ITEM
1. BUSINESS
Corporate
History
Friendable,
Inc., a Nevada corporation (the Company), was incorporated in the State of Nevada.
Friendable,
Inc. is a mobile-focused technology and marketing company, connecting and engaging users through two distinctly branded applications.
The Company initially released its flagship product Friendable, as a social application where users can create one-on-one or group-style
meetups. In 2019 the Company has moved the Friendable app closer to a traditional dating application with its focus on building
revenue, as well as reintroducing the brand as a non-threatening, all-inclusive place where Everything starts with Friendship…meet,
chat & date.
On
June 28, 2017, the Company formed a wholly owned Nevada subsidiary called Fan Pass Inc.
Fan
Pass is the Companys most recent or second app/brand, scheduled for release in 2020. Fan Pass believes in connecting Fans of
their favorite celebrity or artist, to an exclusive VIP or Backstage experience, right from their smartphone or other connected
devices. Fan Pass allows an artists fanbase to experience something they would otherwise never have the opportunity to afford
or geographically attend. The Company aims to establish both Friendable and Fan Pass as premier brands and mobile platforms that
are dedicated to connecting and engaging users from anywhere around the World.
On August 8, 2019 the Company filed a Designation of Series
B convertible Preferred Stock with the state of Nevada, designating 1,000,000 shares of the Series B Preferred Stock with a stated
value of $1.00 per share. A holder of Series B Preferred Stock has the right to convert their Series B Preferred Stock into fully
paid and non-assessable shares of Common Stock. Initially, the conversion price for the Series B Preferred Stock is $.25 per share,
subject to standard anti-dilution adjustments. Additionally, each share of Series B Preferred Stock shall be entitled to, as a
dividend, a pro rata portion of an amount equal to 10% (Ten Percent) of the Net Revenues (Net Revenues being Gross
Sales minus Cost of Goods Sold) derived from the subscriptions and other sales, but excluding and net of Vimeo fees, processing
fees and up sells, generated by Fan Pass Inc., the wholly-owned subsidiary of the Corporation. The Series B Dividend shall be calculated
and paid on a monthly basis in arrears starting on the day 30 days following the first day of the month following the initial issuance
of the Series B Preferred and continuing for a period of 60 (Sixty) months. The holders of Series B Preferred stock shall have
no voting rights. The holders of Series B Preferred stock shall not be entitled to receive any dividends. In the event of any voluntary
or involuntary liquidation, dissolution or winding up of the Company or deemed liquidation event, the holders of shares of Series
B Preferred Stock shall be entitled to be paid the liquidation amount, as defined out of the assets of the Company available for
distribution to its shareholders, after distributions to holders of the Series A Preferred Stock and before distributions to holders
of Common Stock.
On
August 27, 2019, a 1 for 18,000 reverse stock split of our common stock became effective. All share and per shar information in
the accompanying consolidated financial statements and footnotes has been retroactively adjusted for the effects of the reverse
split.
On November 25, 2019 the Company filed a Designation of Series
C convertible Preferred Stock with the state of Nevada, designating 1,000,000 shares of the Series C Preferred Stock with a stated
value of $1.00 per share. The Series C Preferred Stock will, with respect to dividend rights and rights upon liquidation, winding-up
or dissolution, rank: (a) senior with respect to dividends with the Companys common stock, par value 0.0001 per share (Common
Stock)(the Series C Preferred Stock will convert into common stock immediately upon liquidation and be pari passu with the
common stock in the event of litigation), and (b) junior with respect to dividends and right of liquidation to all existing and
future indebtedness of the Company. The Series C Preferred Stock does not have any voting rights. Each share of Series C Preferred
Stock will carry an annual dividend in the amount of eight percent (8%) of the Stated Value of $1.00 (the Divided Rate),
which shall be cumulative and compounded daily, payable solely upon redemption, liquidation or conversion and increase to 22% upon
an event of default as defined. In the event of any default other than the Companys failure to issue shares upon conversion,
the stated price will be $1.50. In a default event where the Company fails to issue shares upon conversion, the stated price will
$2.00. The holder shall have the right six months following the issuance date, to convert all or any part of the outstanding Series
C Preferred Stock into shares of common stock of the Company. The conversion price shall equal the Variable Conversion Price. The
Variable Conversion Price shall mean 71% multiplied by the market price, representing a discount rate of 29%. Market
price means the average of the two lowest trading prices for the Companys common stock during the twenty trading day period
ending on the latest complete trading day prior to the conversion date. Upon any liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary, or upon any deemed liquidation event, after payment or provision for payment of debts
and other liabilities of the Company, and after payment or provision for any liquidation preference payable to the holders of any
Preferred Stock ranking senior upon liquidation to the Series C Preferred Stock, if any, but prior to any distribution or payment
made to the holders of Common Stock or the holders of any Preferred Stock ranking junior upon liquidation to the Series C Preferred
Stock by reason of their ownership thereof, the Holders will be entitled to be paid out of the assets of the Company available
for distribution to its stockholders. The Company will have the right, at the Companys option, to redeem all or any portion
of the shares of Series C Preferred Stock, exercisable on not more than three trading days prior written notice to the Holders,
in full, in accordance with Section 6 of the designations at a premium of up to 35% for up to six months. Companys mandatory
redemption: On the earlier to occur of (i) the date which is twenty-four (24) months following the Issuance Date and (ii) the occurrence
of an Event of Default (the Mandatory Redemption Date), the Company shall redeem all of the shares of Series C Preferred
Stock of the Holders (which have not been previously redeemed or converted).
Friendable,
Inc. – About Us:
Company
Overview
About
Friendable, Inc.
Friendable,
Inc. is a mobile-focused technology and marketing company, connecting and engaging users through two distinctly branded applications:
The
Friendable and Fan Pass Mobile Applications.
The
Company initially released its flagship product Friendable, as a social application where users can create one-on-one or group-style
meetups. In 2019 the Company has moved the Friendable app closer to a traditional dating application with its focus on building
revenue, as well as reintroducing the brand as a non-threatening, all-inclusive place where Everything starts with Friendship…meet,
chat & date.
Fan
Pass is the Companys most recent or second app/brand, scheduled for release in 2020. Fan Pass believes in connecting Fans of
their favorite celebrity or artist, to an exclusive VIP or Backstage experience, right from their smartphone or other connected
devices. Fan Pass allows an artists fanbase to experience something they would otherwise never have the opportunity to afford
or geographically attend. The Company aims to establish both Friendable and Fan Pass as premier brands and mobile platforms that
are dedicated to connecting and engaging users from anywhere around the World.
Friendable,
Inc. was founded by Robert A. Rositano Jr. and Dean Rositano, two brothers with over 27 years of working together on technology-related
ventures.
Highlights
Friendable
has partnered with notable artists like Jennifer Lopez, Fifth Harmony, Fetty Wap, Meghan Trainor, Red Foo and Austin Mahone and
has generated over 1.5 Million historical downloads, approximately 900k registered users and most recently released a new upgraded
Friendable mobile app in January 2019.
