurrence of any of these
business disruptions could seriously harm Samsara’s operations and financial condition and increase its costs and expenses.
Samsara
is subject to U.S. and certain foreign export and import controls, sanctions, embargoes, anti-corruption laws and anti-money laundering
laws and regulations. Compliance with these legal standards could impair Samsara’s ability to compete in domestic and international
markets. Samsara could face criminal liability and other serious consequences for violations, which could harm its business.
Samsara
is subject to export control and import laws and regulations, including the U.S. Export Administration Regulations, U.S. Customs
regulations, and various economic and trade sanctions regulations administered by the U.S. Treasury Department’s Office
of Foreign Assets Controls, and anti-corruption and anti-money laundering laws and regulations, including the U.S. Foreign Corrupt
Practices Act of 1977, as amended, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, the
USA PATRIOT Act, and other state and national anti-bribery and anti-money laundering laws in the countries in which Samsara conducts
activities. Anti-corruption laws are interpreted broadly and prohibit companies and their employees, agents, clinical research
organizations, contractors and other collaborators and partners from authorizing, promising, offering, providing, soliciting or
receiving, directly or indirectly, improper payments or anything else of value to recipients in the public or private sector.
Samsara can be held liable for the corrupt or other illegal activities of its employees, agents, contractors and other collaborators
and partners, even if Samsara does not explicitly authorize or have actual knowledge of such activities. Any violations of the
laws and regulations described above may result in substantial civil and criminal fines and penalties, imprisonment, the loss
of export or import privileges, debarment, tax reassessments, breach of contract and fraud litigation, reputational harm and other
consequences.
Samsara
may engage in strategic transactions that could impact its liquidity, increase its expenses and present significant distractions
to Samsara’s management.
From
time to time, Samsara may consider strategic transactions, such as acquisitions of companies, asset purchases and licensing arrangements.
Any future transactions could increase Samsara’s near- and long-term expenditures, result in potentially dilutive issuances
of Samsara’s equity securities, including its common stock, or the incurrence of debt, contingent liabilities, amortization
expenses or acquired in-process research and development expenses, any of which could affect Samsara’s financial condition,
liquidity and results of operations. Additional potential transactions that Samsara may consider in the future include a variety
of business arrangements, including spin-offs, strategic partnerships, joint ventures, restructurings, divestitures, business
combinations and investments. Future acquisitions may also require Samsara to obtain additional financing, which may not be available
on favorable terms or at all. These transactions may never be successful and may require significant time and attention of management.
In addition, the integration of any business that Samsara may acquire in the future may disrupt Samsara’s existing business
and may be a complex, risky and costly endeavor for which Samsara may never realize the full benefits of the acquisition. Accordingly,
although there can be no assurance that Samsara will undertake or successfully complete any additional transactions of the nature
described above, any additional transactions that Samsara does complete could have a material adverse effect on Samsara’s
business, results of operations, financial condition and prospects.
If
Samsara fails to comply with its obligations in the agreements under which it licenses intellectual property rights from third
parties, or otherwise experiences disruptions in its business relationships with its licensors, Samsara could lose license rights
that are important to its business.
Samsara
is a party to several license agreements under which it is granted rights to intellectual property that are important to its business
and Samsara may enter into additional license agreements in the future. These license agreements impose, and Samsara expects that
any future license agreements where Samsara licenses intellectual property will impose, on Samsara, various development, regulatory
and/or commercial diligence obligations, payment of milestones and/or royalties and other obligations. If Samsara fails to comply
with its obligations under these agreements, or Samsara is subject to bankruptcy-related proceedings, the licensor may have the
right to terminate the license, in which event Samsara would not be able to market products covered by the license.
