Form 1-A Issuer Information UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 1-A
REGULATION A OFFERING STATEMENT
UNDER THE SECURITIES ACT OF 1933
OMB APPROVAL

FORM 1-A

OMB Number: 3235-0286


Estimated average burden hours per response: 608.0

1-A: Filer Information

Issuer CIK
0001300867
Issuer CCC
XXXXXXXX
DOS File Number
Offering File Number
024-10971
Is this a LIVE or TEST Filing? LIVE TEST
Would you like a Return Copy?
Notify via Filing Website only?
Since Last Filing?

Submission Contact Information

Name
Phone
E-Mail Address

1-A: Item 1. Issuer Information

Issuer Infomation

Exact name of issuer as specified in the issuer's charter
ON4 Communications, Inc.
Jurisdiction of Incorporation / Organization
DELAWARE
Year of Incorporation
2001
CIK
0001300867
Primary Standard Industrial Classification Code
SERVICES-PREPACKAGED SOFTWARE
I.R.S. Employer Identification Number
98-0540536
Total number of full-time employees
3
Total number of part-time employees
15

Contact Infomation

Address of Principal Executive Offices

Address 1
1875 Century Park East, 6th Floor,
Address 2
City
Los Angeles
State/Country
CALIFORNIA
Mailing Zip/ Postal Code
90067
Phone
310-722-6624

Provide the following information for the person the Securities and Exchange Commission's staff should call in connection with any pre-qualification review of the offering statement.

Name
Steve Berman
Address 1
Address 2
City
State/Country
Mailing Zip/ Postal Code
Phone

Provide up to two e-mail addresses to which the Securities and Exchange Commission's staff may send any comment letters relating to the offering statement. After qualification of the offering statement, such e-mail addresses are not required to remain active.

Financial Statements

Industry Group (select one) Banking Insurance Other

Use the financial statements for the most recent period contained in this offering statement to provide the following information about the issuer. The following table does not include all of the line items from the financial statements. Long Term Debt would include notes payable, bonds, mortgages, and similar obligations. To determine "Total Revenues" for all companies selecting "Other" for their industry group, refer to Article 5-03(b)(1) of Regulation S-X. For companies selecting "Insurance", refer to Article 7-04 of Regulation S-X for calculation of "Total Revenues" and paragraphs 5 and 7 of Article 7-04 for "Costs and Expenses Applicable to Revenues".

Balance Sheet Information

Cash and Cash Equivalents
$ 221000.00
Investment Securities
$ 0.00
Total Investments
$
Accounts and Notes Receivable
$ 7163056.00
Loans
$
Property, Plant and Equipment (PP&E):
$ 0.00
Property and Equipment
$
Total Assets
$ 10959056.00
Accounts Payable and Accrued Liabilities
$ 126182.00
Policy Liabilities and Accruals
$
Deposits
$
Long Term Debt
$ 2000000.00
Total Liabilities
$ 5881236.00
Total Stockholders' Equity
$ 5077820.00
Total Liabilities and Equity
$ 10959056.00

Statement of Comprehensive Income Information

Total Revenues
$ 4323684.00
Total Interest Income
$
Costs and Expenses Applicable to Revenues
$ 2912794.00
Total Interest Expenses
$
Depreciation and Amortization
$ 0.00
Net Income
$ 1410890.00
Earnings Per Share - Basic
$ 0.00
Earnings Per Share - Diluted
$ 0.00
Name of Auditor (if any)

Outstanding Securities

Common Equity

Name of Class (if any) Common Equity
5000000000
Common Equity Units Outstanding
3741520603
Common Equity CUSIP (if any):
000682203
Common Equity Units Name of Trading Center or Quotation Medium (if any)
OTC Markets

Preferred Equity

Preferred Equity Name of Class (if any)
30000000
Preferred Equity Units Outstanding
25000000
Preferred Equity CUSIP (if any)
0000000NA
Preferred Equity Name of Trading Center or Quotation Medium (if any)
NA

Debt Securities

Debt Securities Name of Class (if any)
0
Debt Securities Units Outstanding
0
Debt Securities CUSIP (if any):
000000000
Debt Securities Name of Trading Center or Quotation Medium (if any)
0

1-A: Item 2. Issuer Eligibility

Issuer Eligibility

Check this box to certify that all of the following statements are true for the issuer(s)

1-A: Item 3. Application of Rule 262

Application Rule 262

Check this box to certify that, as of the time of this filing, each person described in Rule 262 of Regulation A is either not disqualified under that rule or is disqualified but has received a waiver of such disqualification.