Celebrity
Relationships have led the Company in the direction of Live Streaming Video and a soon to be released Mobile Application
by the name of Fan Pass, designed to connect fans to the Backstage or VIP Experience of their favorite
artists
Fan
Pass Market Opportunity
Executive
Leadership
Our
two founders are a team of Entrepreneurs who have over 25 years of tech related startup experience, recruiting talent, building
teams and turning ideas into big business opportunities, as well as exits for investors. Together raising over $40M in capital,
spanning various companies, with a history dating back to the first ever Internet IPO (Netcom Online Communications - 1993), as
well as the development of the first ever World Wide Web Directory (sold to McMillan Publishing 1995) and even deploying a first
mover social network by the name of nettaxi.com – 1998 - 2002, which was prior to Facebook and resulted in a top
10 most trafficked web site in the World, with a market cap of approximately $700M upon exiting the public company. Relationships
developed over the years include such companies as Apple, eBay and AT&T, as well as joint ventures with Music Industry Giants,
including Nocturne Productions, Herbie Herbert (Manager of the Band Journey) and Music.com; an early adopter
offering digital music downloads.
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Robert
A Rositano Jr.
Chief Executive Officer
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Mr.
Rositano, Jr. is a serial entrepreneur with 25+ years of experience in technology and bringing more than $60M in liquidity events
for the companies he has hatched or managed. Prior to starting the Company, Mr. Rositano began as the 3rd employee and member
of the Internets first IPO in 1993, Netcom Online Communications, Inc., which was sold to ICG Communications and later
sold to EarthLink in 1997. Mr. Rositano has co-founded a number of successful ventures following his experience with new technologies,
trends and markets. Some of which included Simply Internet, Inc., Nettaxi.com, Americas Biggest, Inc., Zippi Networks,
Inc (an eBay partner), CheckMate Mobile, Inc. and AppBuilder 360, a mobile app developer. He was also an author the first Web
Directory to ever be published, later selling the rights to Macmillan Publishing. His most recent venture, Friendable, Inc. has
resulted in a growing business opportunity in the ever-popular mobile technology space.
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Dean
Rositano
President & Chief Technology Officer
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Dean
is the President and Chief Technology Officer of Friendable, Inc. and is responsible for the day to day operations and guiding
of the technical direction of the company. With over 20 years of experience in executive management, Internet architecture and
high technology operations, Mr. Rositano has successfully assisted in raising funds in both private and public transactions. Prior
to Friendable, Inc., Mr. Rositano co- founded Checkmate Mobile, Inc, Latitude Venture Partners, LLC, Zippi Networks, Inc, Americas
Biggest, Inc, and most notably, was the co-founder and president and CTO of Silicon Valley based Nettaxi.com, which went public
in 1998 when it quickly reached a valuation of over $600M. With over 3M unique visitors daily and a top 5 worldwide, website rank.
As President and CTO, Mr. Rositano was responsible for designing, architecting, and scaling the Nettaxi server infrastructure
from 0 to over 10 million visitors per day.
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Frank Garcia
Chief Financial Officer
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Mr.
Garcia has an extensive background in public accounting and finance, with his most recent role serving as Chief Financial Officer
Titan Iron Corp. (OTCQB: TFER). From 1997 to 2006, he was employed in senior management positions by UK based Misys PLC, a global
software and solutions company serving customers in international banking and securities, international healthcare, and retail
financial services. Prior to 1997 Mr. Garcia held executive positions with CEMEX, a world leader in the construction materials
industry. Mr. Garcia received his Bachelor of Science –Business Administration—Major in Accounting from the University
of Arizona in 1981.
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Investor
Communications Contacts:
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Robert
A. Rositano, Jr.,
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Web
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Friendable,
Inc. (855) 473-7473
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CEO
Friendable, Inc.
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www.friendable.com
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Xt701
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1821
S. Bascom
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Employees
and Key Consultants
The
Company has three full time employees and a variety of partners that serve in various consulting capacities based on the
Companys specific needs.
Available
information
Our
website address is www.friendable.com. We do not intend our website address to be an active link or to otherwise incorporate
by reference the contents of the website into this Report. The public may read and copy any materials the Company files with the
U.S. Securities and Exchange Commission (the SEC) at the SECs Public Reference Room at 100 F Street, NE,
Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0030.
The SEC maintains an Internet website (http://www.sec.gov) that contains reports, proxy and information statements and other information
regarding issuers that file electronically with the SEC.
ITEM
1A. RISK FACTORS
You
should carefully consider the risks described below, together with all of the other information included in this annual report
in considering our business and prospects. The risks and uncertainties below may not be the only ones the Company faces. Additional
risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations.
If any of these risks actually occur, or others not specified below, the business, financial condition, operating results and
prospects of the Company could be materially and adversely affected.
Risks
Related to Our Business and Industry
Our
success depends upon the continued growth and acceptance of online/mobile advertising, particularly paid listings, as an effective
alternative to traditional, offline advertising and the continued commercial use of the internet.
Many
advertisers still have limited experience with mobile advertising and may continue to devote significant portions of their advertising
budgets to traditional offline advertising media. Accordingly, we continue to compete with traditional advertising media, including
television, radio and print, in addition to a multitude of websites with high levels of traffic and mobile advertising networks,
for a share of available advertising expenditures and expect to face continued competition as more emerging media and traditional
offline media companies enter the online and mobile advertising markets. We believe that the continued growth and continued acceptance
of mobile advertising generally will depend, to a large extent, on its perceived effectiveness and the acceptance of related advertising
models (particularly in the case of models that incorporate user targeting and/or utilize mobile devices), the continued growth
in commercial use of the internet (particularly abroad) and smart devices, the extent to which web/mobile browsers, software programs
and/or mobile applications that limit or prevent advertising from being displayed become commonplace and the extent to which the
industry is able to effectively manage click fraud. Any lack of growth in the market for mobile advertising, particularly
for paid listings, or any decrease in the effectiveness and value of mobile advertising (whether due to the passage of laws requiring
additional disclosure and/or opt-in policies for advertising that incorporates user targeting or other developments) would have
an adverse effect on our business, financial condition and results of operations.
We
depend, in part, upon arrangements with third parties to drive traffic to our various websites and distribute our products and
services.
We
engage in a variety of activities, such as search engine optimization and application search optimization, designed to attract
traffic to our application and convert visitors into repeat users and customers. How successful we are in these efforts depends,
in part, upon our continued ability to enter into arrangements with third parties to drive traffic to our application, as well
as the continued introduction of new and enhanced features, products and services that resonate with users and customers generally.
In
addition, we have entered into a number of arrangements with third parties to promote and deliver mobile advertising to various
social networks or mobile channels. Pursuant to these arrangements, third parties generally promote our application on various
mobile applications, their websites or through e-mail campaigns and we either pay on a cost per impression basis (i.e. cost per
view) or a fixed fee when visitors to these websites click through to or download our application. These arrangements are generally
not exclusive, are short-term in nature and are generally terminable by either party given notice. If existing arrangements with
third parties are terminated (or are not renewed upon their expiration) and we fail to replace this traffic and related revenues,
or if we are unable to enter into new arrangements with existing and/or new third parties in response to industry trends, our
business, financial condition and results of operations could be adversely affected.
Even
if we succeed in driving traffic to our application, we may not be able to convert this traffic or otherwise retain users unless
we continue to provide quality products and services. We may not be able to adapt quickly and/or in cost-effective manner to frequent
changes in user and customer preferences, which can be difficult to predict, or appropriately time the introduction of enhancements
and/or new products or services to the market. Our inability to provide quality products and services would adversely affect user
and customer experiences, which would result in decreases in users, customers and revenues, which would adversely affect our business,
financial condition and results of operations.
