Filed
Pursuant to Rule 253(g)(2)
File
No. 024-11205
Preliminary
Offering Circular
Dated September 2, 2020
Livewire
Ergogenics, Inc.
(Exact
name of issuer as specified in its charter)
Nevada
(State
or other jurisdiction of incorporation or organization)
http://www.livewireergogenics.com/
1600
N Kraemer Blvd.
Anaheim,
CA 92806
714-740-5144
(Address,
including zip code, and telephone number, including area code of issuer’s principal executive office)
2060
|
|
26-1212244
|
(Primary
Standard Industrial Classification Code Number)
|
|
(I.R.S.
Employer Identification Number)
|
Maximum
offering of 363,636,363 Shares
This
is a public offering of up to $2,000,000 in shares of Common Stock of Livewire Ergogenics, Inc. at a fixed price of $0.0055
for a maximum offering of 363,636,363.
The
offering price will be a fixed price between $0.01and $0.02, to be determined at the time of qualification. Offering price will
be disclosed via a supplemental filing within 2 days of Qualification. The end date of the offering will be exactly 365 days from
the date the Offering Circular is approved by the Attorney General of the state of New York (unless extended by the Company, in
its own discretion, for up to another 90 days).
Our
Common Stock currently trades on the OTC Pink market under the symbol “LVVV” and the closing price of our Common Stock
on May 7, 2020 was $0.0045. Our Common Stock currently trades on a sporadic and limited basis.
We
are offering our shares without the use of an exclusive placement agent. However, the Company reserves the right to retain one.
The proceeds will be disbursed to us and the purchased shares will be disbursed to the investors.
We
expect to commence the sale of the shares within two calendar days of the date on which the Offering Statement of which this Offering
Circular is qualified by the Securities Exchange Commission.
See
“Risk Factors” to read about factors you should consider before buying shares of Common Stock.
Generally,
no sale may be made to you in this offering if the aggregate purchase price you pay is more than 10% of the greater of your annual
income or net worth. Different rules apply to accredited investors and non-natural persons. Before making any representation that
your investment does not exceed applicable thresholds, we encourage you to review Rule 251(d)(2)(i)(C) of Regulation A. For general
information on investing, we encourage you to refer to www.investor.gov.
The
United States Securities and Exchange Commission does not pass upon the merits of or give its approval to any securities offered
or the terms of the offering, nor does it pass upon the accuracy or completeness of any offering circular or other solicitation
materials. These securities are offered pursuant to an exemption from registration with the Commission; however, the Commission
has not made an independent determination that the securities offered are exempt from registration.
This
Offering Circular is following the offering circular format described in Part II (a)(1)(ii) of Form 1-A.
Offering
Circular dated September 2, 2020
TABLE
OF CONTENTS
No
dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this Offering
Circular. You must not rely on any unauthorized information or representations. This Offering Circular is an offer to sell only
the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained
in this Offering Circular is current only as of its date.
LIIVEWIRE
ERGOGENICS, INC.
CONSOLIDATED BALANCE SHEET
FOR THE PERIOD ENDING DECEMBER 31, 2019 AND 2018
(UNAUDITED)
|
|
December 31, 2019
|
|
|
December 31, 2018
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
53,730
|
|
|
|
27,948
|
|
Accounts Receivable
|
|
|
60,000
|
|
|
|
-
|
|
Installment receivable
|
|
|
360,000
|
|
|
|
-
|
|
Prepaid expense and other current assets
|
|
|
691,794
|
|
|
|
20,040
|
|
Total current assets
|
|
|
1,165,524
|
|
|
|
47,988
|
|
|
|
|
|
|
|
|
|
|
Fixed assets, net
|
|
|
619,206
|
|
|
|
745,022
|
|
Licenses
|
|
|
602,973
|
|
|
|
590,000
|
|
Investments
|
|
|
935,253
|
|
|
|
369,000
|
|
|
|
|
|
|
|
|
|
|
Total other assets
|
|
|
2,157,432
|
|
|
|
1,704,022
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
3,322,956
|
|
|
$
|
1,752,010
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
|
638,462
|
|
|
|
349,646
|
|
Convertible notes, net of unamortized discounts
|
|
|
236,949
|
|
|
|
218,250
|
|
Notes payable, net of unamortized discounts
|
|
|
1,992,162
|
|
|
|
951,074
|
|
Notes payable - related party
|
|
|
196,341
|
|
|
|
196,341
|
|
Derivative Liability
|
|
|
39,636
|
|
|
|
-
|
|
Total current liabilities
|
|
|
3,103,550
|
|
|
|
1,715,311
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
3,103,550
|
|
|
|
1,715,311
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ deficit
|
|
|
|
|
|
|
|
|
Preferred stock; $0.0001 par value; 10,000,000 shares authorized; 32,895 and 32,895 shares issued and outstanding
as of December 31, 2019 and December 31, 2018, respectively
|
|
|
-
|
|
|
|
-
|
|
Common stock; $0.0001 par value; 1,500,000,000 shares authorized; 1,193,471,830 and 1,085,270,218 shares issued and
outstanding as of December 31, 2019 and December 31, 2018, respectively
|
|
|
119,349
|
|
|
|
108,529
|
|
Stock Payable
|
|
|
277,000
|
|
|
|
230,400
|
|
Additional paid-in capital
|
|
|
23,343,073
|
|
|
|
21,306,608
|
|
Accumulated earnings (deficit)
|
|
|
(23,365,463
|
)
|
|
|
(21,608,838
|
)
|
Total stockholders’ deficit
|
|
|
373,959
|
|
|
|
36,699
|
|
Non-controlling interest
|
|
|
(154,553
|
)
|
|
|
-
|
|
Total stockholders deficit to shareholders
|
|
|
219,406
|
|
|
|
36,699
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ equity
|
|
$
|
3,322,956
|
|
|
$
|
1,752,010
|
|
The accompanying notes
are an integral part of these unaudited consolidated financial statements.
LIVEWIRE ERGOGENICS, INC.
CONSOLIDATED STATEMENT OF OPERATION
FOR THE PERIOD ENDING DECEMBER 31, 2019 AND 2018
(UNAUDITED)
|
|
For the years ended
|
|
|
|
December 31, 2019
|
|
|
December 31, 2018
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
1,355,072
|
|
|
$
|
35,709
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
|
|
894,704
|
|
|
|
60,042
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
460,368
|
|
|
|
(24,333
|
)
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
Professional fees
|
|
|
313,730
|
|
|
|
504,356
|
|
Stock based consulting expense
|
|
|
795,785
|
|
|
|
7,129,547
|
|
General and administrative expenses
|
|
|
441,370
|
|
|
|
289,040
|
|
Depreciation and amortization
|
|
|
137,016
|
|
|
|
117,874
|
|
Total operating expenses
|
|
|
1,687,901
|
|
|
|
8,040,817
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
Loss on debt settlement
|
|
|
-
|
|
|
|
(52,100
|
)
|
Stock based legal settlement expense
|
|
|
-
|
|
|
|
(2,727,800
|
)
|
Gain (loss) on sale of property
|
|
|
1,800
|
|
|
|
-
|
|
Gain (loss) on derivative
|
|
|
(19,636
|
)
|
|
|
-
|
|
Gain (loss) on sale of stock
|
|
|
400,000
|
|
|
|
-
|
|
Interest expense
|
|
|
(1,054,169
|
)
|
|
|
(747,814
|
)
|
Total other income (expense)
|
|
|
(672,005
|
)
|
|
|
(3,527,714
|
)
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(1,899,538
|
)
|
|
$
|
(11,592,864
|
)
|
|
|
|
|
|
|
|
|
|
Less: Net loss to noncontrolling interest
|
|
|
(123,909
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) to shareholders
|
|
$
|
(1,775,629
|
)
|
|
$
|
(11,592,864
|
)
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share - basic
|
|
$
|
(0.00
|
)
|
|
$
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding - basic
|
|
|
1,111,843,228
|
|
|
|
952,712,931
|
|
The accompanying notes
are an integral part of these unaudited consolidated financial statements.
LIVEWIRE ERGOGENICS, INC.
CONSOLIDATED STATEMENT OF CASH FLOW
FOR THE PERIOD ENDING DECEMBER 31, 2019 AND 2018
(UNAUDITED)
|
|
For the Years Ended
|
|
|
|
December 31, 2019
|
|
|
December 31, 2018
|
|
Cash Flows from Operating Activities
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(1,899,538
|
)
|
|
$
|
(11,592,864
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
Stock based compensation
|
|
|
795,785
|
|
|
|
7,129,551
|
|
Loss (gain) on derivative liabilities
|
|
|
19,636
|
|
|
|
-
|
|
Stock issued for legal settlement
|
|
|
-
|
|
|
|
2,727,800
|
|
Loss on settlement of debt
|
|
|
-
|
|
|
|
52,100
|
|
Depreciation and amortization
|
|
|
137,016
|
|
|
|
117,874
|
|
Amortization of debt discount
|
|
|
835,819
|
|
|
|
603,074
|
|
Changes in assets and liabilities
|
|
|
|
|
|
|
|
|
(Increase) decrease in prepaid expenses and other current assets
|
|
|
(683,394
|
)
|
|
|
(20,040
|
)
|
(Increase) decrease in accounts receivable
|
|
|
(60,000
|
)
|
|
|
-
|
|
Increase in installment receivable
|
|
|
(360,000
|
)
|
|
|
-
|
|
Increase(decrease) in stock payable
|
|
|
147,000
|
|
|
|
(40,000
|
)
|
Increase (decrease) in accounts payable
|
|
|
288,816
|
|
|
|
100,604
|
|
Net cash used in operating activities
|
|
|
(778,860
|
)
|
|
|
(921,901
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows from investing
|
|
|
|
|
|
|
|
|
Purchase of investments
|
|
|
-
|
|
|
|
(25,000
|
)
|
Purchase of land
|
|
|
(566,253
|
)
|
|
|
(100,000
|
)
|
Investments in licensing
|
|
|
(12,973
|
)
|
|
|
-
|
|
Purchase of fixed assets
|
|
|
(11,200
|
)
|
|
|
(385,296
|
)
|
Net cash used in investing activities
|
|
|
(590,426
|
)
|
|
|
(510,296
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities
|
|
|
|
|
|
|
|
|
Payments on promissory notes
|
|
|
(157,432
|
)
|
|
|
(403,500
|
)
|
Proceeds from promissory notes
|
|
|
1,522,500
|
|
|
|
1,048,250
|
|
Payments on convertible debt
|
|
|
-
|
|
|
|
(25,000
|
)
|
Proceeds from issuance of common stock
|
|
|
30,000
|
|
|
|
727,500
|
|
Net cash from financing activities
|
|
|
1,395,068
|
|
|
|
1,347,250
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in Cash
|
|
|
25,782
|
|
|
|
(84,947
|
)
|
|
|
|
|
|
|
|
|
|
Beginning cash balance
|
|
|
27,948
|
|
|
|
112,895
|
|
|
|
|
|
|
|
|
|
|
Ending cash balance
|
|
$
|
53,730
|
|
|
$
|
27,948
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
-
|
|
|
$
|
-
|
|
Cash paid for tax
|
|
$
|
-
|
|
|
$
|
-
|
|
The accompanying notes
are an integral part of these unaudited consolidated financial statements.
LIVEWIRE ERGOGENICS,
INC.
CONSOLIDATED STATEMENT OF STOCKHOLDER DEFICIT
FOR THE PERIOD ENDING DECEMBER 31, 2018 AND 2019
(UNAUDITED)
For
the Years Ended December 31, 2018 and 2019
|
|
|
|
Preferred
Stock - B
|
|
|
Preferred
Stock – C
|
|
|
Common
Stock
|
|
|
Additional
Paid-in
|
|
|
Stock
|
|
|
Non-controlling
|
|
|
Accumulated
|
|
|
Total
Stockholders’
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Payable
|
|
|
Interest
|
|
|
Deficit
|
|
|
Deficit
|
|
Balance,
December 31, 2017
|
|
|
32,820
|
|
|
$
|
-
|
|
|
|
75
|
|
|
$
|
-
|
|
|
|
682,729,176
|
|
|
$
|
68,272
|
|
|
$
|
8,927,961
|
|
|
$
|
147,500
|
|
|
$
|
-
|
|
|
$
|
(10,015,974
|
)
|
|
|
(872,241
|
)
|
Shares
issued for cash
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
65,421,044
|
|
|
|
6,541
|
|
|
|
720,959
|
|
|
|
(40,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
687,500
|
|
Shares
issued for fixed assets
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
24,000,000
|
|
|
|
2,400
|
|
|
|
475,200
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
477,600
|
|
Shares
issued for services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
217,200,000
|
|
|
|
21,724
|
|
|
|
7,125,330
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7,147,054
|
|
Shares
issued for settlement of debt
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,000,000
|
|
|
|
100
|
|
|
|
35,600
|
|
|
|
140,400
|
|
|
|
-
|
|
|
|
-
|
|
|
|
176,100
|
|
Shares
issued for license agreement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000,000
|
|
|
|
1,000
|
|
|
|
589,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
590,000
|
|
Shares
issued for legal settlement
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
59,300,000
|
|
|
|
5,930
|
|
|
|
2,721,870
|
|
|
|
(17,500
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
2,710,300
|
|
Commitment
shares issued with debt
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
20,620,298
|
|
|
|
2,062
|
|
|
|
467,188
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
469,250
|
|
Shares
issued for investments
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,000,000
|
|
|
|
500
|
|
|
|
243,500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
244,000
|
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(11,592,864
|
)
|
|
|
(11,592,864
|
)
|
Balance,
December 31, 2018
|
|
|
32,820
|
|
|
|
-
|
|
|
|
75
|
|
|
|
-
|
|
|
|
1,085,270,518
|
|
|
|
108,529
|
|
|
|
21,306,608
|
|
|
|
230,400
|
|
|
|
-
|
|
|
|
(21,608,838
|
)
|
|
|
36,699
|
|
Shares
issued for cash
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
21,709,054
|
|
|
|
2,170
|
|
|
|
258,230
|
|
|
|
(230,400
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
30,000
|
|
Shares
issued for services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47,492,258
|
|
|
|
4,750
|
|
|
|
791,035
|
|
|
|
277,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,072,785
|
|
Shares
issued for settlement of debt
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
39,000,000
|
|
|
|
3,900
|
|
|
|
987,200
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
991,100
|
|
Investment
in GHC to non-controlling interest
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(30,644
|
)
|
|
|
19,004
|
|
|
|
(11,640
|
)
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(123,909
|
)
|
|
|
(1,775,629
|
)
|
|
|
(1,899,538
|
)
|
Balance,
December 31, 2019
|
|
|
32,820
|
|
|
|
-
|
|
|
|
75
|
|
|
|
-
|
|
|
|
1,193,471,830
|
|
|
|
119,349
|
|
|
|
23,343,073
|
|
|
|
277,000
|
|
|
|
(154,553
|
)
|
|
|
(23,365,463
|
)
|
|
|
219,406
|
|
Notes
to Unaudited Financial Statements
Management’s
Discussion and Analysis of Financial Condition and Results of Operation
The
following discussion and analysis should be read in conjunction with our consolidated financial statements. This discussion should
not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion
reached herein will necessarily be indicative of actual operating results in the future.
LiveWire
has been operating in the health and wellness industry for several years, and is focused on acquiring special purpose real
estate properties conducive to discovering and developing high-end organic cannabinoid products for the health and wellness
industry. The Company is in the process of relocating operations from its different locations througout California to its
main property Estrella Ranch in Paso Robles, California, according to its plan to develop the Ranch into the central hub for
all the Company’s operations. Buildout of the operations on the ranch has begun and the Company anticipates that this
process will be concluded during the first half of 2020 and will further streamline and centralize operations true to
management’s mission statement to run a well organized and lean operation while keeping overhead low. The
Company manages a Statewide distribution license from the Bureau of Cannabis Control California under its wholly owned subsidiary
GHC Ventures, LLC. The application for its Estrella Ranch location in Paso Robles, California has been accepted by the
appropriate governing authorities as complete.
The
advanced product development and subsequent commercialization of the unique hand-crafted organic products to be produced at this
facility will take advantage of a rapidly growing, maturing and further legalized cannabis industry, accelerated by the advancing
legalization and increasing public acceptance in California and throughout the country. The company is lead by a
team of entrepreneurs, experienced operators and cannabis industry experts who apply the latest scientific knowledge and technology
to deliver hand-crafted, organic and rigorously tested cannabis products.