Check this box if "bad actor" disclosure under Rule 262(d) is provided in Part II of the offering statement.

1-A: Item 4. Summary Information Regarding the Offering and Other Current or Proposed Offerings

Summary Infomation

Check the appropriate box to indicate whether you are conducting a Tier 1 or Tier 2 offering Tier1 Tier2
Check the appropriate box to indicate whether the financial statements have been audited Unaudited Audited
Types of Securities Offered in this Offering Statement (select all that apply)
Equity (common or preferred stock)
Does the issuer intend to offer the securities on a delayed or continuous basis pursuant to Rule 251(d)(3)? Yes No
Does the issuer intend this offering to last more than one year? Yes No
Does the issuer intend to price this offering after qualification pursuant to Rule 253(b)? Yes No
Will the issuer be conducting a best efforts offering? Yes No
Has the issuer used solicitation of interest communications in connection with the proposed offering? Yes No
Does the proposed offering involve the resale of securities by affiliates of the issuer? Yes No
Number of securities offered
450000000
Number of securities of that class outstanding
3741520603

The information called for by this item below may be omitted if undetermined at the time of filing or submission, except that if a price range has been included in the offering statement, the midpoint of that range must be used to respond. Please refer to Rule 251(a) for the definition of "aggregate offering price" or "aggregate sales" as used in this item. Please leave the field blank if undetermined at this time and include a zero if a particular item is not applicable to the offering.

Price per security
$ 0.0006
The portion of the aggregate offering price attributable to securities being offered on behalf of the issuer
$ 270000.00
The portion of the aggregate offering price attributable to securities being offered on behalf of selling securityholders
$ 0.00
The portion of the aggregate offering price attributable to all the securities of the issuer sold pursuant to a qualified offering statement within the 12 months before the qualification of this offering statement
$ 0.00
The estimated portion of aggregate sales attributable to securities that may be sold pursuant to any other qualified offering statement concurrently with securities being sold under this offering statement
$ 0.00
Total (the sum of the aggregate offering price and aggregate sales in the four preceding paragraphs)
$ 270000.00

Anticipated fees in connection with this offering and names of service providers

Underwriters - Name of Service Provider
Underwriters - Fees
$
Sales Commissions - Name of Service Provider
Sales Commissions - Fee
$
Finders' Fees - Name of Service Provider
Finders' Fees - Fees
$
Audit - Name of Service Provider
Audit - Fees
$
Legal - Name of Service Provider
Stout Law Group, PA
Legal - Fees
$ 25000.00
Promoters - Name of Service Provider
Promoters - Fees
$
Blue Sky Compliance - Name of Service Provider
Blue Sky Compliance - Fees
$
CRD Number of any broker or dealer listed:
Estimated net proceeds to the issuer
$
Clarification of responses (if necessary)

1-A: Item 5. Jurisdictions in Which Securities are to be Offered

Jurisdictions in Which Securities are to be Offered

Using the list below, select the jurisdictions in which the issuer intends to offer the securities

Selected States and Jurisdictions
CONNECTICUT
NEW YORK

Using the list below, select the jurisdictions in which the securities are to be offered by underwriters, dealers or sales persons or check the appropriate box

None
Same as the jurisdictions in which the issuer intends to offer the securities
Selected States and Jurisdictions

1-A: Item 6. Unregistered Securities Issued or Sold Within One Year

Unregistered Securities Issued or Sold Within One Year

None

Unregistered Securities Act

(e) Indicate the section of the Securities Act or Commission rule or regulation relied upon for exemption from the registration requirements of such Act and state briefly the facts relied upon for such exemption

PART II AND III 

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 1-A

 

AMENDMENT NO. 2 

 

REGULATION A OFFERING CIRCULAR UNDER THE SECURITIES ACT OF 1933

 

 

On4 Communications, Inc.
(Exact name of issuer as specified in its charter)

 

Delaware
(State of other jurisdiction of incorporation or organization)

 

1875 Century Park East, 6th Floor
Los Angeles, CA 90067
310-722-6624
(Address, including zip code, and telephone number,
including area code of issuer's principal executive office)

 

Matheau J. W. Stout, Esq.