As
discussed below, our traffic building and conversion initiatives also involve the expenditure of considerable sums for marketing,
as well as for the development and introduction of new products, services and enhancements, infrastructure and other related efforts.
Marketing
efforts designed to drive traffic to our various websites may not be successful or cost-effective.
Traffic
building and conversion initiatives involve considerable expenditures for online, mobile and offline advertising and marketing.
We plan to make significant expenditures for online and mobile display advertising, event-based marketing and traditional offline
advertising in connection with these initiatives, which may not be successful or cost-effective. In the case of paid advertising
generally, the policies of sellers and publishers of advertising may limit our ability to purchase certain types of advertising
or advertise some of our products and services, which could affect our ability to compete effectively and, in turn, adversely
affect our business, financial condition and results of operations.
In
addition, search engines have increasingly expanded their offerings into other, non-search related categories, and have in certain
instances displayed their own integrated or related product and service offerings in a more prominent manner than those of third
parties within their search engine results. Continued expansion and competition from search engines could result in a substantial
decrease in traffic to our various websites, as well as increased costs if we were to replace free traffic with paid traffic,
which would adversely affect our business, financial condition and results of operations.
Lastly,
as discussed above, we also have and will enter into various arrangements with third parties in an effort to increase traffic,
which arrangements are generally more cost-effective than traditional marketing efforts. If we are unable to renew existing (and
enter into new) arrangements of this nature, sales and marketing costs as a percentage of revenue would increase over the long-term.
Any
failure to attract and acquire new, and retain existing, traffic, users and customers in a cost-effective manner could adversely
affect our business, financial condition and results of operations.
We
rely in part on application marketplaces and Internet search engines to drive traffic to our products and services, and if we
fail to appear high up in the search results or rankings, traffic to our platform could decline and our business and operating
results could be adversely affected.
We
rely on application marketplaces, such as Apples App Store, to drive downloads of our mobile applications. In the future,
Apple or other operators of application marketplaces may make changes to their marketplaces which may make access to our products
and services more difficult. Our rankings in Apples App Store may also drop based on the following factors:
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the
size and diversity of our registered member and subscriber bases relative to those of our competitors;
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the
functionality of our application and the attractiveness of their features and our services and offerings generally to consumers
relative to those of our competitors;
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how
quickly we can enhance our existing technology and services and/or develop new features and localized opportunities and venue
based monetization opportunities in response to:
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new,
emerging and rapidly changing technologies;
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the
introduction of product and service offerings by our competitors;
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changes
in consumer requirements and trends in the single community relative to our competitors; and
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our
ability to engage in cost-effective marketing efforts, including by way of maintaining relationships with third parties with which
we have entered into alliances, and the recognition and strength of our various brands relative to those of our competitors.
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Our
estimated income taxes could be materially different from income taxes that we ultimately pay.
We
are subject to income taxes in the United States. Significant judgment and estimation is required in determining our provision
for income taxes and related matters. In the ordinary course of our business, there are many transactions and calculations where
the ultimate tax determinations are uncertain or otherwise subject to interpretation. Our determination of our income tax liability
is always subject to review by applicable tax authorities and we are currently subject to audits in a number of jurisdictions.
Although we believe our income tax estimates and related determinations are reasonable and appropriate, relevant taxing authorities
may disagree. The ultimate outcome of any such audits and reviews could be materially different from estimates and determinations
reflected in our historical income tax provisions and accruals. Any adverse outcome of any such audit or review could have an
adverse effect on our financial condition and results of operations.
A
variety of new laws, or new interpretations of existing laws, could subject us to claims or otherwise harm our business.
We
are subject to a variety of laws in the U.S. and abroad that are costly to comply with, can result in negative publicity and diversion
of management time and effort and can subject us to claims or other remedies. Some of these laws, such as income, sales, use,
value-added and other tax laws and consumer protection laws, are applicable to businesses generally and others are unique to the
various types of businesses in which we are engaged. Many of these laws were adopted prior to the advent of the internet and related
technologies and, as a result, do not contemplate or address the unique issues of the internet and related technologies.
Laws that do reference the internet are being interpreted by the courts, but their applicability and scope remain uncertain.
For
example, through our various businesses we post and link to third party content, including third party advertisements, links and
websites, as well as content submitted by users, such as comments, photographs and videos. We could be subject to liability for
posting or linking to third party content, and while we generally require third parties to indemnify us for related claims, we
may not be able to enforce our indemnification rights. Some laws, including the Communications Decency Act, or CDA, and the Digital
Millennium Copyright Act, or DMCA, limit our liability for posting or linking to third party content. For example, the DMCA generally
protects online service providers from claims of copyright infringement based on use of third party content, so long as certain
statutory requirements are satisfied. However, the scope and applicability of the DMCA are subject to judicial interpretation
and, as such, remain uncertain, and the U.S. Congress may enact legislation limiting the protections afforded by the DMCA to online
service providers. Moreover, similar protections may not exist in other jurisdictions in which our products are used. As a result,
claims could be threatened and filed under both U.S. and foreign laws based upon use of third party content asserting, among other
things, defamation, invasion of privacy or right or publicity, copyright infringement or trademark infringement.
Any
failure on our part to comply with applicable laws may subject us to additional liabilities, which could adversely affect our
business, financial condition and results of operations. In addition, if the laws to which we are currently subject are amended
or interpreted adversely to our interests, or if new adverse laws are adopted, our products and services might need to be modified
to comply with such laws, which would increase our costs and could result in decreased demand for our products and services to
the extent that we pass on such costs to our customers. Specifically, in the case of tax laws, positions that we have taken or
will take are subject to interpretation by the relevant taxing authorities. While we believe that the positions we have taken
to date comply with applicable law, there can be no assurances that the relevant taxing authorities will not take a contrary position,
and if so, that such positions will not adversely affect us. Any events of this nature could adversely affect our business, financial
condition and results of operations.
We
may fail to adequately protect our intellectual property rights or may be accused of infringing the intellectual property rights
of third parties.
We
regard our intellectual property rights, including trademarks, domain names, trade secrets, copyrights and other similar intellectual
property, as critical to our success. For example, we currently rely heavily on the trademark iHookup to market
our product and seek to build and maintain brand loyalty and recognition. We intend, in due course, subject to legal advice, to
apply for trademark, copyright and/or patent protection in the United States and other jurisdictions. We regard our intellectual
property, including our software and trademark, as valuable assets and intend to vigorously defend them against infringement.
Effective trademark protection may not be available or may not be sought in every country in which products and services are made
available and contractual disputes may affect the use of marks governed by private contract. We have reserved and registered certain
domain names, however not every variation of a domain name may be available or be registered, even if available.
While
there can be no assurance that registered trademarks and copyrights will protect our proprietary information, we intend to assert
our intellectual property rights against any infringer. Although any assertion of our rights can result in a substantial cost
to, and diversion of effort by, our Company, management believes that the protection of our intellectual property rights is a
key component of our operating strategy.
Our
application also relies upon trade secrets and certain copyrightable and patentable proprietary technologies relating to its software
and related features, products and services.