The
Company works with, and/or acquires carefully selected cannabis operators and will only work with or have ownership in companies
that are in complete compliance with Federal and State laws and have the required permits to operate. LiveWire Ergogenics pursues
a unique profit-sharing business model to manufacture high-quality handcrafted products under family farm like conditions and
quality control at its Estrella Ranch location. The Company strategically aligns itself with carefully selected businesses
to become a vertically integrated company that will satisfy the fast-growing demand for high-quality and carefully tested products
in the California cannabis market. The Company is planning to expand its operations nationwide as soon as Federal legislation
permits. Livewire does not sell or distribute any products anywhere that are in violation of the United States Controlled Substance
Act.
Critical
Accounting Policies
The
preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United
States requires us to make estimates and judgments that affect our reported assets, liabilities, revenues, and expenses and the
disclosure of contingent assets and liabilities. We base our estimates and judgments on historical experience and on various others
assumptions we believe to be reasonable under the circumstances. Future events, however, may differ markedly from our current
expectations and assumptions. While there are a number of significant accounting policies affecting our consolidated financial
statements; we believe the following critical accounting policies involve the most complex, difficult and subjective estimates
and judgments:
Accounts
Receivable – We evaluate the collectability of our trade accounts receivable based on a number of factors. In circumstances
where we become aware of a specific customer’s inability to meet its financial obligations to us, a specific reserve
for bad debts is estimated and recorded, which reduces the recognized receivable to the estimated amount we believe will ultimately
be collected. In addition to specific customer identification of potential bad debts, bad debt charges are recorded based on our
recent loss history and an overall assessment of past due trade accounts receivable outstanding.
Inventories
– Inventories are stated at the lower of cost to purchase and/or manufacture the inventory or the current estimated
market value of the inventory. We regularly review our inventory quantities on hand and record a provision for excess and obsolete
inventory based primarily on our estimated forecast of product demand, production availability and/or our ability to sell the
product(s) concerned. Demand for our products can fluctuate significantly. Factors that could affect demand for our products include
unanticipated changes in consumer preferences,general market and economic conditions or other factors that may result in cancellations
of advance orders or reductions in the rate of reorders placed by customers and/or continued weakening of economic conditions.
Additionally, management’s estimates of future product demand may be inaccurate, which could result in an understated or
overstated provision required for excess and obsolete inventory.
Long-Lived
Assets – Management regularly reviews property and equipment and other long lived assets, including certain definite-lived
identifiable intangible assets, for possible impairment. This review occurs annually or more frequently if events or changes in
circumstances indicate the carrying amount of the asset may not be recoverable. If there is indication of impairment of property
and equipment or amortizable intangible assets, then management prepares an estimate of future cash flows (undiscounted and without
interest charges) expected to result from the use of the asset and its eventual disposition. If these cash flows are less than
the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. The fair
value is estimated at the present value of the future cash flows discounted at a rate commensurate with management’s estimates
of the business risks.
Revenue
Recognition – We recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred, the
sales price is fixed or determinable and collectability is reasonably assured. Generally, ownership of and title to our
products pass to customers upon delivery of the products to customers. Net sales have been determined after deduction of
promotional and other allowances in accordance with ASC 605-50. Amounts received pursuant to new and/or amended distribution
agreements entered into with certain distributors, relating to the costs associated with terminating our prior
distributors, are accounted for as revenue ratably over the anticipated life of the respective distribution agreement,
generally 20 years. Management believes that adequate provision has been made for cash discounts, returns and spoilage based
on our historical experience.
Cost
of Sales – Cost of sales consists of the costs of products distributed, in-bound freight charges, as well as
certain internal transfer co and warehouse expenses incurred prior to delivery. Variable product costs account for the
largest portion of the cost of sales.
Operating
Expenses – Operating expenses include selling expenses such as distribution expenses to transport products
to customers and warehousing expenses, as well as expenses for advertising, commissions and other marketing expenses.
Operating expenses also include payroll costs, travel costs, professional service fees including legal fees, entertainment,
insurance, postage, depreciation and other general and administrative costs.
Income
Taxes – We utilize the liability method of accounting for income taxes as set forth in ASC 740. Under the liability
method, deferred taxes are determined based on the temporary differences between the financial statement and tax basis of
assets and liabilities using tax rates expected to be in effect during the years in which the basis differences reverse. A
valuation allowance is recorded when it is more likely than not that some of the deferred tax assets will not be realized. In
determining the need for valuation allowances we consider projected future taxable income and the availability of tax
planning strategies. If in the future we determine that we would not be able to realize our recorded deferred tax assets, an
increase in the valuation allowance would be recorded, decreasing earnings in the period in which such determination is
made.
We
assess our income tax positions and record tax benefits for all years subject to examination based upon our evaluation of the
facts, circumstances and information available at the reporting date. For those tax positions where there is a greater than
50% likelihood that a tax benefit will be sustained, we have recorded the largest amount of tax benefit that may potentially
be realized upon ultimate settlement with taxing authority that has full knowledge of all relevant information. For those
income tax positions where there is less than 50% likelihood that a tax benefit will be sustained, no tax benefit has been
recognized in the financial statements.
Derivative
Liabilities The Company assessed the classification of its derivative financial instruments as of December 31,2018, which
consist of Convertible instruments and rights to shares of the Company’s common stock, and determined that such
Derivatives meet the criteria for liability classification under ASC 815.
ASC
815 generally provides three criteria that, if met, require companies to bifurcate conversion options from their host
instruments and account for them as free standing derivative financial instruments. These three criteria include
circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and
closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both
the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable
generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate
instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument subject to
the requirements of ASC 815. ASC 815 also provides an exception to this rule when the host instrument is deemed to be
conventional, as described.
Fair
Value of Financial Instruments - The Company has adopted FASB ASC 820 Fair Value Measurements and Disclosures, or ASC 820,
for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value
to be applied to existing generally accepted accounting principles that require the use of fair value measurements establishes
a framework for measuring fair value and expands disclosure about such fair value measurements. The adoption of ASC 820 did not
have an impact on the Company’s financial position or operating results, but did expand certain disclosures.
ASC
820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
Between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize
the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:
Level
1:
|
Observable
inputs such as quoted market prices in active markets for identical assets or liabilities
|
Level
2:
|
Observable
market-based inputs or unobservable inputs that are corroborated by market data
|
Level
3:
|
Unobservable
inputs for which there is little no market data, which require the use of the reporting entity’s own assumptions.
|
The
Company did not have any Level 2 or Level 3 assets or liabilities as of December 31, 2017, with the exception of its convertible
notes payable and derivative liability. The carrying amounts of these liabilities at December 31, 2017 approximate their respective
fair value based on the Company’s incremental borrowing rate.
Cash
is considered to be highly liquid and easily tradable as of December 31, 2017 and therefore classified as Level 1 within our fair
value hierarchy.
In
addition, FASB ASC 825-10-25 Fair Value Option, or ASC 825-10-25, was effective for January 1, 2008. ASC 825-10-25 expands opportunities
to use fair value measurements in financial reporting and permits entities to choose to measure many financial instruments and
certain other items at fair value. The Company did not elect the fair value options for any of its qualifying financial instruments.
Convertible
Instruments - The Company evaluates and accounts for conversion options embedded in its convertible instruments in
accordance with professional standards for “Accounting for Derivative Instruments and Hedging Activities. Professional
standards generally provides three criteria that, if met, require companies to bifurcate conversion options from their host
instruments and account for them as free standing derivative financial instruments. These three criteria include
circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and
closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both
the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable
generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate
instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.
Professional standards also provide an exception to this rule when the host instrument is deemed to be conventional as
defined under professional standards as the Meaning of “Conventional Convertible Debt Instrument”.
The
Company accounts for convertible instruments (when it has determined that the embedded conversion options should not Be Bifurcated
from their host instruments) in accordance with professional standards when “Accounting for Convertible Securities with
Beneficial Conversion Features,” as those professional standards pertain to “Certain Convertible Instruments.
Accordingly,
the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in
debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the
note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized
over the term of the related debt to their earliest date of redemption. The Company also records when necessary deemed dividends
for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of
the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the
note.
ASC
81540 provides that, among other things, generally, if an event is not within the entity’s control could or require net
cash settlement, then the contract shall be classified as an asset or a liability.
Results
of Operation
During
the year ended December 31, 2019 and 2018, we incurred net losses of $1,775,629 and
$11,592,864 respectively, an improvement of $9,817,235 or 84.6%.
Comparison
of the results of operations for the year ended December 31, 2019 and 2018 Sales. During the years ended December 31, 2019
and 2018, sales of our products amounted to $1,355,072 and $35,709, respectively,
an increase of $1,319,363 or 3,695%. The increase in sales is due to the Company’s grant of a state-wide cannabis distribution
license by the California Bureau of Cannabis Control and accordingly increased
activity in this sector for the year.
Profit
(Loss) from Operations. For the fiscal year ended December 31, 2019, our loss was $1,775,629 compared to a gross loss of $11,592,864
for the fiscal year ended December 31, 2018 an improvement of $9,817,235 or 84.6%. The improvement in operation loss is attributed
to significantly increasing revenue from distribution and a reduction in operating Expenses, especially stock-based
compensation for consulting service, which decreased from $7,129,547 to $795,785. The company issued a total of 10,820,132
shares of its restricted common stock for cash, services and settlement of debt valued at $19,349.
Costs
and Expenses
General
and Administrative. During the year ended December 31, 2019, general and administrative expenses amounted to $441,370 compared
to $289,036 in the year ended December 31, 2018, an increase of $152,334 or 52.8%. The increase in general and administrative
expenses was due to the company’s ongoing efforts and associated cost in the
effort to centralize all operations at its headquarters in Paso Robles and an increased use of outside contractors, experts and
advisors for the involved permit process for Estrella Ranch.
Professional
Fees. During the years ended December 31, 2019 and 2018, Professional Fees totaled $313,730 and $504,356 respectively, a decrease
of $190.626 or 37.7%. The decrease is primarily due to less use of general outside consultants although legal fees had increased
for the year.
Interest
expense. During the year ended December 31, 2019 interest expense increased to $1,054,169 from $747,814 during the year ended
December 31, 2018, an increase of $306,355 or 41%. The primary reason for the increase
is due to short term loan instruments.
Gain
on change in fair value of derivative liability. As described in our accompanying consolidated financial statements, we
issued convertible notes with certain conversion features that have certain reset provisions. All of which, we are required
to Bifurcate from the host financial instrument and mark to market each reporting period. We recorded the initial fair value of
there set provision as a liability with an offset to equity or debt discount and subsequently mark to market the reset
provision liability at each reporting cycle.
For the year ended December 31, 2019, we recorded an decrease of $19,636 in
change in fair value of the derivative liability including initial non-cash interest as compared to a gain/loss of $0 for the
year ended December 31, 2018. Also, the Company recorded a loss on settlement of debt of $3,900 during the year ended
December 31, 2019 as compared to $52,100 in 2018.
Going
Concern. The Company’s consolidated financial statements are prepared using U.S. GAAP applicable to a going concern,
which contemplates the realization of assets and liquidation of liabilities in the normal course of business. We have an accumulated
deficit of $23,365,463 and our current assets exceeded our current liabilities by $219,406 as of December 31, 2019. We
may require additional funding to sustain our operations and satisfy our contractual obligations for our planned operations. Our
ability to establish the Company as a going concern is may be dependent upon our ability to obtain additional funding in order
to finance our planned operations.
In order to continue as a going concern, develop a reliable source of
revenues, and achieve a profitable level of operations the Company will need, among other things, additional capital
resources. Management’s plans to continue as a going concern include raising additional capital through increased sales
of product and by sale of common shares. However, management cannot provide any assurances that the Company will be
successful in accomplishing any of its plans. The ability of the Company to continue as a going concern is dependent upon its
ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of
financing and attain profitable operations. The accompanying consolidated financial statements do not include any adjustments
that might be necessary if the Company is unable to continue as a going concern.
5)
Issuer’s Business, Products and Services
LiveWire
Ergogenics, Inc. was originally formed as MC2, LLC (“LVWR”) was organized under the laws of the State of California
on January 7, 2008 as a limited liability company. LVWR was formed for the purpose of developing and marketing consumable energy
supplements. LVWR adopted December 31 as the fiscal year end.
On
June 30, 2011, LVWR, together with its members, entered into a purchase agreement (the “Purchase Agreement”), for
a share exchange with SF Blu Vu, Inc., (“SF Blu”), a public Nevada shell corporation. SF Blu Vu Inc. was formed in
Nevada on October 9, 2007 under the name Semper Flowers, Inc. On May 15, 2009, Semper Flowers, Inc. changed its name to SF Blu
Vu, Inc. The Purchase Agreement was ultimately completed on August 31, 2011. Under the terms of the Purchase Agreement, SF Blu
issued 36,000,000 (30,000,000 shares pre stock split of 1 (one) additional share for every five shares held) of their common shares
for 100% of the members’ interest in LVWR. Subsequent to the Purchase Agreement, the members of LVWR owned 60% of common
shares of SF Blu, effectively obtaining operational and management control of SFBlu. For accounting purposes, the transaction
has been accounted for as a reverse acquisition under the purchase method of business combinations, and accordingly the transaction
has been treated as a recapitalization of LVWR, the accounting acquirer in this transaction, with SF Blu (the shell) as the legal
acquirer.
Subsequent
to the Purchase Agreement being completed, SF Blu as the legal acquirer and surviving company, together with their Controlling
stockholders from LVWR changed the name of SF Blu to LiveWire Ergogenics. (“LiveWire”) on September 20, 2011. Hereafter,
SF Blu, LVWR, or LiveWire are referred to as the “Company”, unless specific reference is made to an individual entity.
LiveWire
has been operating in the health and wellness industry for several years and specializes in identifying and monetizing current
and future trends in the health and wellness industry. The Company is focused on specialty real estate acquisitions, licensing
and management of fully compliant turnkey production facilities for cannabis cloning, nursery and extraction operations. The Company
is also in the process of establishing research partnerships to explore the application of cannabinoid-based products to target
specific ailments or conditions with large “sufferer” populations for human and veterinarian applications. The resulting
advanced product development and subsequent commercialization will take advantage of a rapidly growing and maturing, further legalized
cannabis industry, accelerated by advancing legalization in California and the country. The company is led by a team of visionary
entrepreneurs, experienced operators and cannabis industry experts as well as scientists, horticulturists and extraction specialists
who apply the latest scientific knowledge and technology to deliver quality-controlled, rigorously tested cannabis products on
a large scale.
The
Company currently operates under a permit for the cultivation of its products in Coachella, California, a Statewide distribution
license from the Bureau of Cannabis Control California and a Minor Use Permit for its location in Paso Robles via and does not
sell or distribute any products anywhere that are in violation of the United States Controlled Substance Act. The Company is planning
to strategically align itself and/or acquire carefully selected cannabis operators and will only work with or have ownership in
companies that are in complete compliance with Federal and State laws and have the required permits to operate. LiveWire Ergogenics
pursues a unique business model acquiring and operating fully compliant nursery and clone facilities, extraction operations to
manufacture high-quality products targeted at growers and large sellers in the industry that will satisfy the fast-growing demand
in the California cannabis market and to expand its operations nationwide as soon as Federal legislation permits.
During
2017 the Company has discontinued operations for the sale of its edibles and began focusing on the implementation of its revised
and expanded business plan.
GHC
Ventures, LLC is a California Limited Liability Company that is engaged in California state licensed cannabis nursery and distribution
services. GHC currently holds two state licenses in Coachella, CA and one local area permit for nursery operations in Paso Robles,
CA and will be submitting for Sate approval second quarter of 2019.
LiveWire
Ergogenics, Inc., together with its subsidiaries specializes in identifying and monetizing current and future trends in the health
and wellness industry, including the acquisition, design and management of real estate properties for legal, fully controlled
and self-contained cannabis operations. These operations include the development and licensing of high-quality cannabinoid-based
products and services, the cloning of cannabis strains to produce positive medicinal results and the dosing verification of zero
pesticide products via the Company’s “7X-Pure Dosage and Verification System”. The Company is also entering
into select research partnerships to explore the application of cannabinoid-based products to target specific ailments or conditions
with large “sufferer” populations, for human and veterinarian applications.