Samsara
may need to obtain licenses from third parties to advance its research or allow commercialization of its products, and Samsara
cannot provide any assurances that third-party patents do not exist which might be enforced against Samsara’s products in
the absence of such a license. Samsara may fail to obtain any of these licenses on commercially reasonable terms, if at all. Even
if Samsara is able to obtain a license, it may be non-exclusive, thereby giving Samsara’s competitors access to the same
technologies licensed to Samsara. In that event, Samsara may be required to expend significant time and resources to develop or
license replacement technology. If Samsara is unable to do so, Samsara may be unable to develop or commercialize the affected
products, which could materially harm Samsara’s business and the third parties owning such intellectual property rights
could seek either an injunction prohibiting Samsara’s sales, or, with respect to Samsara’s sales, an obligation on
Samsara’s part to pay royalties and/or other forms of compensation. Licensing of intellectual property is of critical importance
to Samsara’s business and involves complex legal, business and scientific issues. Disputes may arise between Samsara and
its licensors regarding intellectual property subject to a license agreement, including:
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the
scope of rights granted under the license agreement and other interpretation-related issues;
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whether
and the extent to which Samsara’s technology and processes infringe on intellectual property of the licensor that is
not subject to the licensing agreement;
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Samsara’s
right to sublicense patents and other rights to third parties;
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Samsara’s
diligence obligations with respect to the use of the licensed technology in relation to its development and commercialization
of Samsara’s products, and what activities satisfy those diligence obligations;
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Samsara’s
right to transfer or assign the license; and
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the
ownership of inventions and know-how resulting from the joint creation or use of intellectual property by Samsara’s
licensors and Samsara and its partners.
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If
disputes over intellectual property that Samsara has licensed prevent or impair Samsara’s ability to maintain its current
licensing arrangements on acceptable terms, Samsara may not be able to successfully develop and commercialize the affected product
candidates, which would have a material adverse effect on Samsara’s business.
Samsara’s
commercial success depends significantly on its ability to operate without infringing the patents and other proprietary rights
of third parties. Claims by third parties that Samsara infringes their proprietary rights may result in liability for damages
or prevent or delay Samsara’s developmental and commercialization efforts.
Samsara’s
commercial success depends in part on avoiding infringement of the patents and proprietary rights of third parties. However, Samsara’s
or its licensee’s research, development and commercialization activities may be subject to claims that Samsara or its licensee
infringes or otherwise violates patents or other intellectual property rights owned or controlled by third parties. Other entities
may have or obtain patents or proprietary rights that could limit Samsara’s or its licensee’s ability to make, use,
sell, offer for sale or import Samsara’s products, or impair Samsara’s competitive position. There is a substantial
amount of litigation, both within and outside the United States, involving patent and other intellectual property rights. Numerous
third-party U.S. and foreign issued patents and pending patent applications exist in the fields in which Samsara is developing
products.
Because
patent applications are maintained as confidential for a certain period of time, until the relevant application is published Samsara
may be unaware of third-party patents that may be infringed by commercialization of any of Samsara’s products, and Samsara
cannot be certain that Samsara was the first to file a patent application related to a product candidate or technology. Moreover,
because patent applications can take many years to issue, there may be currently-pending patent applications that may later result
in issued patents that Samsara’s products may infringe. In addition, identification of third-party patent rights that may
be relevant to Samsara’s technology is difficult because patent searching is imperfect due to differences in terminology
among patents, incomplete databases and the difficulty in assessing the meaning of patent claims. In addition, third parties may
obtain patents in the future and claim that use of Samsara’s technologies infringes upon these patents. Any claims of patent
infringement asserted by third parties would be time consuming and could:
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result
in costly litigation that may cause negative publicity;
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divert
the time and attention of Samsara’s technical personnel and management;
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cause
development delays;
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subject
Samsara to an injunction preventing Samsara from making, using, selling, offering for sale, or importing Samsara products;
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prevent
Samsara from commercializing any of its products until the asserted patent expires or is held finally invalid or not infringed
in a court of law;
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require
Samsara to develop non-infringing technology, which may not be possible on a cost-effective basis;
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subject
Samsara to significant liability to third parties; or
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require
Samsara to enter into royalty or licensing agreements, which may not be available on commercially reasonable terms, or at
all, or which might be non-exclusive, which could result in Samsara’s competitors gaining access to the same technology.