We
will rely on a combination of laws and contractual restrictions with employees, customers, suppliers, affiliates and others to
establish and protect our various intellectual property rights. For example, we plan to apply to register and renew, or secure
by contract where appropriate, trademarks and service marks as they are developed and used, and continue to reserve, register
and renew domain names as we deem appropriate.
We
also plan to apply for copyrights and patents or for other similar statutory protections as we deem appropriate, based on then
current facts and circumstances. No assurances can be given that any copyright or patent application we file will result in a
copyright or patent being issued, or that any future copyright or patent will afford adequate protection against competitors and
similar technologies. In addition, no assurances can be given that third parties will not create new products or methods that
achieve similar results without infringing upon copyrights or patents we may own in the future.
Despite
these measures, our intellectual property rights may still not be protected in a meaningful manner, challenges to contractual
rights could arise or third parties could copy or otherwise obtain and use our intellectual property without authorization. The
occurrence of any of these events could result in the erosion of our brands and limitations on our ability to control marketing
on or through the internet using our various domain names, as well as impede our ability to effectively compete against competitors
with similar technologies, any of which could adversely affect our business, financial conditions and results of operations.
From
time to time, we may be subject to legal proceedings and claims in the ordinary course of business, including claims of alleged
infringement of trademarks, copyrights, patents and other intellectual property rights held by third parties. In addition, litigation
may be necessary in the future to enforce our intellectual property rights, protect our trade secrets or to determine the validity
and scope of proprietary rights claimed by others. Any litigation of this nature, regardless of outcome or merit, could result
in substantial costs and diversion of management and technical resources, any of which could adversely affect our business, financial
condition and results of operations. Patent litigation tends to be particularly protracted and expensive.
If
we fail to grow our user base, or if user engagement or ad engagement on the platform declines, the revenue, business and operating
results may be harmed.
The
size of the user base and the users level of engagement are critical to our success. The financial performance has been
and will continue to be significantly determined by success in growing the number of users and increasing their overall level
of engagement on the platform as well as the number of ad engagements. We generate a substantial majority of our revenue based
upon the number of downloads, migration to subscription accounts and engagement by the users with the ads that we display. If
people do not perceive the services to be useful, reliable and trustworthy, we may not be able to attract users or increase the
frequency of their engagement with the platform and the ads that we display. There is no guarantee that we will be successful
in attracting more users or not suffer erosion of the user base or engagement levels. A number of factors could potentially negatively
affect user growth and engagement, including if:
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users
engage with other products, services or activities as an alternative;
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influential
users, such as celebrities, athletes, journalists and brands or certain age demographics conclude that an alternative product
or service is more relevant;
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we
are unable to convince potential new users of the value and usefulness of its products and services;
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there
is a decrease in the perceived quality of the content generated by our platform;
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we
fail to introduce new and improved products or services or if we introduce new or improved products or services that are not favorably
received or that negatively affect user engagement;
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technical
or other problems prevent us from delivering our products or services in a rapid and reliable manner or otherwise affect the user
experience;
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we
are unable to present users with content that is interesting, useful and relevant to them;
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users
believe that their experience is diminished as a result of the decisions we make with respect to the frequency, relevance and
prominence of ads that we display;
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there
are user concerns related to privacy and communication, safety, security or other factors;
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we
become subject to hostile or inappropriate usage on our platform;
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there
are adverse changes in our products or services that are mandated by, or that we elect to make to address, legislation, regulatory
authorities or litigation, including settlements or consent decrees;
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we
fail to provide adequate customer service to users; or
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we
do not maintain our brand image or its reputation is damaged.
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If
users do not continue to download and use our application and their engagement is not valuable to other users, we may experience
a decline in the number of users accessing the products and services and user engagement, which could result in the loss of advertisers
and revenue.
Our
success depends on our ability to provide users with valuable content, which in turn depends on the profile descriptions and use
of the app by others. We believe that one of our competitive advantages is the quality, quantity and real-time nature of the content
on iHookup, and that access to unique or real-time content is one of the main reasons users visit us. We seek to foster a broad
and engaged user community, and we encourage celebrities, athletes, and others to use our products and services to meet people
and form relationships. If users do not continue to contribute profiles and we are unable to provide users with valuable and timely
content or other people to engage with, our user base and user engagement may decline. Additionally, if we are not able to address
user concerns regarding the safety and security of our products and services or if we are unable to successfully prevent abusive
or other hostile behavior on the platform, the size of the user base and user engagement may decline.
If
we are unable to compete effectively for users and advertiser spend, the business and operating results could be harmed.
Competition
for users of its products and services is intense. Although we have developed a new platform for public self-expression and meeting
people in real time, we face strong competition in this business. We compete against many companies to attract and engage users,
including companies which have greater financial resources and substantially larger user bases, such as eHarmony, Match.com and
others which offer a variety of Internet and mobile device-based products, services and content. As a result, competitors may
acquire and engage users at the expense of the growth or engagement of our user base, which would negatively affect the business.
We
believe that our ability to compete effectively for users depends upon many factors both within and beyond our control, including:
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the
popularity, usefulness, ease of use, performance and reliability of our products and services compared to those of our competitors;
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the
amount, quality and timeliness of content generated by our users;
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the
timing and market acceptance of our products and services;
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the
adoption of our products and services internationally;
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its
ability, and the ability of our competitors, to develop new products and services and enhancements to existing products and services;
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the
frequency and relative prominence of the ads displayed by us or our competitors;
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our
ability to establish and maintain relationships with platform partners that integrate with our platform;
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changes
mandated by, or that we elect to make to address, legislation, regulatory authorities or litigation, including settlements and
consent decrees, some of which may have a disproportionate effect on us;
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government
action regulating competition;
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our
ability to attract, retain and motivate talented employees, particularly engineers, designers and product managers;
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acquisitions
or consolidation within our industry, which may result in more formidable competitors; and
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our
reputation and the brand strength relative to our competitors.
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We
also face significant competition for advertiser spend. We compete against online and mobile businesses, including those referenced
above, and traditional media outlets, such as television, radio and print, for advertising budgets. In order to grow our revenue
and improve our operating results, we must increase our share of spending on advertising relative to our competitors, many of
which are larger companies that offer more traditional and widely accepted advertising products. In addition, some of our larger
competitors have substantially broader product or service offerings and leverage their relationships based on other products or
services to gain additional share of advertising budgets.
We
believe that our ability to compete effectively for advertiser spend depends upon many factors both within and beyond our control,
including:
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the
size and composition of our user base relative to those of our competitors;
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our
ad targeting capabilities, and those of our competitors;
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the
timing and market acceptance of our advertising services, and those of our competitors;
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our
marketing and selling efforts, and those of our competitors;
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the
pricing for our products relative to the advertising products and services of our competitors;
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the
return our advertisers receive from their advertising services, compared to those of our competitors; and
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our
reputation and the strength of our brand relative to our competitors.
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If
we are not able to compete effectively for users and advertiser spend our business and operating results would be materially and
adversely affected.
User
growth and engagement depend upon effective interoperation with operating systems, networks, and devices, that we do not control.