The
company does not sell or distribute any products anywhere that are in violation of the United States Controlled Substance Act
and will only work with or have ownership in companies that are in complete compliance with Federal and State laws and have the
required permits to operate.
6)
Issuer’s Facilities
The
Company leases space at the following location:
LiveWire
Ergogenics, Inc.
1600
N Kraemer Boulevard
Anaheim,
CA
Chief
Executive Officer, Bill Hodson and the Chief Operating Officer, Cliff Rusin work full-time at this location. This 1,500-square
foot space serves as our headquarters and order processing and fulfillment facility. It has extensive office space and large available
warehouse areas. This is a month-to-month lease at $1,500 per month. Part-time employees are used from time-to-time to satisfy
order processing requirement. This facility allows us to dynamically expand operations and add personnel as necessary in the future.
Further, on an as needed basis, additional sales and business development efforts are performed by independent consultants located
throughout the country.
In
the second quarter of 2018, the company entered into a lease agreement for approximately 1500 square feet in Coachella, California.
The company’s permits issued by the City of Coachella through its subsidiary GHC Ventures for Nursery, Cultivation and Distribution,
are attached to the Coachella property. This is an annual lease at $7,500 per month.
In
the third quarter of 2018, the company agreed to a lease for approximately 25,000 square feet located at 655 Almond Drive, Paso
Robles, CA. The lease is for the Company’s subsidiary GHC Ventures operation for its recently granted Minor Use Permit for
Cannabis Nursery Cultivation. The lease will commence second quarter of 2019.
Operated
by LiveWire’s subsidiary GHC Ventures, the cultivation facilities at Coachella will be hosting several forty (40) foot high-tech
and self-contained Production PODs equipped with dedicated air conditioning and decontamination units and will be used for the
cloning and cultivation of mom and teen plants to produce proprietary, high-quality and pesticide-free cannabis strains. GHC Ventures
has obtained the cultivation and distribution permits required for the legal operation of its services.
As
such, these PODs are key elements of the Company’s high-quality and clean room production and business strategy. To ensure
the highest quality production and warehousing, the proprietary cloning operation will be operated in a separate and secure area
of the Coachella facility, producing select strains for its clients participating in the Company’s exclusive cloning program.
This space will enable the Company to expand its secure clone and genetics Vault and provide more opportunities to develop the
cannabis strains which are crucial to capturing market share. LiveWire is developing its “7X Pure Dosing and Verification”
testing system that it plans to provide to the entire industry eventually.
7)
Officers, Directors, and Control Persons
We
currently have 3 full-time employees and several consultants who are based in California. These employees oversee day-to-day operations
of the Company in Anaheim, Coachella and Paso Robles and, with the consultants, support management, engineering, manufacturing,
and administration
Name
of Officer/Director and Control Person
|
|
Affiliation
with Company (e.g. Officer/Director/Owner of more than 5%)
|
|
Residential
Address (City / State Only)
|
|
Number
of shares owned
|
|
|
Share
type/class
|
|
Ownership
Percentage of Class Outstanding
|
|
Bill Hodson
|
|
Board Member, Chief
Executive
Officer, Treasurer
|
|
Orange,
CA
|
|
|
54,629,000
|
|
|
Common
|
|
|
5
|
%
|
Bill Hodson
|
|
Board Member, Chief
Executive
Officer, Treasurer
|
|
Orange,
CA
|
|
|
75
|
|
|
Preferred
C
|
|
|
100
|
%
|
Cliff Rusin
|
|
President
|
|
Newport Beach, CA
|
|
|
90,625,000
|
|
|
Common
|
|
|
8
|
%
|
William Riley
|
|
Director
|
|
Las Vegas,
NV
|
|
|
0
|
|
|
n/a
|
|
|
n/a
|
|
Michael Corrigan
|
|
Director
|
|
Carlsbad,
CA
|
|
|
0
|
|
|
n/a
|
|
|
n/a
|
|
8)
Legal/Disciplinary History
A.
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Please
identify whether any of the persons listed above have, in the past 10 years, been the subject of:
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1.
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A
conviction in a criminal proceeding or named as a defendant in a pending criminal proceeding (excluding traffic violations
and other minor offenses);
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No
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2.
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The
entry of an order, judgment, or decree, not subsequently reversed, suspended or vacated, by a court of competent jurisdiction
that permanently or temporarily enjoined, barred, suspended or otherwise limited such person’s involvement in any type
of business, securities, commodities, or banking activities;
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No
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3.
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A
finding or judgment by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission, the
Commodity Futures Trading Commission, or a state securities regulator of a violation of federal or state securities or commodities
law, which finding or judgment has not been reversed, suspended, or vacated; or
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No
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4.
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The
entry of an order by a self-regulatory organization that permanently or temporarily barred, suspended, or otherwise limited
such person’s involvement in any type of business or securities activities.
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No
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B.
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On
May 3, 2018, American E Group LLC filed a complaint against LiveWire Ergogenics Inc. for payment of a Convertible Note of
$30,000 from November 2015 in the Superior Court of New York. The Company intends to defend the claim rigorously and has hired
New York counsel. On June 8, 2018 the Company’s counsel has filed a motion to dismiss the Complaint and all claims with
prejudice and extend further relief to the Company. The Motion has been fully submitted and the Company is waiting for a decision
from the Court. In addition, a counterclaim has been filed by the Company and we are currently expecting a decision by the
court.
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SUMMARY
This
summary highlights information contained elsewhere in this Offering Circular. This summary does not contain all of the information
that you should consider before deciding to invest in our Common Stock. You should read this entire Offering Circular carefully,
including the “Risk Factors” section, our historical consolidated financial statements and the notes thereto, and
unaudited pro forma financial information, each included elsewhere in this Offering Circular. Unless the context requires otherwise,
references in this Offering Circular to “the Company,” “we,” “us” and “our” refer
to LiveWire Ergogenics, Inc.
Our
Company
LiveWire
Ergogenics, Inc. (the “Company”, “we”, “our”, “us”, or “LiveWire”)
was originally organized on January 7, 2008 under the laws of the State of California on January 7, 2008 as a limited liability
company under the name MC2, LLC (“LVWR”). Our major organizational changes since our inception is shown in the timeline
below:
(1)
On January 7, 2008, MC2, LLC was organized under the laws of the State of California for the express purpose of developing and
marketing consumable energy supplements. On September 10, 2017, a decision was made to discontinue the sale of its edibles and
focus on running a cannabis cultivation and dispensary business.
(2)
On June 30, 2011, LVWR, together with its members, entered into a purchase agreement (the “Purchase Agreement”), for
a share exchange with SF Blu Vu, Inc., (“SF Blu”), a public Nevada shell corporation. Under the terms of the Purchase
Agreement, SF Blu Vu, Inc. issued 36,000,000 (30,000,000 shares pre stock split of 1 (one) additional share for every five shares
held) of their common shares to the members of LVWR in exchange for 100% of the members’ interest in LVWR. Subsequent to
the Purchase Agreement, the members of LVWR owned 60% of common shares of SF Blu, effectively obtaining operational and management
control of SF Blu Vu. The acquirer, SF Blu Vu Inc., was originally formed in Nevada on October 9, 2007 under the name Semper Flowers,
Inc. On May 15, 2009, Semper Flowers, Inc. changed its name to SF Blu Vu, Inc. The Purchase Agreement was treated as a reverse
merger and ultimately completed on August 31, 2011.
(3)
On September 20, 2011, SF Blu changed its name to LiveWire Ergogenics. (“LiveWire”).
(4)
On December 14, 2017, GHC Ventures, LLC (“GHC”) was organized under the laws of the State of California and Livewire
acquired a 51% equity stake in GHC. GHC was established to oversee cannabis supply chain and distribution operations with retailers.
GHC Ventures, LLC. GHC operates a permitted cannabis facility in Coachella, CA under a minor use permit and has been issued a
statewide cannabis distribution license by the California Office of Cannabis Control. GHC also operates a nursery in Paso Robles,
CA under a minor use permit.
.
(5)
On July 9, 2018, has acquired a minority equity interest in Mojave Jane, LLC (“Mohave”) in an all-stock transaction;
with a 12-month option to acquire 100% of the company. Mohave is a licensed and legal manufacturer that uses state of the art
CO2 extraction technologies, organic and pesticide free materials and advanced distillation techniques to create an array of products
for both recreational and medical cannabis users. Mojave Jane has since then been acquired by High Hampton and accordingly Livewire’s
equity position in Mojave Jane has been converted into 376,923 shares of High Hampton (CUSIP 42966X309).
(6)
On March 29, 2019, acquired a minority equity stake of 19% in Estrella Ranch Partners, LLC (“Estrella”) under the
laws of the State of California and operates as a partially owned subsidiary of and managed LiveWire. Estrella principal business
purpose is to first oversee the build-out a 3-acre outdoor cannabis cultivation facility in Paso Robles, California and eventually
provide onsite luxury recreational facilities and services. The Company plans to lease to several licensed cannabis operators.
A
key part of our strategic plan includes identifying well-operated and properly permitted cannabis operators in our target market;
as well as enter into carefully evaluated strategically valuable partnership agreements with qualified third-party operators.
The
Company does not sell products that are illegal under the United States Controlled Substance Act. The Company will only work with
or own equity positions in companies that are in full compliance with Federal and State laws and have the required permits to
operate.
THE
OFFERING
Common
Stock we are offering
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Maximum
offering of 363,636,363 shares at $0.0055 per share
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Common
Stock outstanding before this Offering
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1,197,471,830
Common Stock, par value $0.0001
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Use
of proceeds
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The
funds raised per this offering will be utilized to cover the costs of this offering and to provide working capital to obtain
government licenses, purchase an extraction facility, and marketing our products. See “Use of Proceeds” for more
details.
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Risk
Factors
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See
“Risk Factors” and other information appearing elsewhere in this Offering Circular for a discussion of factors
you should carefully consider before deciding whether to invest in our Common Stock.
|
This
offering is being made on a self-underwritten basis without the use of an exclusive placement agent, although the Company may
choose to engage a placement agent at its sole discretion. As there is no minimum offering, upon the approval of any subscription
to this Offering Circular, the Company shall immediately deposit said proceeds into the bank account of the Company and may dispose
of the proceeds in accordance with the Use of Proceeds.
Management
will make its best effort to fill the subscription in the state of New York. However, in the event that management is unsuccessful
in raising the required funds in New York, the Company may file a post qualification amendment to include additional jurisdictions
that management has determined to be in the best interest of the Company for the purpose of raising the maximum offer.
In
the event that the Offering Circular is fully subscribed, any additional subscriptions shall be rejected and returned to the subscribing
party along with any funds received.
In
order to subscribe to purchase the shares, a prospective investor must complete a subscription agreement and send payment by check,
wire transfer or Livewire. Investors must answer certain questions to determine compliance with the investment limitation set
forth in Regulation A Rule 251(d)(2)(i)(C) under the Securities Act of 1933, which states that in offerings such as this one,
where the securities will not be listed on a registered national securities exchange upon qualification, the aggregate purchase
price to be paid by the investor for the securities cannot exceed 10% of the greater of the investor’s annual income or
net worth. In the case of an investor who is not a natural person, revenues or net assets for the investors’ most recently
completed fiscal year are used instead.
The
Company has not currently engaged any party for the public relations or promotion of this offering.
As
of the date of this filing, there are no additional offers for shares, nor any options, warrants, or other rights for the issuance
of additional shares except those described herein.
RISK
FACTORS
Investing
in our Common Stock involves a high degree of risk. You should carefully consider each of the following risks, together with all
other information set forth in this Offering Circular, including the consolidated financial statements and the related notes,
before making a decision to buy our Common Stock. If any of the following risks actually occurs, our business could be harmed.
In that case, the trading price of our Common Stock could decline, and you may lose all or part of your investment.
This
offering contains forward-looking statements. Forward-looking statements relate to future events or our future financial performance.
We generally identify forward-looking statements by terminology such as “may,” “will,” “should,”
“expects,” “plans,” “anticipates,” “could,” “intends,” “target,”
“projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential”
or “continue” or the negative of these terms or other similar words. These statements are only predictions. The outcome
of the events described in these forward-looking statements is subject to known and unknown risks, uncertainties and other factors
that may cause our customers’ or our industry’s actual results, levels of activity, performance or achievements expressed
or implied by these forward-looking statements, to differ. “Risk Factors,” “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” and “Business,” as well as other sections in this
prospectus, discuss the important factors that could contribute to these differences.
The
forward-looking statements made in this prospectus relate only to events as of the date on which the statements are made. We undertake
no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement
is made or to reflect the occurrence of unanticipated events.
This
prospectus also contains market data related to our business and industry. This market data includes projections that are based
on a number of assumptions. If these assumptions turn out to be incorrect, actual results may differ from the projections based
on these assumptions. As a result, our markets may not grow at the rates projected by these data, or at all. The failure of these
markets to grow at these projected rates may have a material adverse effect on our business, results of operations, financial
condition and the market price of our Common Stock.
Risk
Related to our Company and our Business
General
Risks specific to the Cannabis Industry
Operating
in a new and legally still turbulent cannabis industry with existing conflicts between Federal and State law may create significant
risk for any company operating in the cannabis industry, directly or ancillary. While 33
states (and counting) have now legalized marijuana in some form, marijuana is still an illegal Schedule 1 substance under Federal
law. While the Company does not directly produce or sell products that are illegal under California law, the Company is
cognizant that that the still existing conflict between State and Federal marijuana laws
and regulations may significantly complicate operations and diminish the company’s prospects to reach profitability.
Although
California has legalized medical and recreational possession and use of marijuana and State and local authorities have been issuing
permits for legal cannabis operations, possession, cultivation, and distribution of marijuana
remains a crime under Feral law, In addition, punitive tax and banking laws have
until recently remained in place, making it still difficult for cannabis companies to use regular banking channels and the high
tax burden can significantly reduce profit margins. Under IRC 280E cannabis companies are prohibited from deducting their ordinary
and necessary business expenses, forcing them to contend with higher effective federal tax rates than similar companies in other
industries. The effective tax rate on a marijuana business depends on how large its ratio of nondeductible expenses is to its
total revenues, but it can be as high as 45%. This could significantly impede the Company’s capability to determine the
future profitability of a marijuana business.
In
a historic moment, the House of Representatives officially voted on October 4, 2019, by a vote of 321 to 103 to pass the SAFE
Banking Act (H.R. 1595). While the act has not changed the stance of the Federal Government in regard to general decriminalization
of cannabis on a Federal level, the Act will allow the cannabis industry to access banking and financial services. The act shields
banks and insurers from penalties if they choose to serve state-legal cannabis industries. Under the Act, a federal financial
regulator won’t be able to terminate or limit the depository or share insurance of a depository institution or prohibit
or penalize financial institutions from providing services to cannabis businesses. The Act also provides protections for ancillary
businesses in transactions with cannabis-related businesses. Nevertheless, it may take considerable time until banks will accept
applications by cannabis companies to legally open bank accounts.
The
Company’s partially owned subsidiary Estrella Ranch Partners, LLC has acquired a large ranch property in Paso Robles, California
and has applied for the appropriate permits to operate the ranch as a cannabis /hemp facility. Adjacent to this property the Company,
through its partially owned subsidiary GHC Ventures has leased 2 buildings to be used for cannabis cultivation and other cannabis
related services. GHC has been issued a minor use permit for the property and a statewide distribution license for the company’s
property in Coachella, CA.
Nevertheless,
these permits do not guarantee a successful implementation of Livewire’s business plan and reliable projections for revenue
growth and profitability are difficult to establish with any degree of certainty in an industry that is still developing and laws,
rules, regulations and are still continuing to change and differ widely throughout the stat. Additionally, taxation is high and
typical accounting principles for the deduction of expenses cannot currently be applied by cannabis companies.
We
have a limited operating history upon which investors can evaluate our prospects.
We
have a limited operating history upon which an evaluation of its business plan or performance and prospects can be made. The business
and prospects of the Company must be considered in the light of the potential problems, delays, uncertainties and complications
encountered in connection with a newly established business. Risks include, but are
not limited to, the possibility that we will not be able to develop functional and scalable products and services, or that although
functional and scalable, our products and services will not be economical to market; that our competitors hold proprietary rights
that preclude us from marketing such products; that our competitors market a superior or equivalent product; that we are not able
to upgrade and enhance our technologies and products to accommodate new features and expanded service offerings; or the failure
to receive necessary regulatory clearances for our products. To successfully introduce and market our products at a profit, we
must establish brand name recognition and competitive advantages for our products. There are no assurances that we can successfully
address these challenges. If it is unsuccessful, we and our business, financial condition and operating results could be materially
and adversely affected.