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Although
no third-party has asserted a claim of patent infringement against Samsara as of the date of this prospectus, others may hold
proprietary rights that could prevent Samsara’s products from being marketed. Any patent-related legal action against Samsara
claiming damages and seeking to enjoin activities relating to Samsara’s products could subject Samsara to potential liability
for damages, including treble damages if Samsara were determined to have willfully infringed, and require Samsara to obtain a
license to manufacture or develop its products. Defense of these claims, regardless of their merit, would involve substantial
litigation expense and would be a substantial diversion of employee resources from Samsara’s business. Samsara cannot predict
whether it would prevail in any such actions or that any license required under any of these patents would be made available on
commercially reasonable terms, if at all. Moreover, even if Samsara or its future strategic partners were able to obtain a license,
the rights may be nonexclusive, which could result in Samsara’s competitors gaining access to the same intellectual property.
In addition, Samsara cannot be certain that it could redesign its products to avoid infringement, if necessary. Accordingly, an
adverse determination in a judicial or administrative proceeding, or the failure to obtain necessary licenses, could prevent Samsara
from developing and commercializing its products, which could harm Samsara’s business, financial condition and operating
results.
Parties
making claims against Samsara may be able to sustain the costs of complex patent litigation more effectively than Samsara can
because they have substantially greater resources. Furthermore, because of the substantial amount of discovery required in connection
with intellectual property litigation or administrative proceedings, there is a risk that some of Samsara’s confidential
information could be compromised by disclosure. In addition, any uncertainties resulting from the initiation and continuation
of any litigation could have a material adverse effect on Samsara’s ability to raise additional funds or otherwise have
a material adverse effect on Samsara’s business, results of operations, financial condition and prospects.
If
Samsara is unable to protect the confidentiality of its trade secrets, its business and competitive position would be harmed.
In
addition, Samsara relies on the protection of its trade secrets, including unpatented know-how, technology and other proprietary
information to maintain Samsara’s competitive position. Although Samsara has taken steps to protect its trade secrets and
unpatented know-how, including entering into confidentiality agreements with third parties, and confidential information and inventions
agreements with employees, consultants and advisors, Samsara cannot provide any assurances that all such agreements have been
duly executed, and any of these parties may breach the agreements and disclose Samsara’s proprietary information, including
its trade secrets, and Samsara may not be able to obtain adequate remedies for such breaches. Enforcing a claim that a party illegally
disclosed or misappropriated a trade secret is difficult, expensive and time consuming, and the outcome is unpredictable. In addition,
some courts inside and outside the United States are less willing or unwilling to protect trade secrets.
Moreover,
third parties may still obtain this information or may come upon this or similar information independently, and Samsara would
have no right to prevent them from using that technology or information to compete with Samsara. If any of these events occurs
or if Samsara otherwise loses protection for its trade secrets, the value of this information may be greatly reduced and Samsara’s
competitive position would be harmed. If Samsara does not apply for patent protection prior to such publication or if Samsara
cannot otherwise maintain the confidentiality of its proprietary technology and other confidential information, then Samsara’s
ability to obtain patent protection or to protect its trade secret information may be jeopardized.
Risks
Related to the Company’s Common Stock
An
active, liquid and orderly market for the Company’s common stock may not develop, and you may not be able to resell your
common stock at or above the purchase price.
Samsara’s
common stock is quoted on the OTC Pink. An active trading market for the Company’s common stock has not developed and may
never develop or be sustained. The lack of an active market may impair an investor’s ability to sell its shares at the time
it wishes to sell them or at a price that it considers reasonable. An inactive market may also impair the Company’s ability
to raise capital by selling shares and may impair the Company’s ability to acquire other businesses or technologies using
the Company’s shares as consideration, which, in turn, could materially adversely affect the Company’s business.