201 International Circle, Suite 230

Hunt Valley, Maryland 21030

(410) 429-7076
(Name, address, including zip code, and telephone number,
including area code, of agent for service)

7372   98-0540536
(Primary Standard Industrial
Classification Code Number)
  (I.R.S. Employer
Identification Number)

This Preliminary Offering Circular shall only be qualified upon order of the Commission, unless a subsequent amendment is filed indicating the intention to become qualified by operation of the terms of Regulation A.

This Preliminary Offering Circular is following the offering circular format described in Part II of Form 1-A.

 

PART II - OFFERING CIRCULAR - FORM 1-A: TIER 1

 

Dated: November 15, 2019

PURSUANT TO REGULATION A OF THE SECURITIES ACT OF 1933

 

 

ON4 COMMUNICATIONS, INC.

1875 Century Park East, 6th Floor
Los Angeles, CA 90067
310-722-6624
info@on4inc.com

 

450,000,000 Shares of Common Stock at $0.0006 per Share

 

Minimum Investment: 2.000,000 Shares ($1,200.00)

 

Maximum Offering: $270,000.00

  1  

 

 

See The Offering - Page 11 and Securities Being Offered - Page 49 For Further Details
None of the Securities Offered Are Being Sold By Present Security Holders
This Offering Will Commence Upon Qualification of this Offering by
the Securities and Exchange Commission and Will Terminate 90 days from
the date of qualification by the Securities And Exchange Commission,
Unless Extended or Terminated Earlier By The Issuer

 

AN OFFERING STATEMENT PURSUANT TO REGULATION A RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. INFORMATION CONTAINED IN THIS PRELIMINARY OFFERING CIRCULAR IS SUBJECT TO COMPLETION OR AMENDMENT. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED BEFORE THE OFFERING STATEMENT FILED WITH THE COMMISSION IS QUALIFIED. THIS PRELIMINARY OFFERING CIRCULAR SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR MAY THERE BE ANY SALES OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL BEFORE REGISTRATION OR QUALIFICATION UNDER THE LAWS OF ANY SUCH STATE. WE MAY ELECT TO SATISFY OUR OBLIGATION TO DELIVER A FINAL OFFERING CIRCULAR BY SENDING YOU A NOTICE WITHIN TWO BUSINESS DAYS AFTER THE COMPLETION OF OUR SALE TO YOU THAT CONTAINS THE URL WHERE THE FINAL OFFERING CIRCULAR OR THE OFFERING STATEMENT IN WHICH SUCH FINAL OFFERING CIRCULAR WAS FILED MAY BE OBTAINED.

 

PLEASE REVIEW ALL RISK FACTORS ON PAGES PAGE 13 THROUGH PAGE 27 BEFORE MAKING AN INVESTMENT IN THIS COMPANY. AN INVESTMENT IN THIS COMPANY SHOULD ONLY BE MADE IF YOU ARE CAPABLE OF EVALUATING THE RISKS AND MERITS OF THIS INVESTMENT AND IF YOU HAVE SUFFICIENT RESOURCES TO BEAR THE ENTIRE LOSS OF YOUR INVESTMENT, SHOULD THAT OCCUR.

 

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 SELLING LITERATURE. 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 HEREUNDER ARE EXEMPT FROM REGISTRATION.

 

Because these securities are being offered on a "best efforts" basis, the following disclosures are hereby made:

 

  Price to Public Commissions (1) Proceeds to Proceeds to
      Company (2) Other Persons (3)
Per Share $0.0006 $0 $0.0006 None
Minimum Investment $1,200.00 $0 $1,200.00 None
Maximum Offering $270,000.00 $0 $270,000.00 None

 

(1) The Company shall pay no commissions to underwriters for the sale of securities under this Offering.