The
current and future expense levels are based largely on estimates of planned operations and future revenues rather than experience.
It is difficult to accurately forecast future revenues because our business is new, and our market has not been developed. If
our forecasts prove incorrect, the business, operating results and financial condition of the Company will be materially and adversely
affected. Moreover, we may be unable to adjust our spending in a timely manner to compensate for any unanticipated reduction in
revenue. As a result, any significant reduction in revenues would immediately and adversely affect our business, financial condition
and operating results.
We
have had only moderate revenues since inception, and we cannot predict when we will achieve profitability.
We
have not been profitable and cannot predict when we will achieve profitability. We have experienced net losses and have had no
revenues since our and our predecessor’s inception in 20__. We do not anticipate generating significant revenues until we
successfully develop, commercialize and sell our existing and proposed products, of which we can give no assurance. We are unable
to determine when we will generate significant revenues, if any, from the sale of any of such products.
We
cannot predict when we will achieve profitability, if ever. Our inability to become profitable may force us to curtail or temporarily
discontinue our research and development programs and our day-to-day operations. Furthermore, there can be no assurance that profitability,
if achieved, can be sustained on an ongoing basis. As of September 30, 2016, we had an accumulated deficit of $13,884,935.
There
is substantial doubt on our ability to continue as a going concern.
We
have incurred recurring losses from operations and as of September 30, 2019 had an accumulated deficit of $22,769,979. Our continued
existence is dependent upon our ability to continue to execute our operating plan and to obtain additional debt or equity financing.
We do not have an established source of funds sufficient to cover operating costs and accordingly, there can be no assurance that
the necessary debt or equity financing will be available, or will be available on terms acceptable to us, in which case we may
be unable to meet our obligations or fully implement our business plan, if at all. Additionally, should we be unable to realize
our assets and discharge our liabilities in the normal course of business, the net realizable value of our assets may be materially
less than the amounts recorded in our financial statements.
We
cannot assure profitability based on our developmental nature.
The
Company’s business is speculative and dependent upon the timely implementation of its business model to develop and commercialize
current and future products, as well as to identify suitable companies for acquisition or strategic alliances. The Company is
unsure that its efforts will be successful or result in revenue or profit. There can be no assurance that the Company will ever
earn significant revenues or that investors will not lose their entire investment.
We
may not be able to effectively manage growth.
The
Company expects its growth to place a substantial strain or its managerial, operation and financial resources. The Company cannot
assure that it will be able to effectively manage the expansion of its operations, or that its facilities, systems, procedures
or controls will be adequate to support its operations. The Company’s inability to manage future growth effectively would
have a material adverse effect on its business, financial condition and results of operations.
Our
management may not be able to control costs in an effective or timely manner.
The
Company’s management has used reasonable efforts to assess, predict and control costs and expenses. Implementing our business
plan may require more employees, capital equipment, supplies or other expenditure items than management has predicted. Likewise,
the cost of compensating employees and consultants or other operating costs may be higher than management’s estimates, which
could lead to sustained losses.
The
failure to attract and retain key employees could hurt our business.
Our
success also depends upon our ability to attract and retain numerous highly qualified employees. Our failure to attract and retain
skilled management and employees may prevent or delay us from pursuing certain opportunities. If we fail to successfully hire
many management roles, fail to fully integrate new members of our management team, lose the services of key personnel, or fail
to attract additional qualified personnel, it will be significantly more difficult for us to achieve our growth strategies and
success.
The
commercial success of our products is dependent, in part, on factors outside our control.
The
commercial success of our products in development is dependent upon unpredictable and volatile factors beyond our control, such
as the success of our competitors’ products. Our failure to attract market acceptance and a sustainable competitive advantage
over our competitors would materially harm our business.
We
operate in a highly competitive environment, and if we are unable to compete with our competitors, our business, financial condition,
results of operations, cash flows and prospects could be materially adversely affected.
We
operate in a highly competitive environment. Our competition includes all other companies that are in the business of distributing
or reselling cannabis/hemp-based products for personal use or consumption. A highly competitive environment could materially adversely
affect our business, financial condition, results of operations, cash flows and prospects.
We
expect our quarterly financial results to fluctuate.
We
expect our net revenue and operating results to vary significantly from quarter to quarter due to a number of factors, including
changes in:
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Timely
financing implementation of our real estate acquisitions
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Our
ability to identify suitable strategic partnerships and successfully capitalize on the
market potential of those companies
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General
economic conditions
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Costs
of creating and expanding product lines
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As
a result of the variability of these and other factors, our operating results in future quarters may be below the expectations
of our stockholders.
The
Offering will be dilutive to our existing investors which may have a negative effect on our stock price.
If
this Offering is fully subscribed, we will issue approximately 200,000,000 shares in this Offering. Those shares represent additional
shares of our common stock, which would represent an approximate 17.7% increase to our issued and outstanding shares. Such issuance
will be dilutive to our investors and may result in substantial downward pressure on our stock price. If our share price falls
below the price paid by an Investor, the Investor may not be able to recoup the value of his investment.
We
may require additional capital to support our present business plan and our anticipated business growth, and such capital may
not be available on acceptable terms, or at all, which would adversely affect our ability to operate.
We
can give no assurance that we will be successful in raising any funds. Additionally, if we are unable to generate sufficient revenues
from our operating activities, we may need to raise additional funds through equity offerings or otherwise in order to meet our
expected future liquidity requirements, including to introduce our other planned products or to pursue new product opportunities.
Any such financing that we undertake will likely be dilutive to current stockholders and you.
We
intend to continue to make investments to support our business growth, including real estate or other intellectual property asset
creation. In addition, we may also need additional funds to respond to business opportunities and challenges, including our ongoing
operating expenses, protecting our intellectual property, satisfying debt payment obligations, developing new lines of business
and enhancing our operating infrastructure. While we may need to seek additional funding for such purposes, we may not be able
to obtain financing on acceptable terms, or at all. In addition, the terms of our financings may be dilutive to, or otherwise
adversely affect, holders of its common stock. We may also seek additional funds through arrangements with collaborators or other
third parties. We may not be able to negotiate any such arrangements on acceptable terms, if at all. If we are unable to obtain
additional funding on a timely basis, we may be required to curtail or terminate some or all of our business plans.
The
market price of our stock is not reflective of the value of the shares and will likely be volatile.
Our
common stock currently is quoted on the OTC Pink Sheets under the trading symbol “LVVV”. The closing price of our
stock on the date of these this prospectus was $0.0065, which is not reflective of the fair market value of the stock and should
not be considered any indication of the price per share an Investor could obtain by the sale of the Shares. Also, the market for
our stock is highly volatile. Trading of securities on the OTC Pink Sheets is often sporadic and investors may have difficulty
buying and selling or obtaining market quotations, which may have a depressive effect on the market price for our common stock.
You may not be able to sell your Shares at your purchase price or at any price at all.
Risks
Related to Our Business and Industry
Risks
Related to the Securities Markets and Ownership of our Equity Securities
The
Common Stock is thinly traded, so you may be unable to sell at or near ask prices or at all if you need to sell your shares to
raise money or otherwise desire to liquidate your shares.
The
Common Stock has historically been sporadically traded on the OTC Pink Sheets, meaning that the number of persons interested in
purchasing our shares at or near ask prices at any given time may be relatively small or non-existent. This situation is attributable
to a number of factors, including the fact that we are a small company which is relatively unknown to stock analysts, stock brokers,
institutional investors and others in the investment community that generate or influence sales volume, and that even if we came
to the attention of such persons, they tend to be risk-averse and would be reluctant to follow an unproven company such as ours
or purchase or recommend the purchase of our shares until such time as we became more seasoned and viable. As a consequence, there
may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned
issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse
effect on share price. We cannot give you any assurance that a broader or more active public trading market for our common shares
will develop or be sustained, or that current trading levels will be sustained.
The
market price for the Common Stock is particularly volatile given our status as a relatively unknown company with a small and thinly
traded public float, limited operating history and lack of revenue, which could lead to wide fluctuations in our share price.
The price at which you purchase our shares may not be indicative of the price that will prevail in the trading market. You may
be unable to sell your common shares at or above your purchase price, which may result in substantial losses to you.
The
market for our shares of Common Stock is characterized by significant price volatility when compared to seasoned issuers, and
we expect that our share price will continue to be more volatile than a seasoned issuer for the indefinite future. The volatility
in our share price is attributable to a number of factors. First, as noted above, our shares are sporadically traded. Because
of this lack of liquidity, the trading of relatively small quantities of shares may disproportionately influence the price of
those shares in either direction. The price for our shares could, for example, decline precipitously in the event that a large
number of our shares is sold on the market without commensurate demand, as compared to a seasoned issuer which could better absorb
those sales without adverse impact on its share price. Secondly, we are a speculative investment due to, among other matters,
our limited operating history and lack of revenue or profit to date, and the uncertainty of future market acceptance for our potential
products. As a consequence of this enhanced risk, more risk-averse investors may, under the fear of losing all or most of their
investment in the event of negative news or lack of progress, be more inclined to sell their shares on the market more quickly
and at greater discounts than would be the case with the securities of a seasoned issuer. The following factors may add to the
volatility in the price of our shares: actual or anticipated variations in our quarterly or annual operating results; acceptance
of our inventory of games; government regulations, announcements of significant acquisitions, strategic partnerships or joint
ventures; our capital commitments and additions or departures of our key personnel. Many of these factors are beyond our control
and may decrease the market price of our shares regardless of our operating performance. We cannot make any predictions or projections
as to what the prevailing market price for our shares will be at any time, including as to whether our shares will sustain their
current market prices, or as to what effect the sale of shares or the availability of shares for sale at any time will have on
the prevailing market price.
Shareholders
should be aware that, according to SEC Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns
of fraud and abuse. Such patterns include (1) control of the market for the security by one or a few broker-dealers that are often
related to the promoter or issuer; (2) manipulation of prices through prearranged matching of purchases and sales and false and
misleading press releases; (3) boiler room practices involving high-pressure sales tactics and unrealistic price projections by
inexperienced sales persons; (4) excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and (5)
the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level,
along with the resulting inevitable collapse of those prices and with consequent investor losses. Our management is aware of the
abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the
behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical
limitations to prevent the described patterns from being established with respect to our securities. The occurrence of these patterns
or practices could increase the volatility of our share price.
The
market price of our common stock may be volatile and adversely affected by several factors.
The
market price of our common stock could fluctuate significantly in response to various factors and events, including, but not limited
to:
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our
ability to integrate operations, technology, products and services;
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our
ability to execute our business plan;
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operating
results below expectations;
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our
issuance of additional securities, including debt or equity or a combination thereof;
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announcements
of technological innovations or new products by us or our competitors;
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loss
of any strategic relationship;
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industry
developments, including, without limitation, changes in healthcare policies or practices;
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economic
and other external factors;
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period-to-period
fluctuations in our financial results; and
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whether
an active trading market in our common stock develops and is maintained.
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In
addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated
to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market
price of our common stock. Issuers using the Alternative Reporting standard for filing financial reports with OTC Markets are
often subject to large volatility unrelated to the fundamentals of the company.
Our
issuance of additional shares of Common Stock, or options or warrants to purchase those shares, would dilute your proportionate
ownership and voting rights.
We
are entitled under our articles of incorporation to issue up to 1,500,000,000 shares of Common Stock. We have issued and outstanding,
as of the date of this prospectus, 1,193,471,830 shares of Common Stock. Our board may generally issue shares of Common Stock,
preferred stock or options or warrants to purchase those shares, without further approval by our shareholders based upon such
factors as our board of directors may deem relevant at that time. It is likely that we will be required to issue a large amount
of additional securities to raise capital to further our development. It is also likely that we will issue a large amount of additional
securities to directors, officers, employees and consultants as compensatory grants in connection with their services, both in
the form of stand-alone grants or under our stock plans. We cannot give you any assurance that we will not issue additional shares
of Common Stock, or options or warrants to purchase those shares, under circumstances we may deem appropriate at the time.
The
elimination of monetary liability against our directors, officers and employees under our Articles of Incorporation and the existence
of indemnification rights to our directors, officers and employees may result in substantial expenditures by our company and may
discourage lawsuits against our directors, officers and employees.
Our
Articles of Incorporation contains provisions that eliminate the liability of our directors for monetary damages to our company
and shareholders. Our bylaws also require us to indemnify our officers and directors. We may also have contractual indemnification
obligations under our agreements with our directors, officers and employees. The foregoing indemnification obligations could result
in our company incurring substantial expenditures to cover the cost of settlement or damage awards against directors, officers
and employees that we may be unable to recoup. These provisions and resultant costs may also discourage our company from bringing
a lawsuit against directors, officers and employees for breaches of their fiduciary duties, and may similarly discourage the filing
of derivative litigation by our shareholders against our directors, officers and employees even though such actions, if successful,
might otherwise benefit our company and shareholders.
Anti-takeover
provisions may impede the acquisition of our company.
Certain
provisions of the Nevada General Statutes have anti-takeover effects and may inhibit a non-negotiated merger or other business
combination. These provisions are intended to encourage any person interested in acquiring us to negotiate with, and to obtain
the approval of, our board of directors in connection with such a transaction. However, certain of these provisions may discourage
a future acquisition of us, including an acquisition in which the shareholders might otherwise receive a premium for their shares.
As a result, shareholders who might desire to participate in such a transaction may not have the opportunity to do so.
We
may become involved in securities class action litigation that could divert management’s attention and harm our business.
The
stock market in general, and the shares of early stage companies in particular, have experienced extreme price and volume fluctuations.
These fluctuations have often been unrelated or disproportionate to the operating performance of the companies involved. If these
fluctuations occur in the future, the market price of our shares could fall regardless of our operating performance. In the past,
following periods of volatility in the market price of a particular company’s securities, securities class action litigation
has often been brought against that company. If the market price or volume of our shares suffers extreme fluctuations, then we
may become involved in this type of litigation, which would be expensive and divert management’s attention and resources
from managing our business.
As
a public company, we may also from time to time make forward-looking statements about future operating results and provide some
financial guidance to the public markets. Our management has limited experience as a management team in a public company and as
a result, projections may not be made timely or set at expected performance levels and could materially affect the price of our
shares. Any failure to meet published forward-looking statements that adversely affect the stock price could result in losses
to investors, stockholder lawsuits or other litigation, sanctions or restrictions issued by the SEC.
Our
Common Stock is currently deemed a “penny stock,” which makes it more difficult for our investors to sell their shares.
The
SEC has adopted Rule 15g-9 which establishes the definition of a “penny stock,” for the purposes relevant to us, as
any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. For any transaction involving
a penny stock, unless exempt, the rules require that a broker or dealer approve a person’s account for transactions in penny
stocks, and the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity
and quantity of the penny stock to be purchased.
In
order to approve a person’s account for transactions in penny stocks, the broker or dealer must obtain financial information
and investment experience objectives of the person and make a reasonable determination that the transactions in penny stocks are
suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating
the risks of transactions in penny stocks.
The
broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating
to the penny stock market, which, in highlight form sets forth the basis on which the broker or dealer made the suitability determination,
and that the broker or dealer received a signed, written agreement from the investor prior to the transaction.
Generally,
brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make
it more difficult for investors to dispose of our Common Stock if and when such shares are eligible for sale and may cause a decline
in the market value of its stock.
Disclosure
also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the
commission payable to both the broker-dealer and the registered representative, current quotations for the securities and the
rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to
be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny
stock.
As
an issuer of “penny stock,” the protection provided by the federal securities laws relating to forward-looking statements
does not apply to us.
Although
federal securities laws provide a safe harbor for forward-looking statements made by a public company that files reports under
the federal securities laws, this safe harbor is not available to issuers of penny stocks. As a result, we will not have the benefit
of this safe harbor protection in the event of any legal action based upon a claim that the material provided by us contained
a material misstatement of fact or was misleading in any material respect because of our failure to include any statements necessary
to make the statements not misleading. Such an action could hurt our financial condition.