The
trading price of the shares of the Company’s common stock could be highly volatile, and purchasers of the Company’s
common stock could incur substantial losses.
The
Company’s stock price is likely to be volatile. The stock market in general has experienced extreme volatility that has
often been unrelated to the operating performance of particular companies. As a result of this volatility, investors may not be
able to sell their common stock at or above their purchase price. The market price for the Company’s common stock may be
influenced by those factors discussed in this “Risk Factors” section and many others, including:
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the
success or failure of the Company’s efforts to acquire, license or develop additional products;
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innovations
or new products developed by the Company or its competitors;
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announcements
by the Company or its competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments;
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manufacturing,
supply or distribution delays or shortages;
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any
changes to the Company’s relationship with any manufacturers, suppliers, licensors, future collaborators or other strategic
partners;
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achievement
of expected product sales and profitability;
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variations
in the Company’s financial results or those of companies that are perceived to be similar to the Company;
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trading
volume of the Company’s common stock;
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an
inability to obtain additional funding;
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sales
of the Company’s stock by insiders and stockholders;
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general
economic, industry and market conditions other events or factors, many of which are beyond the Company’s control;
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additions
or departures of key personnel; and
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intellectual
property, product liability or other litigation against the Company.
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Samsara’s
executive officers and directors control or significantly influence all matters submitted to stockholders for approval.
The
Company’s executive officers, directors and greater than 5% stockholders, in the aggregate, own in excess of 80% of the
Company’s outstanding common stock. Furthermore, the two directors of Samsara have the ability to control or significantly
influence all matters submitted to the Company’s board of directors or stockholders for approval, including the appointment
of the Company’s management, the election and removal of directors and approval of any significant transaction, as well
as the Company’s management and business affairs. This concentration of ownership may have the effect of delaying, deferring
or preventing a change in control, impeding a merger, consolidation, takeover or other business combination involving the Company,
or discouraging a potential acquiror from making a tender offer or otherwise attempting to obtain control of the Company’s
business, even if such a transaction would benefit other stockholders.
Samsara
does not currently intend to pay dividends on its common stock, and, consequently, investors’ ability to achieve a return
on your investment will depend on appreciation, if any, in the price of the Company’s common stock.
Samsara
has never declared or paid any cash dividend on its common stock. Samsara currently anticipates that it will retain future earnings
for the development, operation and expansion of the Company’s business and does not anticipate declaring or paying any cash
dividends for the foreseeable future. Any return to stockholders will therefore be limited to the appreciation of their stock.
There is no guarantee that shares of the Company’s common stock will appreciate in value or even maintain the price at which
stockholders have purchased their shares.
Sales
of a substantial number of shares of the Company’s common stock by the Company’s stockholders in the public market
could cause the Company’s stock price to fall.
Sales
of a substantial number of shares of the Company’s common stock in the public market or the perception that these sales
might occur could significantly reduce the market price of the Company’s common stock and impair the Company’s ability
to raise adequate capital through the sale of additional equity securities.
Samsara
must incur significant increased costs as a result of operating as a public company, and its management will be required to devote
substantial time to new compliance initiatives compared to that which they devoted as the management of a private company.
The
Target, whose former management team is now Samsara’s management team, was a private company. As a public company, Samsara
must incur significant legal, accounting and other expenses that the Target did not have to incur prior to the Merger. Samsara
is subject to the reporting requirements of the Exchange Act, which will require, among other things, that Samsara file with the
U.S. Securities and Exchange Commission, or SEC, annual, quarterly and current reports with respect to its business and financial
condition. In addition, the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”), as well as rules subsequently adopted by
the SEC to implement provisions of Sarbanes-Oxley, impose significant requirements on public companies, including requiring establishment
and maintenance of effective disclosure and financial controls and changes in corporate governance practices. Further, pursuant
to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the SEC has adopted additional rules and regulations
in these areas, such as mandatory “say on pay” voting requirements that now apply to Samsara. Stockholder activism,
the current political environment and the current high level of government intervention and regulatory reform may lead to substantial
new regulations and disclosure obligations, which may lead to additional compliance costs and impact the manner in which Samsara
operates its business in ways Samsara cannot currently anticipate.