 

(2) Does not reflect payment of expenses of this offering, which are estimated to not exceed $25,000.00 and which include, among other things, legal fees, accounting costs, reproduction expenses, due diligence, marketing, consulting, administrative services other costs of blue sky compliance, and actual out-of-pocket expenses incurred by the Company selling the Shares. This amount represents the proceeds of the offering to the Company, which will be used as set out in "USE OF PROCEEDS TO ISSUER."

 

(3) There are no finder's fees or other fees being paid to third parties from the proceeds. See 'PLAN OF DISTRIBUTION.'

  2  

 

 

 

This offering (the "Offering") consists of Common Stock (the "Shares" or individually, each a "Share") that is being offered on a "best efforts" basis, which means that there is no guarantee that any minimum amount will be sold. The Shares are being offered and sold by On4 Communications, Inc., a Delaware Corporation ("ONCI" or the "Company"). There are 450,000,000 Shares being offered at a price of $.0006 per Share with a minimum purchase of 2,000,000 shares per investor. The Shares are being offered on a best efforts basis to an unlimited number of accredited investors and an unlimited number of non-accredited investors only by the Company. The maximum aggregate amount of the Shares offered is $270,000 (the "Maximum Offering"). There is no minimum number of Shares that needs to be sold in order for funds to be released to the Company and for this Offering to close.

 

The Shares are being offered pursuant to Regulation A of Section 3(b) of the Securities Act of 1933, as amended, for Tier 1 offerings. The Shares will only be issued to purchasers who satisfy the requirements set forth in Regulation A. The offering is expected to expire on the first of: (i) all of the Shares offered are sold; or (ii) the close of business 90 days from the date of qualification by the Commission, unless sooner terminated or extended by the Company's CEO.

 

Funds will be promptly refunded without interest, for sales that are not consummated. Upon closing under the terms as set out in this Offering Circular, funds will be immediately transferred to the Company where they will be available for use in the operations of the Company's business in a manner consistent with the "USE OF PROCEEDS TO ISSUER" in this Offering Circular.

 

THIS OFFERING CIRCULAR DOES NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS CONCERNING THE COMPANY OTHER THAN THOSE CONTAINED IN THIS OFFERING CIRCULAR, AND IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON.


PROSPECTIVE INVESTORS ARE NOT TO CONSTRUE THE CONTENTS OF THIS OFFERING CIRCULAR, OR OF ANY PRIOR OR SUBSEQUENT COMMUNICATIONS FROM THE COMPANY OR ANY OF ITS EMPLOYEES, AGENTS OR AFFILIATES, AS INVESTMENT, LEGAL, FINANCIAL OR TAX ADVICE.


BEFORE INVESTING IN THIS OFFERING, PLEASE REVIEW ALL DOCUMENTS CAREFULLY, ASK ANY QUESTIONS OF THE COMPANY'S MANAGEMENT THAT YOU WOULD LIKE ANSWERED AND CONSULT YOUR OWN COUNSEL, ACCOUNTANT AND

OTHER PROFESSIONAL ADVISORS AS TO LEGAL, TAX AND OTHER RELATED MATTERS CONCERNING THIS INVESTMENT.


NASAA UNIFORM LEGEND

 

FOR RESIDENTS OF ALL STATES: THE PRESENCE OF A LEGEND FOR ANY GIVEN STATE REFLECTS ONLY THAT A LEGEND MAY BE REQUIRED BY THAT STATE AND SHOULD NOT BE CONSTRUED TO MEAN AN OFFER OR SALE MAY BE MADE IN A PARTICULAR STATE. IF YOU ARE UNCERTAIN AS TO WHETHER OR NOT OFFERS OR SALES MAY BE LAWFULLY MADE IN ANY GIVEN STATE, YOU ARE HEREBY ADVISED TO CONTACT THE COMPANY. THE SECURITIES DESCRIBED IN THIS OFFERING CIRCULAR HAVE NOT BEEN REGISTERED UNDER ANY STATE SECURITIES LAWS (COMMONLY CALLED 'BLUE SKY' LAWS).

  3  

 

 

IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE PERSON OR ENTITY CREATING THE SECURITIES AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.