As
an issuer not required to make reports to the Securities and Exchange Commission under Section 13 or 15(d) of the Securities Exchange
Act of 1934, holders of restricted shares may not be able to sell shares into the open market as Rule 144 exemptions may not apply.
Under
Rule 144 of the Securities Act of 1933 holders of restricted shares, may avail themselves of certain exemption from registration
is the holder and the issuer meet certain requirements. As a company that is not required to file reports under Section 13 or
15(d) of the Securities Exchange Act, referred to as a non-reporting company, we may not, in the future, meet the requirements
for an issuer under 144 that would allow a holder to qualify for Rule 144 exemptions. In such an event, holders of restricted
stock would have to utilize another exemption from registration or rely on a registration statement to be filed by the Company
registered the restricted stock. Currently, the Company has no plans of filing a registration statement with the Commission.
Securities
analysts may elect not to report on our Common Stock or may issue negative reports that adversely affect the stock price.
At
this time, no securities analysts provide research coverage of our Common Stock, and securities analysts may elect not to provide
such coverage in the future. It may remain difficult for our company, with its small market capitalization, to attract independent
financial analysts that will cover our Common Stock. If securities analysts do not cover our Common Stock, the lack of research
coverage may adversely affect the stock’s actual and potential market price. The trading market for our Common Stock may
be affected in part by the research and reports that industry or financial analysts publish about our business. If one or more
analysts elect to cover our company and then downgrade the stock, the stock price would likely decline rapidly. If one or more
of these analysts cease coverage of our company, we could lose visibility in the market, which, in turn, could cause our stock
price to decline. This could have a negative effect on the market price of our Common Stock.
We
have not paid cash dividends in the past and do not expect to pay cash dividends in the foreseeable future. Any return on investment
may be limited to the value of our Common Stock.
We
have never paid cash dividends on our capital stock and do not anticipate paying cash dividends on our capital stock in the foreseeable
future. The payment of dividends on our capital stock will depend on our earnings, financial condition and other business and
economic factors affecting us at such time as the board of directors may consider relevant. If we do not pay dividends, our Common
Stock may be less valuable because a return on your investment will only occur if the Common Stock price appreciates.
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
We
make forward-looking statements under the “Summary,” “Risk Factors,” “Business,” “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” and in other sections of this Offering Circular.
In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “should,”
“expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,”
“potential” or “continue,” and the negative of these terms and other comparable terminology. These forward-looking
statements, which are subject to known and unknown risks, uncertainties and assumptions about us, may include projections of our
future financial performance based on our growth strategies and anticipated trends in our business. These statements are only
predictions based on our current expectations and projections about future events. There are important factors that could cause
our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance
or achievements expressed or implied by the forward-looking statements. In particular, you should consider the numerous risks
and uncertainties described under “Risk Factors.”
While
we believe we have identified material risks, these risks and uncertainties are not exhaustive. Other sections of this Offering
Circular describe additional factors that could adversely impact our business and financial performance. Moreover, we operate
in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible
to predict all risks and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any
factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
Although
we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level
of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy or
completeness of any of these forward-looking statements. You should not rely upon forward-looking statements as predictions of
future events. We are under no duty to update any of these forward-looking statements after the date of this Offering Circular
to conform our prior statements to actual results or revised expectations, and we do not intend to do so.
Forward-looking
statements include, but are not limited to, statements about:
|
●
|
our
business’ strategies and investment policies;
|
|
●
|
our
business’ financing plans and the availability of capital;
|
|
●
|
potential
growth opportunities available to our business;
|
|
●
|
the
risks associated with potential acquisitions by us;
|
|
●
|
the
recruitment and retention of our officers and employees;
|
|
●
|
our
expected levels of compensation;
|
|
●
|
the
effects of competition on our business; and
|
|
●
|
the
impact of future legislation and regulatory changes on our business.
|
We
caution you not to place undue reliance on the forward-looking statements, which speak only as of the date of this Offering Circular.
USE
OF PROCEEDS
The
following Use of Proceeds is based on estimates made by management. The Company planned the Use of Proceeds after deducting estimated
offering expenses estimated to be $1,955,000. Management prepared the milestones based on three levels of offering raise success:
25% of the Maximum Offering proceeds raised ($488,750), 50% of the Maximum Offering proceeds raised ($977,500), 75% of the Maximum
Offering proceeds raised ($1,466,250) and the Maximum Offering proceeds raised of $ $1,955,000 through the offering. The costs
associated with operating as a public company are included in all our budgeted scenarios and management is responsible for the
preparation of the required documents to keep the costs to a minimum.
Although
we have no minimum offering, we have calculated used of proceeds such that if we raise 25% of the offering is budgeted to sustain
operations for a twelve-month period. 25% of the Maximum Offering is sufficient to keep the Company current with its public listing
status costs with prudently budgeted funds remaining which will be sufficient to complete the development of our marketing package.
If the Company were to raise 50% of the Maximum Offering, then we would be able to expand our marketing outside the US. Raising
the Maximum Offering will enable the Company to implement our full business. If we begin to generate profits, we plan to increase
our marketing and sales activity accordingly.
The
Company intends to use the proceeds from this offering as follows:
|
|
If
25% of the
Offering is Raised
|
|
|
If
50% of the
Offering is Raised
|
|
|
If
75% of the
Offering is
Raised
|
|
|
If
100%
of the
Offering
is Raised
|
|
Net Proceeds
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2.000,000
|
|
Costs of the Offering
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
45,000
|
|
Manufacturing and Storage Space Build-Out
|
|
$
|
100,000
|
|
|
$
|
200,000
|
|
|
$
|
250,000
|
|
|
$
|
250,000
|
|
Equipment
|
|
$
|
80,000
|
|
|
$
|
100,000
|
|
|
$
|
150,000
|
|
|
$
|
200,000
|
|
Alarm & Security System, Monitoring
- Video & Camera System, Computer Systems
|
|
$
|
150,000
|
|
|
$
|
150,000
|
|
|
$
|
150,000
|
|
|
$
|
150,000
|
|
Direct Costs
|
|
$
|
50,000
|
|
|
$
|
80,000
|
|
|
$
|
100,000
|
|
|
$
|
100,000
|
|
Initial & General Costs
|
|
$
|
50,000
|
|
|
$
|
70,000
|
|
|
$
|
100,000
|
|
|
$
|
150,000
|
|
Operating Expenses
|
|
$
|
60,000
|
|
|
$
|
60,000
|
|
|
$
|
60,000
|
|
|
$
|
60,000
|
|
Marketing & Sales Expenses
|
|
$
|
50,000
|
|
|
$
|
100,000
|
|
|
$
|
150,000
|
|
|
$
|
200,000
|
|
Salaries & Benefits
|
|
$
|
30,000
|
|
|
$
|
50,000
|
|
|
$
|
200,000
|
|
|
$
|
300,000
|
|
Working Capital
|
|
$
|
|
|
|
$
|
167,500
|
|
|
$
|
306,250
|
|
|
$
|
545.000
|
|
TOTAL
|
|
$
|
570,000
|
|
|
$
|
977,500
|
|
|
$
|
1,466,250
|
|
|
$
|
2,000,000
|
|
DIVIDEND
POLICY
We
have not declared or paid any dividends on our Common Stock. We intend to retain earnings for use in our operations and to finance
our business. Any change in our dividend policy is within the discretion of our board of directors and will depend, among other
things, on our earnings, debt service and capital requirements, restrictions in financing agreements, if any, business conditions,
legal restrictions and other factors that our board of directors deems relevant.
DILUTION
Purchasers
of our Common Stock in this offering will experience an immediate dilution of net tangible book value per share from the public
offering price. Dilution in net tangible book value per share represents the difference between the amount per share paid by the
purchasers of shares of Common Stock and the net tangible book value per share immediately after this offering.
The
following table sets forth the estimated net tangible book value per share after the offering and the dilution to persons purchasing
Common Stock based on the foregoing minimum and maximum offering assumptions based on an offering price of $0.01 per share. The
numbers are based on the total issued and outstanding shares of Common Stock as of May 7, 2020 as it relates to the balance
sheet for the period ended December 31, 2019.
|
|
|
25%
|
|
|
|
50.0%
|
|
|
|
75%
|
|
|
|
100%
|
|
Net Value
|
|
$
|
704,406.00
|
|
|
$
|
1,204,406.00
|
|
|
$
|
1,704,406.00
|
|
|
$
|
2,204,406.00
|
|
# Total Shares
|
|
|
1,243,471,830
|
|
|
|
1,293,471,830
|
|
|
|
1,343,471,830
|
|
|
|
1,393,471,830
|
|
Net Book Value Per Share
|
|
$
|
0.0006
|
|
|
$
|
0.0009
|
|
|
$
|
0.0013
|
|
|
$
|
0.0016
|
|
Increase in NBV/Share
|
|
$
|
0.0004
|
|
|
$
|
0.0007
|
|
|
$
|
0.0011
|
|
|
$
|
0.0014
|
|
Dilution to new
shareholders
|
|
$
|
0.0094
|
|
|
$
|
0.0091
|
|
|
$
|
0.0087
|
|
|
$
|
0.0084
|
|
Percentage Dilution
to New
|
|
|
94.34
|
%
|
|
|
90.69
|
%
|
|
|
87.31
|
%
|
|
|
84.18
|
%
|
The
following table sets forth the estimated net tangible book value per share after the offering and the dilution to persons purchasing
Common Stock based on the foregoing minimum and maximum offering assumptions based on an offering price of $0.02 per share. The
numbers are based on the total issued and outstanding shares of Common Stock as of January 21, 2020 as it relates to the balance
sheet for the period ended September 30, 2019.
|
|
|
25%
|
|
|
|
50.0%
|
|
|
|
75%
|
|
|
|
100%
|
|
Net Value
|
|
$
|
954,406.00
|
|
|
$
|
1,704,406.00
|
|
|
$
|
2,454,406.00
|
|
|
$
|
3,204,406.00
|
|
# Total Shares
|
|
|
1,230,971,830
|
|
|
|
1,268,471,830
|
|
|
|
1,305,971,830
|
|
|
|
343,471,830
|
|
Net Book Value Per Share
|
|
$
|
0.0008
|
|
|
$
|
0.0013
|
|
|
$
|
0.0019
|
|
|
$
|
0.0024
|
|
Increase in NBV/Share
|
|
$
|
0.0006
|
|
|
$
|
0.0012
|
|
|
$
|
0.0017
|
|
|
$
|
0.0022
|
|
Dilution to new
shareholders
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
Percentage Dilution
to New
|
|
|
96.12
|
%
|
|
|
93.28
|
%
|
|
|
90.60
|
%
|
|
|
88.07
|
%
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The
following discussion of our financial condition and results of operations should be read in conjunction with the unaudited financial
statements and the notes thereto of the Company included in this Offering Circular. The following discussion contains forward-looking
statements. Actual results could differ materially from the results discussed in the forward-looking statements. See “Risk
Factors” and “Cautionary Note Regarding Forward-Looking Statements” above.
Organizational
Overview
We
have been operating in the health and wellness industry for several years and specializes in identifying and monetizing current
and future trends in the health and wellness industry. Our Company is led by a team of visionary entrepreneurs, experienced operators
and cannabis industry experts as well as scientists, horticulturists and extraction specialists who apply the latest scientific
knowledge and technology to deliver quality-controlled, rigorously tested cannabis products on a large scale.
The
Company is focused on specialty real estate acquisitions, licensing, management and operation of fully compliant turnkey production
facilities for cannabis cloning, nursery and extraction operations. We are also in the process of establishing research partnerships
to explore the application of cannabinoid-based products to target specific ailments or conditions with large “sufferer”
populations for human and veterinarian applications. The resulting advanced product development and subsequent commercialization
will take advantage of a rapidly growing and maturing, further legalized cannabis industry, accelerated by advancing legalization
in California and the country. We currently operate under a permit for the cultivation of cannabis products in Coachella, California,
through a Statewide distribution license from the Bureau of Cannabis Control California, and a Minor Use Permit for its location
in Paso Robles via its wholly owned subsidiary GHC Ventures and have completed and submitted an application for cannabis operations
on the Estrella Ranch to the appropriate local authorities through our partially owned subsidiary Estrella Ranch Partners, LLC.
We have not sold or distributed any products anywhere that are in violation of the United States Controlled Substance Act.
We
are also planning to strategically align with and/or acquire carefully selected cannabis operators that are in complete compliance
with Federal and State laws; and have the required permits to operate.
We
have no operating history in the cannabis industry, and no history of earnings or profits in this market segment. We are only
beginning to establish operations that will allow us to generate positive cash flow from operations. We have no experience in
addressing the risks, expenses and difficulties frequently encountered by companies in their early stage of development, particularly
companies in new and rapidly evolving markets such as the cannabis market.
The
preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United
States requires us to make estimates and judgments that affect our reported assets, liabilities, revenues, and expenses and the
disclosure of contingent assets and liabilities. We base our estimates and judgments on historical experience and on various others
assumptions we believe to be reasonable under the circumstances. Future events, however, may differ markedly from our current
expectations and assumptions. While there are a number of significant accounting policies affecting our consolidated financial
statements; we believe the following critical accounting policies involve the most complex, difficult and subjective estimates
and judgments:
Accounts Receivable – We evaluate
the collectability of our trade accounts receivable based on a number of factors. In circumstances where we become aware of a
specific customer’s inability to meet its financial obligations to us, a specific reserve for bad debts is estimated
and recorded, which reduces the recognized receivable to the estimated amount we believe will ultimately be collected. In addition
to specific customer identification of potential bad debts, bad debt charges are recorded based on our recent loss history and
an overall assessment of past due trade accounts receivable outstanding.
Inventories – Inventories
are stated at the lower of cost to purchase and/or manufacture the inventory or the current estimated market value of the inventory.
We regularly review our inventory quantities on hand and record a provision for excess and obsolete inventory based primarily
on our estimated forecast of product demand, production availability and/or our ability to sell the product(s) concerned. Demand
for our products can fluctuate significantly. Factors that could affect demand for our products include unanticipated changes
in consumer preferences, general market and economic conditions or other factors that may result in cancellations of advance orders
or reductions in the rate of reorders placed by customers and/or continued weakening of economic conditions. Additionally, management’s
estimates of future product demand may be inaccurate, which could result in an understated or overstated provision required for
excess and obsolete inventory.
Long-Lived
Assets – Management regularly reviews property and equipment and other long lived assets, including certain definite-lived
identifiable intangible assets, for possible impairment. This review occurs annually or more frequently if events or changes in
circumstances indicate the carrying amount of the asset may not be recoverable. If there is indication of impairment of property
and equipment or amortizable intangible assets, then management prepares an estimate of future cash flows (undiscounted and without
interest charges) expected to result from the use of the asset and its eventual disposition. If these cash flows are less than
the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. The fair
value is estimated at the present value of the future cash flows discounted at a rate commensurate with management’s estimates
of the business risks.
Revenue
Recognition – We recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred, the
sales price is fixed or determinable and collectability is reasonably assured. Generally, ownership of and title to our
products pass to customers upon delivery of the products to customers. Net sales have been determined after deduction of
promotional and other allowances in accordance with ASC 605-50. Amounts received pursuant to new and/or amended distribution
agreements entered into with certain distributors, relating to the costs associated with terminating our prior
distributors, are accounted for as revenue ratably over the anticipated life of the respective distribution agreement,
generally 20 years. Management believes that adequate provision has been made for cash discounts, returns and spoilage based
on our historical experience.
Cost
of Sales – Cost of sales consists of the costs of products distributed, in-bound freight charges, as well as certain
internal transfer co and warehouse expenses incurred prior to delivery. Variable product costs account for the largest portion
of the cost of sales.
Operating
Expenses – Operating expenses include selling expenses such as distribution expenses to transport products to
customers and warehousing expenses, as well as expenses for advertising, commissions and other marketing expenses. Operating
expenses also include payroll costs, travel costs, professional service fees including legal fees, entertainment, insurance,
postage, depreciation and other general and administrative costs.
Income Taxes – We utilize
the liability method of accounting for income taxes as set forth in ASC 740. Under the liability method, deferred taxes are determined
based on the temporary differences between the financial statement and tax basis of assets and liabilities using tax rates expected
to be in effect during the years in which the basis differences reverse. A valuation allowance is recorded when it is more likely
than not that some of the deferred tax assets will not be realized. In determining the need for valuation allowances we consider
projected future taxable income and the availability
of tax planning strategies. If in the future we determine that we would not be able to realize our recorded deferred
tax assets, an increase in the valuation allowance would be recorded, decreasing earnings in the period in which such determination
is made.