Currently,
our application is available only on Apples iOS. We are dependent on the interoperability of our products and services
with popular devices, and mobile operating systems that we do not control. Any changes in such systems or devices that degrade
the functionality of our products and services or give preferential treatment to competitive products or services could adversely
affect usage of our products and services. Further, if the number of platforms for which we develop our product expands, it will
result in an increase in our operating expenses. In order to deliver high quality products and services, it is important that
our products and services work with a range of operating systems and devices that we do not control. In addition, because our
users access our products and services through mobile devices, we are particularly dependent on the interoperability of our products
and services with mobile devices and operating systems. We may not be successful in developing or maintaining relationships with
key participants in the mobile industry or in developing products or services that operate effectively with these operating systems
and devices. In the event that it is difficult for our users to access and use our products and services on their mobile devices,
our user growth and engagement could be harmed, and our business and operating results could be adversely affected.
We
have a limited operating history in a new and unproven market for our platform, which makes it difficult to evaluate our future
prospects and may increase the risk that we will not be successful.
We
have developed a mobile app for public self-expression and meeting people in real time, and the market for our products and services
is relatively new and may not develop as expected, if at all. People who are not our users may not understand the value of our
products and services and new users may initially find our products confusing. Convincing potential new users of the value of
our products and services is critical to increasing our user base and to the success of our business
We
have a limited operating history which makes it difficult to effectively assess our future prospects or forecast future results.
We encounter or may encounter many risks in this developing and rapidly evolving market. These risks and challenges include its
ability to, among other things:
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increase
its number of users and user engagement;
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successfully
expand our business;
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develop
a reliable, scalable, secure, high-performance technology infrastructure that can efficiently handle increased usage;
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convince
advertisers of the benefits of our products compared to alternative forms of advertising;
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develop
and deploy new features, products and services;
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successfully
compete with other companies, some of which have substantially greater resources and market power than us, that are currently
in, or may in the future enter, its industry, or duplicate the features of our products and services;
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attract,
retain and motivate talented employees, particularly engineers, designers and product managers;
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process,
store, protect and use personal data in compliance with governmental regulations, contractual obligations and other obligations
related to privacy and security;
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continue
to earn and preserve its users trust, including with respect to their private personal information; and
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defending
ourselves against litigation, regulatory, intellectual property, privacy or other claims.
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If
we fail to educate potential users and potential advertisers about the value of our products and services, if the market for our
platform does not develop as we expect or if we fail to address the needs of this market, our business will be harmed. We may
not be able to successfully address these risks and challenges or other unforeseen risks and challenges. Failure to adequately
address these risks and challenges could harm our business and cause our operating results to suffer.
Our
business depends on the continued and unimpeded access to our products and services on mobile devices by our users and advertisers.
If we or our users experience disruptions in service or if mobile service providers are able to block, degrade or charge for access
to our products and services, we could incur additional expenses and the loss of users and advertisers.
We
depend on the ability of our users and advertisers to access mobile devices. Currently, this access is provided by companies that
have significant market power in the broadband and telecommunications access marketplace, including incumbent telephone companies,
cable companies, mobile communications companies, government-owned service providers, device manufacturers and operating system
providers, any of whom could take actions that degrade, disrupt or increase the cost of user access to our products or services,
which would, in turn, negatively impact our business. We also rely on other companies to maintain reliable communications network
systems that provide adequate speed, data capacity and security to us and our users. As the number of mobile device users continues
to grow, frequency of use and amount of data transmitted, the communications infrastructure that we and our users rely on may
be unable to support the demands placed upon it. The failure of the mobile communications infrastructure that we and/or our users
rely on, even for a short period of time, could undermine our operations and harm our operating results.
Abusive
activities by certain users could diminish the user experience on our platform, which could damage our reputation and deter our
current and potential users from using our products and services.
There
are a range of abusive activities that are prohibited by the our terms of service and are generally defined as unsolicited, repeated
actions that negatively impact other users with the general goal of drawing user attention to a given person, account, site, product
or idea. This includes posting large numbers of unsolicited mentions of a user, duplicate outlets, misleading links (e.g., to
malware or click-jacking pages) or other false or misleading content, and aggressively following and un-following accounts, adding
users to lists, sending invitations to inappropriately attract attention. Our terms of service also prohibit the creation of serial
or bulk accounts, both manually or using automation, for disruptive or abusive purposes. Although we continue to invest resources
to reduce spam and other abusive behavior, we expect spammers and abusers will continue to seek ways to act inappropriately on
our platform. We will continuously combat spam and other abusive behaviors, including by suspending or terminating accounts we
believe to be spammers and launching algorithmic changes focused on curbing abusive activities. Combatting spam and other abusive
behaviors require the diversion of significant time and focus of our engineering team from improving our products and services.
If spam or abusive behavior increase, this could hurt our reputation for delivering relevant content or reduce user growth and
user engagement and result in continuing operational cost to us.
If
we fail to effectively manage our growth, our business and operating results could be harmed.
If
we experience rapid growth in our headcount and operations, it will place significant demands on our management, operational and
financial infrastructure. We intend to continue to make substantial investments to expand our operations, research and development,
sales and marketing and general and administrative organizations. We face significant competition for employees, particularly
engineers, designers and product managers, from other Internet and high-growth companies, which include both publicly-traded and
privately-held companies, and we may not be able to hire new employees quickly enough to meet our needs. To attract highly skilled
personnel, we will need to continue to offer, highly competitive compensation packages. As we continue to grow, we are subject
to the risks of over-hiring, over-compensating our employees and over-expanding our operating infrastructure, and to the challenges
of integrating, developing and motivating a rapidly growing employee base. If we fail to effectively manage our hiring needs and
successfully integrate new hires, our efficiency and ability to meet our forecasts and our employee morale, productivity and retention
could suffer, and our business and operating results could be adversely affected.
Our
business and operating results may be harmed by a disruption in our service, or by our failure to timely and effectively scale
and adapt our existing technology and infrastructure.
One
of the reasons people use our platform is for real-time information and personal contact. We may, in the future, experience service
disruptions, outages and other performance problems due to a variety of factors, including infrastructure changes, human or software
errors, hardware failure, capacity constraints due to an overwhelming number of people accessing our products and services simultaneously,
computer viruses and denial of service or fraud or security attacks. Although we are investing significantly to improve the capacity,
capability and reliability of our infrastructure, we are not currently serving traffic equally through the data centers that support
our platform. Accordingly, in the event of a significant issue at the data center supporting most of our network traffic, some
of our products and services may become inaccessible to the public or the public may experience difficulties accessing our products
and services. Any disruption or failure in our infrastructure could hinder our ability to handle existing or increased traffic
on our platform, which could significantly harm our business.
As
the number of our users increases and our users generate more content, including photos and videos hosted by us, we may be required
to expand and adapt our technology and infrastructure to continue to reliably store, serve and analyze this content. It may become
increasingly difficult to maintain and improve the performance of our products and services, especially during peak usage times,
as our products and services become more complex and our user traffic increases. This would negatively impact our ability to attract
users and advertisers and increase engagement of our users. We expect to continue to make significant investments to maintain
and improve the capacity, capability and reliability of our infrastructure. To the extent that we do not effectively address capacity
constraints, upgrade our systems as needed and continually develop our technology and infrastructure to accommodate actual and
anticipated changes in technology, our business and operating results may be harmed.
If
we are unable to maintain and promote our brand, our business and operating results may be harmed.