NOTICE TO FOREIGN INVESTORS

IF THE PURCHASER LIVES OUTSIDE THE UNITED STATES, IT IS THE PURCHASER'S RESPONSIBILITY TO FULLY OBSERVE THE LAWS OF ANY RELEVANT TERRITORY OR JURISDICTION OUTSIDE THE UNITED STATES IN CONNECTION WITH ANY PURCHASE OF THE SECURITIES, INCLUDING OBTAINING REQUIRED GOVERNMENTAL OR OTHER CONSENTS OR OBSERVING ANY OTHER REQUIRED LEGAL OR OTHER FORMALITIES. THE COMPANY RESERVES THE RIGHT TO DENY THE PURCHASE OF THE SECURITIES BY ANY FOREIGN PURCHASER.


 

Forward Looking Statement Disclosure

 

This Form 1-A, Offering Circular, and any documents incorporated by reference herein or therein contain forward-looking statements and are subject to risks and uncertainties. All statements other than statements of historical fact or relating to present facts or current conditions included in this Form 1-A, Offering Circular, and any documents incorporated by reference are forward-looking statements. Forward-looking statements give the Company's current reasonable expectations and projections relating to its financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as 'anticipate,' 'estimate,' 'expect,' 'project,' 'plan,' 'intend,' 'believe,' 'may,' 'should,' 'can have,' 'likely' and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. The forward-looking statements contained in this Form 1-A, Offering Circular, and any documents incorporated by reference herein or therein are based on reasonable assumptions the Company has made in light of its industry experience, perceptions of historical trends, current conditions, expected future developments and other factors it believes are appropriate under the circumstances. As you read and consider this Form 1-A, Offering Circular, and any documents incorporated by reference, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties (many of which are beyond the Company's control) and assumptions. Although the Company believes that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect its actual operating and financial performance and cause its performance to differ materially from the performance anticipated in the forward-looking statements. Should one or more of these risks or uncertainties materialize, or should any of these assumptions prove incorrect or change, the Company's actual operating and financial performance may vary in material respects from the performance projected in these forward- looking statements. Any forward-looking statement made by the Company in this Form 1-A, Offering Circular or any documents incorporated by reference herein speaks only as of the date of this Form 1-A, Offering Circular or any documents incorporated by reference herein. Factors or events that could cause our actual operating and financial performance to differ may emerge from time to time, and it is not possible for the Company to predict all of them. The Company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

 


  4  

 

About This Form 1-A and Offering Circular

 

In making an investment decision, you should rely only on the information contained in this Form 1-A and Offering Circular. The Company has not authorized anyone to provide you with information different from that contained in this Form 1-A and Offering Circular. We are offering to sell, and seeking offers to buy the Shares only in jurisdictions where offers and sales are permitted. You should assume that the information contained in this Form 1-A and Offering Circular is accurate only as of the date of this Form 1-A and Offering Circular, regardless of the time of delivery of this Form 1-A and Offering Circular. Our business, financial condition, results of operations, and prospects may have changed since that date. Statements contained herein as to the content of any agreements or other documents are summaries and, therefore, are necessarily selective and incomplete and are qualified in their entirety by the actual agreements or other documents. The Company will provide the opportunity to ask questions of and receive answers from the Company's management concerning terms and conditions of the Offering, the Company or any other relevant matters and any additional reasonable information to any prospective investor prior to the consummation of the sale of the Shares. This Form 1-A and Offering Circular do not purport to contain all of the information that may be required to evaluate the Offering and any recipient hereof should conduct its own independent analysis. The statements of the Company contained herein are based on information believed to be reliable. No warranty can be made as to the accuracy of such information or that circumstances have not changed since the date of this Form 1-A and Offering Circular. The Company does not expect to update or otherwise revise this Form 1-A, Offering Circular or other materials supplied herewith. The delivery of this Form 1-A and Offering Circular at any time does not imply that the information contained herein is correct as of any time subsequent to the date of this Form 1-A and Offering Circular. This Form 1-A and Offering Circular are submitted in connection with the Offering described herein and may not be reproduced or used for any other purpose.