We
assess our income tax positions and record tax benefits for all years subject to examination based upon our evaluation of the
facts, circumstances and information available at the reporting date. For those tax positions where there is a greater than
50% likelihood that a tax benefit will be sustained, we have recorded the largest amount of tax benefit that may potentially
be realized upon ultimate settlement with taxing authority that has full knowledge of all relevant information. For those
income tax positions where there is less than 50% likelihood that a tax benefit will be sustained, no tax benefit has been
recognized in the financial statements.
Derivative
Liabilities The Company assessed the classification of its derivative financial instruments as of December 31,2018, which
consist of Convertible instruments and rights to shares of the Company’s common stock, and determined that such
Derivatives meet the criteria for liability classification under ASC 815.
ASC
815 generally provides three criteria that, if met, require companies to bifurcate conversion options from their host
instruments and account for them as free standing derivative financial instruments. These three criteria include
circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and
closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both
the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable
generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate
instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument subject to
the requirements of ASC 815. ASC 815 also provides an exception to this rule when the host instrument is deemed to be
conventional, as described.
Fair
Value of Financial Instruments - The Company has adopted FASB ASC 820 Fair Value Measurements and Disclosures, or ASC 820,
for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value
to be applied to existing generally accepted accounting principles that require the use of fair value measurements establishes
a framework for measuring fair value and expands disclosure about such fair value measurements. The adoption of ASC 820 did not
have an impact on the Company’s financial position or operating results, but did expand certain disclosures.
ASC
820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
Between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize
the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:
Level
1:
|
Observable
inputs such as quoted market prices in active markets for identical assets or liabilities
|
Level
2:
|
Observable
market-based inputs or unobservable inputs that are corroborated by market data
|
Level
3:
|
Unobservable
inputs for which there is little no market data, which require the use of the reporting entity’s own assumptions.
|
The
Company did not have any Level 2 or Level 3 assets or liabilities as of December 31, 2017, with the exception of its convertible
notes payable and derivative liability. The carrying amounts of these liabilities at December 31, 2017 approximate their respective
fair value based on the Company’s incremental borrowing rate.
Cash
is considered to be highly liquid and easily tradable as of December 31, 2017 and therefore classified as Level 1 within our fair
value hierarchy.
In
addition, FASB ASC 825-10-25 Fair Value Option, or ASC 825-10-25, was effective for January 1, 2008. ASC 825-10-25 expands opportunities
to use fair value measurements in financial reporting and permits entities to choose to measure many financial instruments and
certain other items at fair value. The Company did not elect the fair value options for any of its qualifying financial instruments.
Convertible
Instruments - The Company evaluates and accounts for conversion options embedded in its convertible instruments in
accordance with professional standards for “Accounting for Derivative Instruments and Hedging Activities. Professional
standards generally provides three criteria that, if met, require companies to bifurcate conversion options from their host
instruments and account for them as free standing derivative financial instruments. These three criteria include
circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and
closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both
the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable
generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate
instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.
Professional standards also provide an exception to this rule when the host instrument is deemed to be conventional as
defined under professional standards as the Meaning of “Conventional Convertible Debt Instrument”. The Company
accounts for convertible instruments (when it has determined that the embedded conversion options should not Be Bifurcated
from their host instruments) in accordance with professional standards when “Accounting for Convertible Securities with
Beneficial Conversion Features,” as those professional standards pertain to “Certain Convertible Instruments.
Accordingly, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion
options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the
commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these
arrangements are amortized over the term of the related debt to their earliest date of redemption. The Company also records
when necessary deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the
differences between the fair value of the underlying common stock at the commitment date of the note transaction and the
effective conversion price embedded in the note.
ASC
81540 provides that, among other things, generally, if an event is not within the entity’s control could or require net
cash settlement, then the contract shall be classified as an asset or a liability.
Results
of Operation
Liquidity and Capital Resources
Going concern – The accompanying
financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. The Company has incurred cumulative net losses of $23,365,463 since its inception
and requires capital for its contemplated operational and marketing activities to take place. The Company’s ability to generate
the necessary funds through sale or licensing of its core products or the ability to raise additional capital through the future
issuances of common stock or debt is unknown. The obtainment of additional financing, the successful development of the Company’s
contemplated plan of operations, and its transition, ultimately, to the attainment of profitable operations are necessary for
the Company to continue operations. These factors, among others, raises substantial doubt about the Company’s ability to
continue as a going concern. The consolidated financial statements of the Company do not include any adjustments that may result
from the outcome of these aforementioned uncertainties.
As of December 31, 2019, we had total current
assets of $1,165,524, consisting of cash, accounts receivable, installment receivables and prepaid expenses and other current
assets, and total assets in the amount of $3,322,432. Our current and total liabilities as of December 31, 2019 were $3,103,550.
We had a working capital deficit of $1,938,026 as of December 31, 2019.
Operating activities used $778,860 in cash
for the year ended December 31, 2019, as compared with $921,901 for the same period ended December 31, 2018. Our net loss of $1,889,538
was the main component of our negative operating cash flow for the year ended December 31, 2019, offset mainly by depreciation
and amortization of $137,016, amortization of debt discounts of $835,819, and stock-based compensation of $795,785. Our net loss
of $11,597,864 was the main component of our negative operating cash flow for the year ended December 31, 2018, offset mainly
by stock issued for legal settlement $2,727,800, depreciation and amortization of $117,874, amortization of debt discounts of
$603,074 and stock-based compensation of $7,129,551.
Cash flows used by investing activities
during the year ended December 31, 2019 was $590,426, as compared with $510,296 for the same period ended December 31, 2018. Our
acquisition of land of $566,263, investment in licensing of $12,973 and purchase of fixed assets of $11,200 were the main components
of our negative investing cash flow for the year ended December 31, 2019. Our investment in land of $100,000, purchase of fixed
assets of $385,296, and investments of 25,000 were the main components of our negative investing cash flow for the year ended
December 31, 2018.
Cash flows from by financing activities
during the year ended December 31, 2019 amounted to $1,395,068, as compared with cash received of $1,347,250 for the year ended
December 31, 2018. Our cash flows from financing activities for the year ended December 31, 2019 consisted of repayments of $157,432
on promissory notes, Proceeds from Promissory notes of $1,522,500 and proceeds from the sale of common stock of 30,000. Our cash
flows from financing activities for the year ended December 31, 2018 consisted of $727,500 in proceeds from the sale of common
stock, $25,000 in payments on convertible notes and $1,048,250 proceeds from promissory notes off set by $403,500 in repayments
on promissory note.
Our future capital requirements will depend
on many factors including our growth rate, the timing and extent of spending to support business development efforts, the expansion
of our sales and marketing, the timing of new product introductions and the continuing market acceptance of our products and services.
Based upon our current financial condition,
we do not have sufficient cash to operate our business at the current level for the next twelve months. We intend to fund operations
through increased sales and debt and/or equity financing arrangements, which may be insufficient to fund expenditures or other
cash requirements. We plan to seek additional financing in a private equity offering to secure funding for operations. There can
be no assurance that we will be successful in raising additional funding. If we are not able to secure additional funding, the
implementation of our business plan will be impaired. There can be no assurance that such additional financing will be available
to us on acceptable terms or at all.
Net Loss
During
the year ended December 31, 2019 and 2018, we incurred net losses of $1,775,629 and
$11,592,864 respectively, an improvement of $9,817,235 or 84.6%.
Comparison
of the results of operations for the year ended December 31, 2019 and 2018 Sales. During the years ended December 31, 2019
and 2018, sales of our products amounted to $1,355,072 and $35,709, respectively,
an increase of $1,319,363 or 3,695%. The increase in sales is due to the Company’s grant of a state-wide cannabis distribution
license by the California Bureau of Cannabis Control and accordingly increased
activity in this sector for the year.
Profit
(Loss) from Operations. For the fiscal year ended December 31, 2019, our loss was $1,775,629 compared to a gross loss of $11,592,864
for the fiscal year ended December 31, 2018 an improvement of $9,817,235 or 84.6%. The improvement in operation loss is attributed
to significantly increasing revenue from distribution and a reduction in operating Expenses, especially stock-based
compensation for consulting service, which decreased from $7,129,547 to $795,785. The company issued a total of 10,820,132
shares of its restricted common stock for cash, services and settlement of debt valued at $19,349.
Costs
and Expenses
General
and Administrative. During the year ended December 31, 2019, general and administrative expenses amounted to $441,370 compared
to $289,036 in the year ended December 31, 2018, an increase of $152,334 or 52.8%. The increase in general and administrative
expenses was due to the company’s ongoing efforts and associated cost in the
effort to centralize all operations at its headquarters in Paso Robles and an increased use of outside contractors, experts and
advisors for the involved permit process for Estrella Ranch.
Professional
Fees. During the years ended December 31, 2019 and 2018, Professional Fees totaled $313,730 and $504,356 respectively, a decrease
of $190.626 or 37.7%. The decrease is primarily due to less use of general outside consultants although legal fees had increased
for the year.
Interest
expense. During the year ended December 31, 2019 interest expense increased to $1,054,169 from $747,814 during the year ended
December 31, 2018, an increase of $306,355 or 41%. The primary reason for the increase
is due to short term loan instruments.
Gain
on change in fair value of derivative liability. As described in our accompanying consolidated financial statements, we issued
convertible notes with certain conversion features that have certain reset provisions. All of which, we are required to Bifurcate
from the host financial instrument and mark to market each reporting period. We recorded the initial fair value of
the reset provision as a liability with an offset to equity or debt discount and subsequently mark to market the reset
provision liability at each reporting cycle.
For the year ended December 31, 2019, we recorded an decrease of $19,636 in change
in fair value of the derivative liability including initial non-cash interest as compared to a gain/loss of $0 for the year ended
December 31, 2018. Also, the Company recorded a loss on settlement of debt of $3,900 during the year ended December 31, 2019 as
compared to $52,100 in 2018.
Going
Concern. The Company’s consolidated financial statements are prepared using U.S. GAAP applicable to a going concern,
which contemplates the realization of assets and liquidation of liabilities in the normal course of business. We have an accumulated
deficit of $23,365,463 and our current assets exceeded our current liabilities by $219,406 as of December 31, 2019. We
may require additional funding to sustain our operations and satisfy our contractual obligations for our planned operations. Our
ability to establish the Company as a going concern is may be dependent upon our ability to obtain additional funding in order
to finance our planned operations.
In order to continue as a going concern, develop a reliable source of revenues, and achieve a profitable
level of operations the Company will need, among other things, additional capital resources. Management’s plans to continue
as a going concern include raising additional capital through increased sales of product and by sale of common shares. However,
management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. The ability of
the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the
preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying consolidated
financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
BUSINESS
This
Prospectus includes market and industry data that we have developed from publicly available information, various industry publications
and other published industry sources and our internal data and estimates. Although we believe the publications and reports are
reliable, we have not independently verified the data. Our internal data, estimates and forecasts are based upon information obtained
from trade and business organizations and other contacts in the market in which we operate and our management’s understanding
of industry conditions.
As
of the date of the preparation of this Prospectus, these and other independent government and trade publications cited herein
are publicly available on the Internet without charge. Upon request, the Company will also provide copies of such sources cited
herein.
LiveWire
has been operating in the health and wellness industry for several years and specializes in identifying and monetizing current
and future trends in the health and wellness industry. The Company is focused on specialty real estate acquisitions, licensing
and management of fully compliant turnkey production facilities for cannabis operations and services. The Company currently operates
under a permit for the cultivation of its products in Coachella, California, a Statewide distribution license from the Bureau
of Cannabis Control California and a Minor Use Permit for its location in Paso Robles via its wholly owned subsidiary GHC Ventures,
LLC. The Company works with, and/or plans to acquire carefully vetted cannabis operators, will only work with or have ownership
in companies that are in complete compliance with Federal and State laws and have the required permits to operate. The Company
does not sell or distribute any products anywhere that are in violation of the United States Controlled Substance Act
Together
with its subsidiaries, the Company is pursuing a vertically integrated Weedery business model for high-quality handcrafted products,
enter strategic alliances and seek the cooperation of the most experienced operators in the cannabis industry to accelerate development
and revenue generation. After carefully vetting several potential partners the Company has entered into the first definitive Agreement
with an experienced agricultural company and highly specialized cannabis grower, QDG Agricultural. QDG
has begun to design, construct and manage all necessary buildouts required for phase one of a self-sustained scalable growth operation
within the constraints of the Paso Robles property. QDG is establishing a regenerative plant environment in strict compliance
with the rules that LiveWire has established for all operators on the Ranch. QDG uses state of the art technology and science
executed by professionals with 20 years of experience, the QDG system is proven to be cost effective and scalable, offering a
100% organic “tractor-less farming”. QDG will provide marketable cannabis strains as allowed per California Laws under
a unique profit-sharing model between the parties involved.
The
Company is also in the process of establishing research partnerships to explore the application of cannabinoid-based products
to target specific ailments or conditions with large “sufferer” populations for human and veterinarian applications.
The advanced product development and subsequent commercialization potentially arising out of these research projects will
take advantage of the growing and maturing, further legalized cannabis industry, accelerated by the advancing legalization and
increasing public acceptance in California and throughout the country.
The
company is lead by a team of entrepreneurs, experienced operators and cannabis industry experts as well as scientists, horticulturists
and extraction specialists who apply the latest scientific knowledge and technology to deliver quality-controlled, rigorously
tested cannabis products throughout California. The Company continues to strategically align itself with carefully selected growers
and sellers in the industry to become a fully vertically integrated company that will satisfy the growing demand for high-quality
and carefully tested products in the California cannabis market and to expand its operations nationwide as soon as Federal legislation
permits. LiveWire will manage the real estate, complete all permitting processes and obtain and maintain (through its subsidiaries)
all operating permits.
Development
Stage Company
We
are an early stage development company and starting to implement core parts of our business plan. We have no operating history
in the cannabis industry, and no history of earnings or profits. We are in the early stages of establishing customers or means
to generate positive cash flow from operations. We have no experience in addressing the risks, expenses and difficulties frequently
encountered by companies in their early stage of development, particularly companies in new and rapidly evolving markets such
as the cannabis market. There can be no assurance that we will be successful in addressing these risks and the failure to do so
in any one area could have a material adverse effect on our business, prospects, financial condition and results of operations.
There is no assurance that our business will be a success.
Our
ability to continue as a going concern and to ensure adequate working capital is dependent upon achieving profitable operations
or upon obtaining sufficient additional financing in future debt and equity offerings. These factors may cast significant doubt
on our ability to continue as a going concern. Our strategic business plan includes successfully executing the following objectives:
|
●
|
Make
special purpose real estate acquisitions to establish, license and manage fully compliant
turnkey production facilities cannabis cloning, nursery and extraction operations.
|
|
●
|
Manage
licensed and fully compliant special purpose cannabis manufacturers
|
|
●
|
Receive
approval on submitted application for Estrella Ranch operational permit
|
|
●
|
Continue
to integrate auxiliary LiveWire operations on Estrella Ranch as the Central Operation
Hub.
|
|
●
|
Establish
Estrella Ranch “Estate Grown Weedery” as the leading “hand-crafted”
Nationwide cannabis brand.
|
|
●
|
Expand
distribution network throughout California
|
|
●
|
Up
list to OTCQB
|
|
●
|
Enter
into consulting agreements with experts in plant genetics and modern horticulture technology
in the cannabis industry
|
|
●
|
Establish
a team of innovators to commence with leading-edge research to explore the application
of cannabinoid products in several underserved medical sectors
|
|
●
|
Enter
strategic alliances with research teams with highly recognized and published experts
and/or institutions in their respective fields
|
|
●
|
Pursue
small research studies designed to document safety, dosage and efficacy of various combinations
of CBD/THC and terpene profiles
|
|
●
|
Expansion
into the sports and cosmetics markets for CBD or THC infused products with different
dosage combinations of fragrances and herbs are currently being tested developed for
licensing
|
|
●
|
Continuation
of developing a proprietary “7xPure Compliance & Dosage Verification System”
to be developed into an industry “Gold Standard”
|
While
the Company is expanding its best efforts in this regard, our ability to successfully execute the above business development objectives
and the ultimate outcome of these matters cannot be predicted at this time.