We
believe that maintaining and promoting our brand is critical to expanding our base of users and advertisers. Maintaining and promoting
our brand will depend largely on our ability to continue to provide useful, reliable and innovative products and services, which
we may not do successfully. We may introduce new features, products, services or terms of service that users, platform partners
or advertisers do not like, which may negatively affect our brand. Additionally, the actions of platform partners may affect our
brand if users do not have a positive experience using third-party applications. Our brand may also be negatively affected by
the actions of users that are hostile or inappropriate to other people, by users impersonating other people, by users identified
as spam, by users introducing excessive amounts of spam on its platform or by third parties obtaining control over users
accounts. Maintaining and enhancing our brand may require iHookup to make substantial investments and these investments may not
achieve the desired goals. If we fail to successfully promote and maintain our brand or if we incur excessive expenses in this
effort, our business and operating results could be adversely affected.
Negative
publicity could adversely affect our business and operating results.
Negative
publicity about us, including about our product quality and reliability, changes to our products and services, privacy and security
practices, litigation, regulatory activity, the actions of our users or user experience with our products and services, even if
inaccurate, could adversely affect our reputation and the confidence in and the use of our products and services. For example,
service outages could result in widespread media reports. Such negative publicity could also have an adverse effect on the size,
engagement and loyalty of our user base and result in decreased revenue, which could adversely affect our business and operating
results.
We
focus on product innovation and user engagement rather than short-term operating results.
We
encourage employees to quickly develop and help us launch new and innovative features. We focus on improving the user experience
for our products and services and on developing new and improved products and services for the advertisers on our platform. We
prioritize innovation and the experience for users and advertisers on our platform over short-term operating results. We may make
product and service decisions that may reduce our short-term operating results if we believe that the decisions are consistent
with its goals to improve the user experience and performance for advertisers, which we believe will improve our operating results
over the long term. These decisions may not be consistent with the short-term expectations and may not produce the long-term benefits
that we expect, in which case our user growth and user engagement, our relationships with advertisers and our business and operating
results could be harmed. In addition, our focus on the user experience may negatively impact our relationships with existing or
prospective advertisers. This could result in a loss of advertisers, which could harm our revenue and operating results.
Our
products and services may contain undetected software errors, which could harm our business and operating results.
Our
products and services incorporate complex software and we encourage our employees to quickly develop and help us launch new and
innovative features. Our software may now or in the future contain, errors, bugs or vulnerabilities. Some errors in the software
code may only be discovered after the product or service has been released. Any errors, bugs or vulnerabilities discovered in
our code after release could result in damage to our reputation, loss of users, loss of platform partners, loss of advertisers
or advertising revenue or liability for damages, any of which could adversely affect our business and operating results.
Our
business is subject to complex and evolving U.S. laws and regulations. These laws and regulations are subject to change and uncertain
interpretation, and could result in claims, changes to its business practices, monetary penalties, increased cost of operations
or declines in user growth, user engagement or ad engagement, or otherwise harm our business.
We
are subject to a variety of laws and regulations in the United States that involve matters central to our business, including
privacy, rights of publicity, data protection, content regulation, intellectual property, competition, protection of minors, consumer
protection and taxation. Many of these laws and regulations are still evolving and being tested in courts and could be interpreted
or applied in ways that could harm our business, particularly in the new and rapidly evolving industry in which we operate. The
introduction of new products or services may subject us to additional laws and regulations. There have been a number of recent
legislative proposals in the United States, at both the federal and state level, that would impose new obligations in areas such
as privacy. The U.S. government, including the Federal Trade Commission, or the FTC, and the Department of Commerce, has announced
that it is reviewing the need for greater regulation for the collection of information concerning user behavior on the Internet
and over mobile devices, including regulation aimed at restricting certain tracking and targeted advertising practices.
Additionally,
recent amendments to U.S. patent laws may affect the ability of companies to protect their innovations and defend against claims
of patent infringement. Having personal information may subject us to additional regulation. Further, it is difficult to predict
how existing laws and regulations will be applied to its business and the new laws and regulations to which we may become subject,
and it is possible that they may be interpreted and applied in a manner that is inconsistent with our practices. These existing
and proposed laws and regulations can be costly to comply with and can delay or impede the development of new products and services,
result in negative publicity, significantly increase our operating costs, require significant time and attention of management
and technical personnel and subject us to inquiries or investigations, claims or other remedies, including fines or demands that
we modify or cease existing business practices.
Even
though our platform is for public self-expression conversation and personal interaction, user trust regarding privacy is important
to the growth of users and the increase in user engagement on our platform, and privacy concerns relating to our products and
services could damage our reputation and deter current and potential users and advertisers from using our products and services.
From
time to time, concerns have been expressed by governments, regulators and others about whether mobile products, services or practices
compromise the privacy of users and others. Concerns about, governmental or regulatory actions involving practices with regard
to the collection, use, disclosure or security of personal information or other privacy-related matters, even if unfounded, could
damage our reputation, cause us to lose users and advertisers and adversely affect our operating results. While we will strive
to comply with applicable data protection laws and regulations, as we strive to comply with our own posted privacy policies and
other obligations we may have with respect to privacy and data protection, the failure or perceived failure to comply may result,
in inquiries and other proceedings or actions against us by governments, regulators or others. These inquiries could result in
negative publicity and damage to our reputation and brand, each of which could cause us to lose users and advertisers, which could
have an adverse effect on our business.
Any
systems failure or compromise of our security that results in the unauthorized access to or release of our users or advertisers
data could significantly limit the adoption of our products and services and cause harm to our reputation and brand and, therefore,
our business. We expect to continue to expend significant resources to protect against security breaches. The risk that these
types of events could seriously harm our business is likely to increase as we expand the number of products and services we offer,
increase the size of our user base and operate in other countries.
If
our security measures are breached, or if our products and services are subject to attacks that degrade or deny the ability of
users to access our products and services, our products and services may be perceived as not being secure, users and advertisers
may curtail or stop using our products and services and our business and operating results could be harmed.
Our
products and services involve the storage and transmission of users and advertisers information, and security breaches
expose us to a risk of loss of this information, litigation and potential liability. We may experience cyber-attacks of varying
degrees, and as a result, unauthorized parties may obtain, and may in the future obtain, access to its data or its users
or advertisers data. Our security measures may also be breached due to employee error, malfeasance or otherwise. Additionally,
outside parties may attempt to fraudulently induce employees, users or advertisers to disclose sensitive information in order
to gain access to our data or our users or advertisers data or accounts, or may otherwise obtain access to such
data or accounts. Since our users and advertisers may use their accounts to establish and maintain online identities, unauthorized
communications from our accounts that have been compromised may damage their reputations. Any such breach or unauthorized access
could result in significant legal and financial exposure, damage to our reputation and a loss of confidence in the security of
our products and services that could have an adverse effect on our business and operating results. Because the techniques used
to obtain unauthorized access, disable or degrade service or sabotage systems change frequently and often are not recognized until
launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. If
an actual or perceived breach of security occurs, the market perception of the effectiveness of our security measures could be
harmed, we could lose users and advertisers and we may incur significant legal and financial exposure, including legal claims
and regulatory fines and penalties. Any of these actions could have a material and adverse effect on our business, reputation
and operating results.
We
depend on highly skilled personnel to grow and operate our business, and if we are unable to hire, retain and motivate its personnel,
we may not be able to grow effectively.