 

TABLE OF CONTENTS

 

OFFERING SUMMARY, PERKS AND RISK FACTORS 5
OFFERING SUMMARY 6
PERKS 6
The Offering 6
Investment Analysis 6
RISK FACTORS 7
DILUTION 16
PLAN OF DISTRIBUTION 17
USE OF PROCEEDS TO ISSUER 19
DESCRIPTION OF BUSINESS 20
DESCRIPTION OF PROPERTY 20
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 20
Results of Operations 22
Liquidity and Capital Resources 23
Plan of Operations 23
Trend Information 23
Off-Balance Sheet Arrangements 23
Critical Accounting Policies 24
Revenue Recognition 25
Additional Company Matters 26
DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES 27
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS 28
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITYHOLDERS 29
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS 30
SECURITIES BEING OFFERED 30
DISQUALIFYING EVENTS DISCLOSURE 31
ERISA CONSIDERATIONS 31
INVESTOR ELIGIBILITY STANDARDS 32
SIGNATURES 33
ACKNOWLEDGMENT ADOPTING TYPED SIGNATURES 33
SECTION F/S FINANCIAL STATEMENTS 34

 

OFFERING SUMMARY, PERKS AND RISK FACTORS


  5  

 

OFFERING SUMMARY

 

The following summary is qualified in its entirety by the more detailed information appearing elsewhere in this Offering Circular and/or incorporated by reference in this Offering Circular. For full offering details, please (1) thoroughly review this Form 1-A filed with the Securities and Exchange Commission (2) thoroughly review this Offering Circular and (3) thoroughly review any attached documents to or documents referenced in, this Form 1-A and Offering Circular.

 

Type of Stock Offering: Common Stock
Price Per Share: $0.0006
Minimum Investment: $1,200.00 per investor (2,000,000 Shares of Common Stock)
Maximum Offering: $270,000.00. The Company will not accept investments greater than the Maximum Offering amount.
Maximum Shares Offered: 450,000,000 Shares of Common Stock
Use of Proceeds: See the description in section entitled "USE OF PROCEEDS TO ISSUER" on page 32
herein.
Voting Rights: The Shares have full voting rights.
Length of Offering: Shares will be offered on a continuous basis until either (1) the maximum number of Shares or sold; (2) 90 days from the date of qualification by the Commission, (3) if Company in its sole discretion extends the offering beyond 90 days from the date of qualification by the Commission, or (4) the Company in its sole discretion withdraws this Offering.

 

The Offering

 

Common Stock Outstanding (1) 4,528,205,518 Shares
Common Stock in this Offering 450,000,000 Shares
Stock to be outstanding after the offering (2) 4,978,205,518 Shares  
   

 

(1) The Company has also authorized 30,000,000 shares of Class A Preferred Stock, of which all 30,000,000 shares are issued to the Company’s CEO, Steve Berman. Each share of Class A Preferred Stock is entitled to 5000 votes, giving Mr. Berman voting control of the Company. No Preferred Stock is being sold in this Offering. 3,741,520,603 Common Stock was Outstanding as of July 31,2019.

 

(2) The total number of Shares of Common Stock assumes that the maximum number of Shares are sold in this offering.

 

The Company may not be able to sell the Maximum Offering Amount. The Company will conduct one or more closings on a rolling basis as funds are received from investors.

 

The net proceeds of the Offering will be the gross proceeds of the Shares sold minus the expenses of the offering.

Our common stock is quoted on OTCMarkets.com under trading symbol “ONCI.” We are not listed on any stock exchange, and our ability to list our stock in the future is uncertain. Investors should not assume that the Offered Shares will be listed. A consistent public trading market for the shares may not develop.

 

Investment Analysis

 

There is no assurance On4 Communications, Inc. will be profitable, or that management's opinion of the Company’s future prospects will not be outweighed in the by unanticipated losses, adverse regulatory developments and other risks. Investors should carefully consider the various risk factors below before investing in the Shares.

  6  

 

 

RISK FACTORS

 

The purchase of the Company's Common Stock involves substantial risks. You should carefully consider the following risk factors in addition to any other risks associated with this investment. The Shares offered by the Company constitute a highly speculative investment and you should be in an economic position to lose your entire investment. The risks listed do not necessarily comprise all those associated with an investment in the Shares and are not set out in any particular order of priority. Additional risks and uncertainties may also have an adverse effect on the Company's business and your investment in the Shares. An investment in the Company may not be suitable for all recipients of this Offering Circular. You are advised to consult an independent professional adviser or attorney who specializes in investments of this kind before making any decision to invest. You should consider carefully whether an investment in the Company is suitable in the light of your personal circumstances and the financial resources available to you.