The
Cannabis Industry and Regulation
Industry
Overview
The
U.S. cannabis market is still very fragmented and populated mainly by many small, poorly managed and underfunded companies. The
worldwide market is as fragmented as the U.S. market and is not clearly dominated by one or two large companies, thus creating
significant opportunities for well-structured companies that are sufficiently funded and will be able to operate globally. While
still in a turbulent development phase, the Cannabis industry is continuing to consolidate, and several companies have entered
into joint ventures or have been acquired, re-organized or strategically aligned their business models and are expected to lead
to cohesive growth.
There
are three basic operating segments within the cannabis industry:
|
●
|
Cannabis
nursery and distributors - Cannabis nursery and distributors set up greenhouses or
indoor facilities where they cultivate plants, which they harvest and then process into
products that are distributed to dispensaries, which ultimately sell as permitted by
law.
|
|
●
|
Cannabis-focused
biotechnology innovation - Cannabis-focused biotechnology companies develop medicines
like prescription drugs that are made from the chemical ingredients of cannabis (known
as cannabinoids).
|
|
●
|
Ancillary
products and services providers - Ancillary products and services providers support
the other types of cannabis businesses by providing products and services that are needed
to do business. These products and services can range from consulting and administrative
services to distribution to fertilizers, hydroponics (growing plants in water), and lighting
systems used in cannabis cultivation.
|
Cannabis
Regulatory Developments
In
December 2018, hemp became an official agricultural commodity with the passage of the Farm Act. Although there are still FDA restrictions
on hemp-derived CBD as an additive in ingestible products and topical products marketed as therapeutic rather than cosmetic, several
major U.S. retailers are now selling non-ingestible forms of hemp-derived CBD. Emerging on shelves today, consumers are likely
to see topical products like lotions, oils, balms and creams that are infused with hemp-derived CBD. And despite the FDA pronouncements,
some suppliers and retailers are already selling ingestible forms of hemp-CBD, as well as several states that have passed their
own laws allowing CBD in ingestibles.
There
are 34 US states, districts or territories that have legalized some form of cannabis use. Congress now allows states to set their
own medical marijuana and hemp policies, without interfering from a Federal level. In December 2018, the Farm Bill was signed
into law. Under section 10113 of the Farm Bill, state departments of agriculture must consult with the state’s governor
and chief law enforcement officer to devise a plan that must be submitted to the Secretary of the USDA. A state’s plan to
license and regulate hemp can only commence once the Secretary of the USDA approves that state’s plan. In states opting
not to devise a hemp regulatory program, USDA will construct a regulatory program under which hemp cultivators in those states
must apply for licenses and comply with a federally run program. This system of shared regulatory programming is similar to options
states had in other policy areas such as health insurance marketplaces under the Affordable Care Act, or workplace safety plans
under OSHA—both of which had federally-run systems for states opting not to set up their own systems. Non-cannabis hemp
be a highly regulated crop in the United States for both personal and industrial production.
Section
12619 of the Farm Bill removes hemp-derived products from its Schedule I status under the Controlled Substances Act, but the legislation
does not legalize CBD generally. CBD, with some minor exceptions, remains a Schedule I substance under federal law. The Farm Bill
ensures that any cannabinoid—a set of chemical compounds found in the cannabis plant—that is derived from hemp will
be legal, if and only if that hemp is produced in a manner consistent with the Farm Bill, associated federal regulations, association
state regulations, and by a licensed grower. Though many states have adopted their own policies legalizing the sale and manufacture
of products containing CBD oil, all other cannabinoids, produced in any other setting, remain a Schedule I substance under federal
law and are thus illegal.
While
the federal government has not interfered with the legalization laws enacted by state and local governments; however, there remains
significant risk that the federal government could pass legislation that could reverse the legalization of cannabis.
Additionally,
there are a number of federal and state banking laws and regulations that could continue to make it challenging for cannabis operators
to safely and securely process operating revenues and costs.
Market
Opportunity
According
to the latest Nielsen Thinking Beyond the Buzz Survey (U.S.) 2019, sales of cannabis and related products are estimated to rise
from $8 billion in 2018 to more than $41 billion by 2025; of which Nielsen projects $35 billion will come from marijuana products
and the remaining $6 billion from hemp-derived CBD products. These projections by Neilson assume that 75% of the U.S. adult population
will have consistent access to legal marijuana by 2025. Hemp-derived CBD estimates assume that ingestible hemp-derived CBD products
will be legally available at major retailers and across retail channels.
Cannabis
and related products include several derivatives such as consumables, vapes, topicals, and concentrates for use in health and
beauty products. Certain cannabis derivative products and can be produced from pot plants, such as derivatives containing tetrahydrocannabinol
(THC), cannabidiol (CBD), or hemp oil. THC is the psychoactive cannabinoid that gets users high, whereas CBD doesn’t get
users high and is best known for its perceived medical benefits. According to a study conducted by Nielsen in 2018, approximately
48% of cannabis dried flower products sold in 2018 in Colorado, Washington, Nevada, and California was dried flower and the remainder
was comprised of vape pens (19%), edibles (11%), and other derivatives (22%).
Apart
from the already established states, markets for marijuana usage for medical and recreational purposes are slowly emerging in
many other states and all across the world. Additionally, a growing number of states and districts in the U.S. continue towards
legalization of cannabis as shown below:
Based
on these continuing trends and the fact that additional states will likely expand the legality of Cannabis products, we expect
robust growth in the overall U.S. marketplace.
We
believe that cannabis should be elevated to its proper place among other legal recreational intoxicants such as fine wines, liquors,
beers, cigars, etc. There is a large amount of scientific evidence that supports this philosophy, as well as a growing number
of supporters ranging from high-ranking US and foreign politicians to prominent figures in different industries, from medical
to entertainment. According to a recent Gallup poll conducted by Pew Research Center as shown below, there continues to be growing
support in the U.S. among all generations in support of legalization of cannabis.
In
addition, we believe that legalization will help unlock the phenomenal power of cannabis as a medicinal treatment for numerous
ailments from pain and headaches to anxiety and cancer. The first cannabis based medical application, brought to the market by
GWC Pharmaceuticals (NASDAQ: GWPH) has just been approved by the FDA. This is expected to have significant positive impact on
both, human and veterinarian applications, as indicated by leading opinions in the medical field.
Competition
Global
Market
Several
countries have legalized cannabis for medicinal purposes at the national level. Canada currently has the largest share of the
cannabis market among these countries, with estimated sales of medical cannabis in 2018 of more than $600 million. Germany, and
other similarly large countries, are expected to be larger than the Canadian market within the next few years because of its larger
population and potential distribution access.
U.S.
Market
The
legalization of cannabis in the U.S. market represents a blue ocean market and large potential source of tax revenue for state
and local governments. Cannabis remains illegal at the federal level in the U.S.; however, approximately 31 states have legalized
and/or decriminalized possession of cannabis. Most of these states have approved the use of cannabis for medicinal purposes and
a growing number of states permit recreational use. The rise in the number of states that have passed laws that legalize the cultivation
and sale of cannabis has increased the number of competitors and competing cannabis brands. According to a recent Nielsen report
(U.S. Cannabis Market Pulse Report, 2018) indicates that the number of cannabis brands in the market have increased from 166 to
over 2,650 bands over the last five years as show below:
The
largest competitors in the cannabis market are large and well-funded publicly traded companies as shown below:
We
believe that successful competitors in the emerging Cannabis market will be those that move away from a fringe, counterculture
approach and embrace professional, high-quality product development and superior marketing and distribution protocols; as well
as access to debt and capital markets to raise capital to expand operations.
Intellectual
Property and Permits
Our
intellectual property rights and operational permits are important to our business. We expect to rely on a combination of cannabis
licenses, trademarks, trade secret and other rights in the United States and other jurisdictions, as well as confidentiality procedures
and contractual provisions to protect our cannabis cultivation and cannabis and related products and related intellectual proprietary.
We protect our intellectual property rights in several ways including entering into confidentiality and other written agreements
with our employees, customers, consultants and partners to control access to and distribution of our property. Despite our efforts
to protect our proprietary rights, third parties may, in an unauthorized manner, attempt to use, copy or otherwise obtain and
market or distribute our intellectual property rights or otherwise develop similar products.
Employees
As
of January 28, 2020, we had approximately 1 full-time employees. We engage several consultants and employ temporary employees.
None of our employees are subject to a collective bargaining agreement. We believe that our relations with our employees are good.
Description
of Property
All
of our property locations are leased either directly by Livewire or via one of its partially owned subsidiaries. We believe we
can obtain additional facilities required to accommodate projected needs without difficulty and at commercially reasonable prices,
although no assurance can be given that we will be able to do so. The following table presents our or our managed property locations
at November 5, 2019 for our U.S. locations:
Entity
|
|
Purpose
|
|
Location
|
|
Lease
Expiration
Date
|
|
Leased
Space
(in
Sqft)
|
|
|
Annual
Cost
|
|
LiveWire
Ergogenics, Inc.
|
|
Corporate administration
and order fulfillment (1)
|
|
1600 N Kraemer Boulevard,
Anaheim, California
|
|
Month to Month
|
|
|
1,500
|
|
|
$
|
18,000
|
|
GHC
Ventures, LLC
|
|
Cultivation and Distribution (2)
|
|
Coachella, California
|
|
Month to Month
|
|
|
1,500
|
|
|
$
|
90,000
|
|
GHC
Ventures, LLC
|
|
Cannabis Nursery Cultivation (3)
|
|
655 Almond Drive, Paso Robles, California
|
|
10 Year Lease
|
|
|
25,000
|
|
|
$
|
15,000
|
|
Estrella
Ranch Partners, LLC
|
|
Ranch Property in development, planned
cannabis operations (4)
|
|
5165 Estrella Rd Paso Robles,
CA,
934465
|
|
Mortgage
|
|
|
265
acres
|
|
|
|
390,000
|
|
(1)
This property serves as our headquarters and order processing and fulfillment facility; and it has extensive office space and
large warehouse areas to permit expansion of operations if required. Part-time employees are used from time-to-time to satisfy
order processing requirement.
(2)
This property serves as our subsidiary GHC Ventures, LLC’s primary cannabis cultivation and distribution center. Our cannabis
cultivation permits were issued by the City of Coachella to our subsidiary GHC Ventures, LLC and those permits are attached to
this property.
(3)
This property serves as our subsidiary GHC Ventures, LLC’s cannabis nursery. Our minor use permit was issued by the local
authorities to our subsidiary GHC Ventures, LLC.
(4)
This property has been acquired in May 2019 and is currently under development and will house several licensed third-party operators
for a variety of cannabis operations. The property is owned by our subsidiary Estrella Ranch Partners, LLC
Legal
Matters
On
May 3, 2018, American E Group LLC filed a complaint against LiveWire Ergogenics Inc. for payment of a Convertible Note of $30,000
from November 2015 in the Superior Court of New York. The Company intends to defend the claim rigorously and has hired New York
counsel. On June 8, 2018 the Company’s counsel has filed a motion to dismiss the Complaint and all claims with prejudice
and extend further relief to the Company. On January 28, 2020, United States District Court Judge Gregory H. Woods of the United
States District Court for the Southern District of New York issued an opinion and order in the action entitled, American E Group
LLC v. Livewire Ergogenics Inc. (18-civ-3969) that granted Livewire Ergogenics Inc’s (“Livewire”) motion to
dismiss all of Plaintiff American E Group’s (“AEG”) claims against Livewire. The Court also denied AEG any attempt
to reassert its claims because any attempt to do so would be “futile.” AEG’s dismissed claims sought the recovery
of principal and interest and issuance of Livewire stock as consideration for a loan that had been made to the Company. The Court
held that AEG’s loan to Livewire was criminally usurious, and therefore, void under New York law. Livewire’s counterclaims
against AEG for aiding and abetting breach of fiduciary duty, breach of implied covenant of good faith and fair dealing and civil
conspiracy are still pending. Livewire is represented in this lawsuit by Ryan J. Whalen of Gusrae Kaplan Nusbaum PLLC in New York.
Dividend
Policy
We
have not declared or paid any dividends on our common stock and we do not anticipate paying dividends in the foreseeable future.
We expect to retain future earnings to finance product development, growth, and where appropriate, to pay down debt. Any change
in our dividend policy is within the discretion of our board of directors and will depend, among other things, on our earnings,
debt service and capital requirements, restrictions in financing agreements, if any, business conditions, legal restrictions and
other factors that our board of directors deems relevant.
MANAGEMENT
Directors
of the corporation are elected by the stockholders to a term of one year and serve until a successor is elected and qualified.
Officers of the corporation are appointed by the Board of Directors to a term of one year and serves until a successor is duly
appointed and qualified, or until he or he is removed from office. The Board of Directors has no nominating, auditing or compensation
committees. The Board of Directors also appointed our officers in accordance with the Bylaws of the Company, and per employment
agreements negotiated between the Board of Directors and the respective officer. Currently, there are no such employment agreements.
Officers listed herein are employed at the whim of the Directors and state employment law, where applicable.
The
name, age, and position of our officer and director is set forth below:
Name
|
|
Age
|
|
First
Year as a
Director or officer
|
|
Office(s)
held
|
Bill
Hodson
|
|
52
|
|
2011
|
|
Director
and Chief Executive Officer
|
Michael
Corrigan
|
|
61
|
|
2019
|
|
Director
|
William
Riley
|
|
45
|
|
2019
|
|
Director
|
The
term of office of each director of the Company ends at the next annual meeting of the Company’s stockholders or when such
director’s successor is elected and qualifies. No date for the next annual meeting of stockholders is specified in the Company’s
bylaws or has been fixed by the Board of Directors. The term of office of each officer of the Company ends at the next annual
meeting of the Company’s Board of Directors, expected to take place immediately after the next annual meeting of stockholders,
or when such officer’s successor is elected and qualifies.
Directors
are entitled to reimbursement for expenses in attending meetings but receive no other compensation for services as directors.
Directors who are employees may receive compensation for services other than as director. No compensation has been paid to directors
for services.
Biographical
Information
We
have a diversified management team and advisory board with long standing experience and relationships in the cannabis and financial
industries. We maintain our headquarters in Anaheim, California, and we are managed by our Chairman and CEO, Bill Hodson.
Bill
Hodson, Chief Executive Officer. Mr. Hodson is the CEO and the Chairman of the Board of Directors with currently Mr. Hodson
being the only director. Mr. Hodson is responsible for the strategic direction of the firm’s development, branding, sales
and marketing strategies and leads the development and implementation of the company’s innovative product strategy.
Previously,
he was Executive Vice President of LiveWire Sports Group from September 2003 until May 2008. Hodson was responsible for overseeing
all of LWSG’s operations, which included the launch of several sports publications and one of the country’s largest
sports consumer expos. Prior to LiveWire, he served as Sales Director for Winn Golf Grips and was responsible for building the
company’s national sales force and launch of what is now considered the top golf grip in the industry. Most notably, Mr.
Hodson has launched a popular kids’ game called “Pogs” which he developed into a notable Domestic and International
success.
Mr.
Hodson began his professional career in the securities industry as a stockbroker specializing in early stage nutraceutical and
biotechnology companies.
Mike
Corrigan, Director. Mr. Corrigan’s practice emphasizes general and SEC representation of emerging high technology
and other operating companies. He has been counsel to private and public companies in a broad range of industries, including computer
hardware and software, telecommunications, multimedia, action sports, restaurant, entertainment and sporting goods manufacturing.
He has assisted these companies with their corporate and partnership organization, private and public financing of debt and equity,
mergers and acquisitions, joint ventures, technology licensing, real estate syndication and related commercial arrangements. He
has advised owners of these companies on retirement planning and estate planning matters. In addition, Mr. Corrigan has represented
several regional investment banking, advisory and management firms in securities and underwriting transactions, as well as compliance
matters. Since 2003, Mr. Corrigan’s practice has dealt almost exclusively with small cap publicly traded companies and privately
held companies in the process of going public.
Mr.
Corrigan moved to California from Colorado in 1980. He attended the University of Denver where he received both a J.D. and M.B.A.
degree, was an editor of the Denver Journal of International Law & Policy and clerked at the U.S. Securities & Exchange
Commission. He received his undergraduate degree from the University of Notre Dame, where he majored in finance.
Mr.