Our
future success will depend upon our continued ability to identify, hire, develop, motivate and retain highly skilled personnel,
including senior management, engineers, designers and product managers. Our ability to execute efficiently is dependent upon contributions
from our employees, in particular our senior management team. We do not maintain key person life insurance for any employee. In
addition, from time to time, there may be changes in our senior management team that may be disruptive to our business. If our
senior management team, including any new hires that we may make, fails to work together effectively and to execute our plans
and strategies on a timely basis, our business could be harmed. Our growth strategy also depends on our ability to expand our
organization with highly skilled personnel. Identifying, recruiting, training and integrating qualified individuals will require
significant time, expense and attention. Competition for highly skilled personnel is intense, particularly in the San Francisco
Bay Area, where our headquarters is located. We may need to invest significant amounts of cash and equity to attract and retain
new employees and we may never realize returns on these investments. If we are not able to effectively add and retain employees,
our ability to achieve our strategic objectives will be adversely impacted, and our business will be harmed.
Our
business is subject to the risks of earthquakes, fire, power outages, floods and other catastrophic events, and to interruption
by man-made problems such as terrorism.
A
significant natural disaster, such as an earthquake, fire, flood or significant power outage could have a material adverse impact
on our business, operating results, and financial condition. Our headquarters is located in the San Francisco Bay Area, a region
known for seismic activity. Despite any precautions we may take, the occurrence of a natural disaster or other unanticipated problems
at our data centers could result in lengthy interruptions in our services. In addition, acts of terrorism and other geo-political
unrest could cause disruptions in our business. All of the aforementioned risks may be further increased if our disaster recovery
plans prove to be inadequate. We have a disaster recovery program, which allows us to move production to a back-up data center
in the event of a catastrophe. Although this program is functional, we do not currently serve network traffic equally from each
data center, so if our primary data center shuts down, there will be a period of time that our products or services, or certain
of our products or services, will remain inaccessible to our users or our users may experience severe issues accessing our products
and services. We do not carry business interruption insurance sufficient to compensate us for the potentially significant losses,
including the potential harm to our business that may result from interruptions in our ability to provide our products and services.
Risks
Related to Our Company
Messrs.
Dean and Robert Rositano, Jr., as our directors and officers, own a significant percentage of the voting power of our stock and
will be able to exercise significant influence and control over the matters subject to stockholder approval and our operations.
-Messrs.
Dean and Robert Rositano may be deemed to own (directly and/or beneficially) 94.1% of our Series A preferred stock.
As of June 23, 2020, the following entities and individuals own the following shares of our Series A preferred stock:
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Messrs.
Dean and Robert Rositano each own 1,942 shares;
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Copper
Creek Holdings, LLC, a Nevada limited liability company owned and managed by Robert Rositano and his wife Stacy Rositano, owns
14,730 shares;
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The
holders of Series A preferred stock are entitled to cast votes equal to the number of votes equal to the number of whole shares
of common stock into which the shares of Series A Preferred Stock held by such holder are convertible. The total aggregate issued
shares of Series A Preferred Stock at any given time regardless of their number shall be convertible into the number of shares
of common stock which equals nine (9) times the total number of shares of common stock which are issued and outstanding at the
time of any conversion, at the option of the preferred holders or until the closing of a Qualified Financing (i.e. the sale and
issuance of our equity securities that results in gross proceeds in excess of $2,500,000) at one time or in the same round. As
a result of the Titan Iron Ore Corp. and iHookup merger transaction, the former iHookup stockholders received a controlling interest
in the Company due to the voting rights of the Series A Preferred Stock being connected to their super-majority conversion rights.
As a result of Messrs. Dean and Robert Rositanos ownership interests and voting power described above,
Messrs. Dean and Robert Rositano currently are in a position to influence and control, subject to our organizational
documents and Nevada law, the composition of our Board of Directors and the outcome of corporate actions requiring stockholder
approval, such as mergers, business combinations and dispositions of assets, among other corporate transactions. In addition,
this concentration of voting power could discourage others from initiating a potential merger, takeover or other change of control
transaction that may otherwise be beneficial to the Company, which could adversely affect the market price of our securities.
If
we are unable to pay the convertible promissory notes when obligations become due, the note holders may take adverse proceedings
under terms of default.
In
the event of default under terms in the convertible promissory notes, the note holder may enforce remedies including acceleration
of payment in full plus interest and other charges, and an increase in interest rates of up to 24% when allowable by law.
Our
disclosure controls and procedures and internal control over financial reporting are not effective, which may cause our financial
reporting to be unreliable and lead to misinformation being disseminated to the public.
Our
management evaluated our disclosure controls and procedures as of December 31, 2019 and concluded that as of those dates, our
disclosure controls and procedures were not effective. The ineffectiveness of our disclosure controls and procedures was due to
(i) inadequate segregation of duties and ineffective risk assessment; and (ii) insufficient written policies and procedures
for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines.
As
of the date of this annual report on Form 10-K, we believe that these material weaknesses continue to exist and our disclosure
controls and procedures and internal control over financial reporting are not effective. If such material weakness and ineffective
controls are not promptly corrected in the future, our ability to report quarterly and annual financial results or other information
required to be disclosed on a timely and accurate basis may be adversely affected. Also such material weakness and ineffective
controls could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public. Investors
relying upon this misinformation may make an uninformed investment decision.
We
have a limited operating history on which to base an evaluation of our business and prospects.
We
have a short operating history, which limits our ability to forecast our future operating results and subjects us to a number
of uncertainties, including our ability to plan for and model future growth. We have encountered and will continue to encounter
risks and uncertainties frequently experienced by growing companies in developing industries. If our assumptions regarding these
uncertainties, which we use to plan our business, are incorrect or change in reaction to changes in our markets, or if we do not
address these risks successfully, our operating and financial results could differ materially from our expectations and our business
could suffer.
If
we issue additional shares in the future, it will result in the dilution of our existing shareholders.
As
of December 31, 2019, our articles of incorporation authorize the issuance of up to 1,000,000,000 shares of common stock with
a par value of $0.0001 per share. Our board of directors may choose to issue some or all of such shares to acquire one or more
companies or properties and to fund our overhead and general operating requirements. The issuance of any such shares will reduce
the book value per share and may contribute to a reduction in the market price of the outstanding shares of our common stock.
If we issue any such additional shares, such issuance will reduce the proportionate ownership and voting power of all current
shareholders. Further, such issuance may result in a change of control of our corporation.
The
price of our common stock may be negatively impacted by factors which are unrelated to our operations.
The
market price of our common stock could fluctuate substantially due to a variety of factors, including market perception of our
ability to achieve our planned growth, quarterly operating results of our competitors, trading volume in our common stock, changes
in general conditions in the economy and the financial markets or other developments affecting our competitors or us. In addition,
the stock market is subject to extreme price and volume fluctuations. This volatility has had a significant effect on the market
price of securities issued by many companies for reasons unrelated to their operating performance and could have the same effect
on our common stock.
We
do not intend to pay cash dividends on any investment in the shares of stock of our company.
We
have never paid any cash dividends and currently do not intend to pay any cash dividends for the foreseeable future. Because we
do not intend to declare cash dividends, any gain on an investment in our company will need to come through an increase in the
stocks price. This may never happen and investors may lose all of their investment in our company.