 

The discussions and information in this Offering Circular may contain both historical and forward- looking statements. To the extent that the Offering Circular contains forward-looking statements regarding the financial condition, operating results, business prospects, or any other aspect of the Company's business, please be advised that the Company's actual financial condition, operating results, and business performance may differ materially from that projected or estimated by the Company in forward-looking statements. The Company has attempted to identify, in context, certain of the factors it currently believes may cause actual future experience and results may differ from the Company's current expectations.

 

Before investing, you should carefully read and carefully consider the following risk factors:

 

Risks Relating to the Company and Its Business

 

The Company Has Limited Operating History

 

The Company has a limited operating history and has suffered losses and there can be no assurance that the Company's proposed plan of business can be realized in the manner contemplated and, if it cannot be, shareholders may lose all or a substantial part of their investment. There is no guarantee that it will continue to generate significant operating revenues or that its operations will be profitable.

 

The Company Is Dependent Upon Its Management, Key Personnel and Consultants to Execute the Business Plan

 

The Company's success is heavily dependent upon the continued active participation of the Company's current executive officers as well as other key personnel and consultants. Loss of the services of one or more of these individuals could have a material adverse effect upon the Company's business, financial condition or results of operations. Further, the Company's success and achievement of the Company's growth plans depend on the Company's ability to recruit, hire, train and retain other highly qualified technical and managerial personnel. Competition for qualified employees among companies in the healthy living, healthcare and online industries is intense, and the loss of any of such persons, or an inability to attract, retain and motivate any additional highly skilled employees required for the expansion of the Company's activities, could have a materially adverse effect on it. The inability to attract and retain the necessary personnel, consultants and advisors could have a material adverse effect on the Company's business, financial condition or results of operations.

 

Although Dependent Upon Certain Key Personnel, The Company Does Not Have Any Key Man Life Insurance Policies On Any Such People

 

The Company is dependent upon management in order to conduct its operations and execute its business plan; however, the Company has not purchased any insurance policies with respect to those individuals in the event of their death or disability. Therefore, should any of these key personnel, management or founders die or become disabled, the Company will not receive any compensation that would assist with such person's absence. The loss of such person could negatively affect the Company and its operations.

  7  

 

 

The Company Is Subject To Income Taxes As Well As Non-Income Based Taxes, Such As Payroll, Sales, Use, Value-Added, Net Worth, Property And Goods And Services Taxes.

 

Significant judgment is required in determining our provision for income taxes and other tax liabilities. In the ordinary course of our business, there are many transactions and calculations where the ultimate tax determination is uncertain. Although the Company believes that our tax estimates will be reasonable: (i) there is no assurance that the final determination of tax audits or tax disputes will not be different from what is reflected in our income tax provisions, expense amounts for non-income based taxes and accruals and (ii) any material differences could have an adverse effect on our consolidated financial position and results of operations in the period or periods for which determination is made.

 

The Company Is Not Subject To Sarbanes-Oxley Regulations And Lacks The Financial Controls And Safeguards Required Of Public Companies.

 

The Company does not have the internal infrastructure necessary, and is not required, to complete an attestation about our financial controls that would be required under Section 404 of the Sarbanes-Oxley Act of 2002. There can be no assurances that there are no significant deficiencies or material weaknesses in the quality of our financial controls. The Company expects to incur additional expenses and diversion of management's time if and when it becomes necessary to perform the system and process evaluation, testing and remediation required in order to comply with the management certification and auditor attestation requirements.

 

The Company Has Engaged In Certain Transactions With Related Persons.

 

Please see the section of this Offering Circular entitled "Interest of Management and Others in Certain Related-Party Transactions and Agreements"

 

Changes In Employment Laws Or Regulation Could Harm The Company's Performance.