Corrigan is a member of the California bar, a 1988 graduate of the San Diego LEAD program and sits on the Medical Bioethics Committee
of Sharp Memorial Hospital. He previously sat on the Board of Directors of the National Kidney Foundation of Southern California,
the Board of Directors of United Way/CHAD, the Board of Trustees of the California Ballet Association/The Board of Trustees of
the San Diego Repertory Theatre and the Eagle Scout Review Board.
William
Riley, Director, Mr. Riley spent most of his career as an institutional trader on the New York Stock Exchange (NYSE) operating
out of St. Louis, Missouri. Mr. Riley moved to Las Vegas in 2011 to pursue a career in the residential mortgage banker field.
As a registered mortgage broker, he consults on introductions to private investors for various real estate and other projects.
Mr. Riley holds a Bachelor of Science from Eastern Illinois University, Charleston, Illinois.
The
Advisory Board
The
Company has an informal Advisory Board that is available to provide business advice and counseling to the Management Team of the
Company. The Advisory Board is appointed by the CEO and does not involve itself in any matters involving corporate governance
of the Company.
Kyle
Anthony McKay, Master Horticulturist. Mr. McKay will apply 25 years of experience in the cannabis industry to providing extensive
cultivation expertise specifically in the cannabis cloning discipline to fill the pipeline of proven and newly developed strains
to LiveWire for research purposes. He will identify a variety of cannabis strains in an effort to provide greater efficacy when
targeting specific ailments. He possesses over 20 years of experience in the industry and are extremely qualified to guide Livewire’s
efforts to become a true force in the cannabinoid health and wellness industry. His expertise in plant genetics and modern horticulture
technology has him extremely qualified to render the requisite services to Livewire
Jeff
Halloran. Mr. Halloran, a resident of Toronto, Canada, will advise the Company on issues
relating to the potential interactions between the US and Canadian cannabis and financial markets. Jeff is an accomplished senior
management executive with over 35 years of experience. He has founded and held top positions in large financial and technology
firms and has an outstanding record of achievement managing multi-million and billion-dollar programs. Jeff will use his standing
in the Canadian markets to provide Livewire with research and advice for potential acquisitions and strategic alliance targets
in the burgeoning Canadian cannabis markets. He will also work with the Company’s Analyst to increase market awareness of
LiveWire in the Canadian financial markets and demonstrate the opportunity for Canadian companies to enter the US market via strategic
alliances with LiveWire
Jimmy
Connors. Jimmy Connors is a legendary No.1 tennis player and is considered among the greatest in the history of the sport.
He has held the top ATP ratings for a record 160 consecutive weeks from 1974 to 1977 and for a total of 268 weeks throughout his
entire career. Connors still holds the Open Era Men’s Single Record consisting of 109 titles, 1,535 matches played with
1,256 wins and he is the only man to ever reach 100 titles. Based on his long and exceptionally prolific career, Connors still
holds three prominent Open Era men’s singles records. His titles include eight majors (five US Open, two Wimbledon, one
Australian Open), three year-end championships, and 17 Grand Prix Super Series. In 1974, he became the second man in the Open
Era to win three majors in a calendar year, and his total career match win rate remains in the top five of the era.
Matthew
Geriak, PharmD, Clinical Pharmacist, Investigational Research Pharmacist. Dr. Geriak is a specialized Pharmacist and has a
system-wide position on the Investigational Review Board for Sharp Healthcare, which owns 5 hospitals and various clinics throughout
San Diego County. Sharp conducts Drug Research spanning from Phase 1 to 4 Human Research Clinical Trials with the focus in the
fields of Oncology, Renal and Heart Transplantations, Septic Shock treatment, Infectious Diseases and Anticoagulation. Mr. Geriak
is the primary Investigator for retrospective cohorts in the field of Infectious Diseases.
He
also has held positions as a Clinical Pharmacist in the Acute Care department at Scripps Mercy Hospital in San Diego, CA and was
an infectious Disease Specialist with Sharp HealthCare in San Diego. His responsibilities were to bring the Antibiotic Stewardship
to the next level by developing/mentoring a Pharmacy Residency Infectious Disease Rotation, round with the ID physicians, create
antibiotic utilization guidelines for surgical prophylaxis, and provide entity input to the system-wide Antimicrobial Review Committee.
He received his education from the University of Southern California
Executive
Compensation
Name
and
Position
|
|
Year
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock
awards
($)
|
|
|
Option
awards
($)
|
|
|
Non-equity
incentive plan
compensation
($)
|
|
|
Change
in pension value
and nonqualified deferred
compensation earnings
($)
|
|
|
All
other
compensation
($)
|
|
|
Total
($)
|
|
Bill Hodson
|
|
2016
|
|
$
|
1,644
|
|
|
$
|
0.00
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
|
|
|
|
|
2017
|
|
$
|
54,665
|
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
|
|
|
|
|
2018
|
|
$
|
50,000
|
|
|
$
|
0.00
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
|
|
|
|
|
2019
|
|
$
|
60,000
|
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
|
|
|
Cliff Rusin (resigned)
|
|
2016
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
|
|
|
|
|
2017
|
|
$
|
15,250
|
|
|
$
|
0.00
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
|
|
|
|
|
2018
|
|
$
|
50,000
|
|
|
$
|
0.00
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
|
|
|
|
|
2019
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
|
|
|
|
●
|
In
2016, we issued 14,629,000 shares of common stock to Bill Hodson as compensation for
services.
|
|
●
|
In
2017, we issued 10,675,000 shares of common stock to Cliff Rusin as compensation for
services.
|
|
●
|
In
2018, we issued 40,000,000 shares of common stock to Bill Hodson and 39,950,000 shares
of common stock to Cliff Rusin as compensation for services.
|
RELATIONSHIPS
AND RELATED PARTY TRANSACTIONS
There
are no related party transactions as of the date of this filing.
PRINCIPAL
STOCKHOLDERS
The
following table sets forth information as to the shares of Common Stock beneficially owned as of February 4, 2020, by (i) each
person known to us to be the beneficial owner of more than 5% of our Common Stock; (ii) each Director; (iii) each Executive Officer;
and (iv) all of our Directors and Executive Officers as a group. Unless otherwise indicated in the footnotes following the table,
the persons as to whom the information is given had sole voting and investment power over the shares of Common Stock shown as
beneficially owned by them. Beneficial ownership is determined in accordance with Rule 13d-3 under the Exchange Act, which generally
means that shares of Common Stock subject to options currently exercisable or exercisable within 60 days of the date hereof are
considered to be beneficially owned, including for the purpose of computing the percentage ownership of the person holding such
options, but are not considered outstanding when computing the percentage ownership of each other person. The footnotes below
indicate the amount of unvested options for each person in the table. None of these unvested options vest within 60 days of the
date hereof.
Name
of Officer/Director
and Control Person
|
|
Affiliation
with Company (e.g. Officer/Director/Owner of more than 5%)
|
|
Number
of
shares owned
|
|
|
Share
type/class
|
|
Ownership
Percentage of
Class Outstanding
|
|
Bill
Hodson
|
|
Board
Member, Chief
Executive Officer, Treasurer
|
|
|
54,629,000
|
|
|
Comm
|
|
|
5
|
%
|
Bill
Hodson
|
|
Board Member,
Chief
Executive Officer, Treasurer
|
|
|
75
|
|
|
Preferred C
|
|
|
100
|
%
|
Cliff
Rusin
|
|
President (Resigned)
|
|
|
90,625,000
|
|
|
Common
|
|
|
8
|
%
|
DESCRIPTION
OF CAPITAL
The
following summary is a description of the material terms of our capital stock and is not complete. You should also refer to our
articles of incorporation, as amended and our bylaws, as amended, which are included as exhibits to the registration statement
of which this Offering Circular forms a part.
Common
Stock
Voting
Each
holder of our Common Stock is entitled to one vote for each share of Common Stock held on all matters submitted to a vote of stockholders.
Any action at a meeting at which a quorum is present will be decided by a majority of the votes cast. Cumulative voting for the
election of directors is not permitted.
Dividends
Holders
of our Common Stock are entitled to receive dividends when, as and if declared by our Board of Directors out of funds legally
available for payment, subject to the rights of holders, if any, of our preferred stock. Any decision to pay dividends on our
Common Stock will be at the discretion of our Board of Directors. Our Board of Directors may or may not determine to declare dividends
in the future. See “Dividend Policy.” The Board’s determination to issue dividends will depend upon our profitability
and financial condition, and other factors that our Board of Directors deems relevant.
Liquidation
Rights
In
the event of a voluntary or involuntary liquidation, dissolution or winding up of our company, the holders of our Common Stock
will be entitled to share ratably on the basis of the number of shares held in any of the assets available for distribution after
we have paid in full all of our debts and after the holders of all outstanding preferred stock, if any, have received their liquidation
preferences in full.
Convertible
Preferred Stock
Class
B Preferred
|
|
|
|
Trading
symbol:
|
n/a
|
|
|
Exact
title and class of securities outstanding:
|
Class
B Preferred
|
|
|
CUSIP:
|
n/a
|
|
|
Par
or stated value:
|
$0.0001
|
|
|
Total
shares authorized:
|
10,000
|
as
of date: 2/6.2020
|
|
Total
shares outstanding:
|
32,820
|
as
of date: 2/6/2020
|
|
|
|
|
|
Trading
symbol:
|
n/a
|
|
|
Exact
title and class of securities outstanding:
|
Class
C Preferred
|
|
|
CUSIP:
|
n/a
|
|
|
Par
or stated value:
|
$0.0001
|
|
|
Total
shares authorized:
|
75
|
as
of date: 2/6/2020
|
|
Total
shares outstanding:
|
75
|
as
of date: 2/6/2020
|
|
Series
B Preferred
Voting
Each
outstanding share of Series B Preferred Stock shall vote with common stock and other Preferred Stock on all matters, having one
vote per share.
Conversion
Each
outstanding share of Series B Preferred Stock may be converted, at the option of the holder, into a number of common stock equal
to $1.25.
Liquidation
Rights
Upon
a liquidation event, all shares of Series B Preferred Stock shall automatically convert into common stock per the terms of conversion
and shall receive, and thereafter, the holder shall receive their pro rata portion of liquidation provided to all common
stock shareholders.
Series
C Preferred
Voting
The
Class C Preferred Stock is allowed to cast a vote on all matters that the Company’s shareholders are permitted to vote upon,
equal to .7% of all outstanding securities that are eligible to vote at the time of such shareholder action for each share of
Class B Preferred (.7% X 75 shares = 52.5% of total vote).
Conversion
Rights
Each
share of Class C Preferred Stock has the right to convert into 8,000 shares of the Company’s common stock.
Liquidation
Rights
Each
share of Class C Preferred Stock has a liquidation preference of $200 per share.
Limitations
on Liability and Indemnification of Officers and Directors
Nevada
law authorizes corporations to limit or eliminate (with a few exceptions) the personal liability of directors to corporations
and their stockholders for monetary damages for breaches of directors’ fiduciary duties as directors. Our articles of incorporation
and bylaws include provisions that eliminate, to the extent allowable under Nevada law, the personal liability of directors or
officers for monetary damages for actions taken as a director or officer, as the case may be. Our articles of incorporation and
bylaws also provide that we must indemnify and advance reasonable expenses to our directors and officers to the fullest extent
permitted by Nevada law. We are also expressly authorized to carry directors’ and officers’ insurance for our directors,
officers, employees and agents for some liabilities. We currently maintain directors’ and officers’ insurance covering
certain liabilities that may be incurred by directors and officers in the performance of their duties
The
limitation of liability and indemnification provisions in our articles of incorporation and bylaws may discourage stockholders
from bringing a lawsuit against directors for breach of their fiduciary duty. These provisions may also have the effect of reducing
the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise
benefit us and our stockholders. In addition, your investment may be adversely affected to the extent that, in a class action
or direct suit, we pay the costs of settlement and damage awards against directors and officers pursuant to the indemnification
provisions in our articles of incorporation and bylaws.
There
is currently no pending litigation or proceeding involving any of directors, officers or employees for which indemnification is
sought.
Transfer
Agent
Our
transfer agent is Continental Stock Transfer and Trust Company, 1 State Street Plaza, 30th Floor, New York, New York,
10004, phone 212.509.4000.
SHARE
ELIGIBLE FOR FUTURE SALE
Future sales of substantial amounts of our Common Stock in the public market after this offering could adversely affect market
prices prevailing from time to time and could impair our ability to raise capital through the sale of our equity securities. We
are unable to estimate the number of shares of Common Stock that may be sold in the future.
Upon
the successful completion of this offering, we will have 1,566,108,193 outstanding shares of Common Stock if we complete
the maximum offering hereunder. All of the shares sold in this offering will be freely tradable without restriction under the
Securities Act unless purchased by one of our affiliates as that term is defined in Rule 144 under the Securities Act, which generally
includes directors, officers or 5% stockholders.
Rule
144
Shares
of our Common Stock held by any of our affiliates, as that term is defined in Rule 144 of the Securities Act, may be resold only
pursuant to further registration under the Securities Act or in transactions that are exempt from registration under the Securities
Act. In general, under Rule 144 as currently in effect, any of our affiliates would be entitled to sell, without further registration,
within any three-month period a number of shares that does not exceed the greater of:
|
●
|
1%
of the number of shares of Common Stock then outstanding, which will equal about 15,661,081 shares if fully subscribed;
or
|
|
|
|
|
●
|
the
average weekly trading volume of the unrestricted Common Stock during the four calendar weeks preceding the filing of a Form
144 with respect to the sale.
|
Sales
under Rule 144 by our affiliates will also be subject to manner of sale provisions and notice requirements and to the availability
of current public information about us.
PLAN
OF DISTRIBUTION
The
Offering will be sold by our officers and directors.
This
is a self-underwritten offering. This Offering Circular is part of an exemption under Regulation A that permits our officers and
directors to sell the Shares directly to the public in those jurisdictions where the Offering Circular is approved, with no commission
or other remuneration payable for any Shares sold. There are no plans or arrangements to enter into any contracts or agreements
to sell the Shares with a broker or dealer. After the qualification by the Commission and acceptance by those states where the
offering will occur, the Officer and Directors intends to advertise through personal contacts, telephone, and hold investment
meetings in those approved jurisdictions only. We do not intend to use any mass-advertising methods such as the Internet or print
media. Officers and Directors will also distribute the prospectus to potential investors at meetings, to their business associates
and to his friends and relatives who are interested the Company as a possible investment, so long as the offering is an accordance
with the rules and regulations governing the offering of securities in the jurisdictions where the Offering Circular has been
approved. In offering the securities on our behalf, the Officers and Directors will rely on the safe harbor from broker dealer
registration set out in Rule 3a4-1 under the Securities Exchange Act of 1934.
Terms
of the Offering
The
Company is offering on a best-efforts, self-underwritten basis a maximum of 363,636,363 shares of its Common Stock at $0.0055
per share for the duration of the offering, unless an amendment is properly filed with the Commission. There is no minimum
investment required from any individual investor. The shares are intended to be sold directly through the efforts of our officers
and directors. The shares are being offered for a period not to exceed 365 days. The offering will terminate on the earlier of:
(i) the date when the sale of all shares is completed, or (ii) 365 days from the effective date of this document. For more information,
see the section titled “Plan of Distribution” and “Use of Proceeds” herein.
VALIDITY
OF COMMON STOCK
The
validity of the securities offered hereby will be passed upon by Eilers Law Group, P.A.
EXPERTS
None
REPORTS
As
a Tier 1, Regulation A filer, we are not required to file any reports.
PART
III EXHIBITS
EXHIBIT
INDEX
SIGNATURES
Pursuant
to the requirements of Regulation A, the issuer certifies that it has reasonable grounds to believe that it meets all of the requirements
for filing on Form 1-A and has duly caused this offering statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Anaheim, California on this 30th day of July 2020.
By:
|
/s/
Bill Hodson
|
|
|
Bill
Hodson, Chief Executive Officer, President, Treasurer
Principal
Executive Officer
Principal
Financial Officer
Principal
Accounting Officer
|
|
This
offering statement has been signed by the following persons in the capacities and on the dates indicated.
/s/
Michael L. Corrigan
|
|
July 30, 2020
|
Michael
L. Corrigan, Director
|
|
Date
|
|
|
|
/s/
William P. Riley
|
|
July 30, 2020
|
William
P. Riley, Director
|
|
Date
|
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