Trading
of our stock is restricted by the Securities Exchange Commissions penny stock regulations, which may limit a stockholders
ability to buy and sell our common stock.
The
Securities and Exchange Commission has adopted regulations which generally define penny stock to be any equity security
that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain
exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers
who sell to persons other than established customers and accredited investors. The term accredited investor
refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or
annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to
a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form
prepared by the Securities and Exchange Commission, which provides information about penny stocks and the nature and level of
risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the
penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing
the market value of each penny stock held in the customers account. The bid and offer quotations, and the broker-dealer
and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction
and must be given to the customer in writing before or with the customers confirmation. In addition, the penny stock rules
require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special
written determination that the penny stock is a suitable investment for the purchaser and receive the purchasers written
agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the
secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the
ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit
the marketability of our common stock.
FINRA
sales practice requirements may also limit a stockholders ability to buy and sell our stock.
In
addition to the penny stock rules described above, the Financial Industry Regulatory Authority (known as FINRA)
has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds
for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their
non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customers 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 requirements
make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability
to buy and sell our stock and have an adverse effect on the market for our shares.
Our
stock price has been volatile and your investment could lose value.
The
trading price of our common stock has been volatile and could be subject to wide fluctuations due to various factors. The timing
of announcements in the public market regarding new products, product enhancements or technological advances by us or our competitors,
and any announcements by us or our competitors of acquisitions, major transactions or management changes could also affect our
stock price. Our stock price is subject to speculation in the press and the analyst community, changes in recommendations or earnings
estimates by financial analysts, changes in investors or analysts valuation measures for our stock and market trends
unrelated to our performance. A significant drop in our stock price could also expose us to the risk of securities class action
lawsuits, which could result in substantial costs and divert managements attention and resources, which could adversely
affect our business. Moreover, if the per share trading price of our common stock declines significantly, you may be unable to
resell your shares at or above the public offering price. We cannot assure you that the per share trading price of our common
stock will not fluctuate or decline significantly in the future.
The
trading price of our common stock has been low, and the sale of a substantial number of shares in the public market could depress
the price of our common stock.
Our
common stock is traded on the OTC Pink marketplace and historically has had a low average daily trading price relative to
many other stocks. Thinly traded stocks can have more price volatility than stocks trading in an active public market, which can
lead to significant price swings even when a relatively small number of shares are being traded, and can limit an investors
ability to quickly sell blocks of stock. If there continues to be low average daily trading volume or price in our common stock
investors may be unable to quickly liquidate their investments or at prices investors consider to be adequate.
Because
our common stock is quoted and traded on the OTC Pink marketplace, short selling could increase the volatility of our stock
price.
Short
selling occurs when a person sells shares of stock which the person does not yet own and promises to buy stock in the future to
cover the sale. The general objective of the person selling the shares short is to make a profit by buying the shares later, at
a lower price, to cover the sale. Significant amounts of short selling, or the perception that a significant amount of short sales
could occur, could depress the market price of our common stock. In contrast, purchases to cover a short position may have the
effect of preventing or retarding a decline in the market price of our common stock, and together with the imposition of the penalty
bid, may stabilize, maintain or otherwise affect the market price of our common stock. As a result, the price of our common stock
may be higher than the price that otherwise might exist in the open market. If these activities are commenced, they may be discontinued
at any time. These transactions may be effected on the OTC Pink marketplace or any other available markets or exchanges.
Such short selling if it were to occur could impact the value of our stock in an extreme and volatile manner to the detriment
of our shareholders.
Risks
Relating to the Early Stage of our Company and Ability to Raise Capital
We
are at a very early stage and our success is subject to the substantial risks inherent in the establishment of a new business
venture.
The
implementation of our business strategy is in a very early stage and subject to all of the risks inherent in the establishment
of a new business venture. Accordingly, our intended business and prospective operations may not prove to be successful in the
near future, if at all. Any future success that we might enjoy will depend upon many factors, many of which are beyond our control,
or which cannot be predicted at this time, and which could have a material adverse effect upon our financial condition, business
prospects and operations and the value of an investment in our company.
We
expect to suffer continued operating losses and we may not be able to achieve profitability.
We
expect to continue to incur significant development and marketing expenses in the foreseeable future related to the launch and
commercialization of our products and services. As a result, we will be sustaining substantial operating and net losses, and it
is possible that we will never be able to achieve profitability.
We
may have difficulty raising additional capital, which could deprive us of necessary resources.
In
order to support the initiatives envisioned in our business plan, we will need to raise additional funds through public or private
debt or equity financing, collaborative relationships or other arrangements. Our ability to raise additional financing depends
on many factors beyond our control, including the state of the capital markets, the market price of our common stock, and the
development of competitive projects by others. Because our common stock is not listed on a major stock market, many investors
may not be willing or allowed to purchase our common shares or may demand steep discounts. Sufficient additional financing may
not be available to us or may be available only on terms that would result in further dilution to the current owners of our common
stock.
During
the year ended December 31, 2019, we received $474,500 from the sale of common and preferred stock. However, we do not have any
firm commitments for funding beyond this recent financing. If we are unsuccessful in raising additional capital, or the terms
of raising such capital are unacceptable, we may have to modify our business plan and/or significantly curtail our planned activities.
If we are successful raising additional capital through the issuance of additional equity, our investors interests will
be diluted.
There
are substantial doubts about our ability to continue as a going concern and if we are unable to continue our business, our shares
may have little or no value.
Our
ability to become a profitable operating company is dependent upon our ability to generate revenues and/or obtain financing adequate
to implement our business plan. Achieving a level of revenues adequate to support our cost structure has raised doubts about our
ability to continue as a going concern. We plan to attempt to raise additional equity capital by issuing shares and, if necessary
through one or more private placement or public offerings, and via the securities purchase agreement/equity line financing. However,
the doubts raised relating to our ability to continue as a going concern may make our shares an unattractive investment for potential
investors. These factors, among others, may make it difficult to raise any additional capital.
Failure
to effectively manage our growth could place additional strains on our managerial, operational and financial resources and could
adversely affect our business and prospective operating results.
Our
anticipated growth is expected to continue to place a strain on our managerial, operational and financial resources. Further,
as we expand our user and advertiser base, we will be required to manage multiple relationships. Any further growth by us, or
an increase in the number of our strategic relationships will increase this strain on our managerial, operational and financial
resources. This strain may inhibit our ability to achieve the rapid execution necessary to implement our business plan, and could
have a material adverse effect upon our financial condition, business prospects and prospective operations and the value of an
investment in our company.
We
may fail to raise sufficient capital.
To
the extent that we fail to obtain sufficient operating capital, we may be unable to deal with presently unforeseen contingencies
in the future or be able to fund our operations. In addition, we may have more difficulty or find it impossible, to raise third
party financing from investors or financial institutions.
Our
reserves may be insufficient.
We
intend to establish a reserve fund, as determined in the Boards discretion, for normal working capital contingencies. However,
we have been unable to do so. If the reserves are not available to the Company, it may be necessary to attempt to raise additional
capital or financing. In the event that such capital or financing is not available on favorable terms, we may be forced to raise
additional capital on unfavorable terms. In fact, we have been forced to issue several convertible notes at substantial discounts
and interest rates in order to raise the requisite capital for operations.