Samsara
expects the rules and regulations applicable to public companies to substantially increase Samsara’s legal and financial
compliance costs compared to those of the Target prior to the Merger, and to make some activities more time consuming and costly.
If these requirements divert the attention of Samsara’s management and personnel from other business concerns, they could
have a material adverse effect on Samsara’s business, financial condition and results of operations. The increased costs
may increase Samsara’s net loss, and may require Samsara to reduce costs in other areas of its business or increase the
prices of its products or services. For example, Samsara expects these rules and regulations to make it more difficult and more
expensive for Samsara to obtain director and officer liability insurance, and Samsara may be required to incur substantial costs
to maintain the same or similar coverage. Samsara cannot predict or estimate the amount or timing of additional costs Samsara
may incur to respond to these requirements. The impact of these requirements could also make it more difficult for Samsara to
attract and retain qualified persons to serve on its board of directors, its board committees or as executive officers.
If
securities or industry analysts do not publish research or reports or publish unfavorable research or reports about the Company’s
business, the Company’s stock price and trading volume could decline.
The
trading market for the Company’s common stock will depend in part on the research and reports that securities or industry
analysts publish about the Company, its business, its market or its competitors. Samsara does not currently have and may never
obtain research coverage by securities and industry analysts. If no securities or industry analysts commence coverage of the Company,
the trading price for the Company’s stock would be negatively impacted. In the event the Company obtains securities or industry
analyst coverage, if one or more of the analysts who covers the Company downgrades its stock, the Company’s stock price
would likely decline. If one or more of these analysts ceases to cover the Company or fails to regularly publish reports on the
Company, interest in the Company’s stock could decrease, which could cause the Company’s stock price or trading volume
to decline.
If
the Company fails to maintain proper and effective internal control over financial reporting, the Company’s ability
to produce accurate and timely financial statements could be impaired, investors may lose confidence in the Company’s financial
reporting and the trading price of the Company’s common stock may decline.
Pursuant
to Section 404 of Sarbanes-Oxley, the Company’s management is required to report upon the effectiveness of the Company’s
internal control over financial reporting. Additionally, if the Company reaches an accelerated filer threshold, the Company’s
independent registered public accounting firm will be required to attest to the effectiveness of the Company’s internal
control over financial reporting. The rules governing the standards that must be met for management to assess the Company’s
internal control over financial reporting are complex and require significant documentation, testing and possible remediation.
To comply with the requirements of being a reporting company under the Exchange Act, the Company will need to upgrade its information
technology systems; implement additional financial and management controls, reporting systems and procedures; and hire additional
accounting and finance staff. If the Company or, if required, its auditors are unable to conclude that the Company’s internal
control over financial reporting is effective, investors may lose confidence in the Company’s financial reporting and the
trading price of the Company’s common stock may decline.
The
Company cannot assure its investors that there will not be material weaknesses or significant deficiencies in the Company’s
internal control over financial reporting in the future. Any failure to maintain internal control over financial reporting could
severely inhibit the Company’s ability to accurately report its financial condition, results of operations or cash flows.
If the Company is unable to conclude that its internal control over financial reporting is effective, or if the Company’s
independent registered public accounting firm determines the Company has a material weakness or significant deficiency in the
Company’s internal control over financial reporting once that firm begin its Section 404 reviews, investors may lose confidence
in the accuracy and completeness of the Company’s financial reports, the market price of the Company’s common stock
could decline, and the Company could be subject to sanctions or investigations by the SEC or other regulatory authorities. Failure
to remedy any material weakness in the Company’s internal control over financial reporting, or to implement or maintain
other effective control systems required of public companies, could also restrict the Company’s future access to the capital
markets.