 

Various federal and state labor laws govern the Company's relationship with our employees and affect operating costs. These laws may include minimum wage requirements, overtime pay, healthcare reform and the implementation of various federal and state healthcare laws, unemployment tax rates, workers' compensation rates, citizenship requirements, union membership and sales taxes. A number of factors could adversely affect our operating results, including additional government-imposed increases in minimum wages, overtime pay, paid leaves of absence and mandated health benefits, mandated training for employees, changing regulations from the National Labor Relations Board and increased employee litigation including claims relating to the Fair Labor Standards Act.

 

The Company's Bank Accounts Will Not Be Fully Insured

 

The Company's regular bank accounts each have federal insurance that is limited to a certain amount of coverage. It is anticipated that the account balances in each account may exceed those limits at times. In the event that any of Company's banks should fail, the Company may not be able to recover all amounts deposited in these bank accounts.

 

The Company's Business Plan Is Speculative

 

The Company's present business and planned business are speculative and subject to numerous risks and uncertainties. There is no assurance that the Company will continue to generate significant revenues or profits.

 

The Company Will Likely Incur Debt

 

The Company has incurred debt and expects to incur future debt in order to fund operations. Complying with obligations under such indebtedness may have a material adverse effect on the Company and on your investment.

 

The Company's Expenses Could Increase Without a Corresponding Increase in Revenues

 

The Company's operating and other expenses could increase without a corresponding increase in revenues, which could have a material adverse effect on the Company's consolidated financial results and on your investment. Factors which could increase operating and other expenses include, but are not limited to (1) increases in the rate of inflation, (2) increases in taxes and other statutory charges, (3) changes in laws, regulations or government policies which increase the costs of compliance with such laws, regulations or policies, (4) significant increases in insurance premiums, and (5) increases in borrowing costs.

  8  

 

 

The Company Will Be Reliant On Key Suppliers

 

The Company intends to enter into agreements with key suppliers and will be reliant on positive and continuing relationships with such suppliers. Termination of those agreements, variations in their terms or the failure of a key supplier to comply with its obligations under these agreements (including if a key supplier were to become insolvent) could have a material adverse effect on the Company's consolidated financial results and on your investment.

 

Increased Costs Could Affect The Company

 

An increase in the cost of raw materials or energy could affect the Company's profitability. Commodity and other price changes may result in unexpected increases in the cost of raw materials, glass bottles and other packaging materials used by the Company. The Company may also be adversely affected by shortages of raw materials or packaging materials. In addition, energy cost increases could result in higher transportation, freight and other operating costs. The Company may not be able to increase its prices to offset these increased costs without suffering reduced volume, sales and operating profit, and this could have an adverse effect on your investment.

 

Inability to Maintain and Enhance Product Image

 

It is important that the Company maintains and enhances the image of its existing and new products. The image and reputation of the Company's products may be impacted for various reasons including litigation, complaints from regulatory bodies resulting from quality failure, illness or other health concerns. Such concerns, even when unsubstantiated, could be harmful to the Company's image and the reputation of its products. From time to time, the Company may receive complaints from customers regarding products purchased from the Company. The Company may in the future receive correspondence from customers requesting reimbursement. Certain dissatisfied customers may threaten legal action against the Company if no reimbursement is made. The Company may become subject to product liability lawsuits from customers alleging injury because of a purported defect in products or sold by the Company, claiming substantial damages and demanding payments from the Company. The Company is in the chain of title when it manufactures, supplies or distributes products, and therefore is subject to the risk of being held legally responsible for them. These claims may not be covered by the Company's insurance policies. Any resulting litigation could be costly for the Company, divert management attention, and could result in increased costs of doing business, or otherwise have a material adverse effect on the Company's business, results of operations, and financial condition. Any negative publicity generated as a result of customer complaints about the Company's products could damage the Company's reputation and diminish the value of the Company's brand, which could have a material adverse effect on the Company's business, results of operations, and financial condition, as well as your investment. Deterioration in the Company's brand equity (brand image, reputation and product quality) may have a material adverse effect on its consolidated financial results as well as your investment.

 

If We Are Unable To Protect Effectively Our Intellectual Property, We May Not Be Able To Operate Our Business, Which Would Impair Our Ability To Compete

 

Our success will depend on our ability to obtain and maintain meaningful intellectual property protection for any such intellectual property. The names and/or logos of Company brands (whether owned by the Company or licensed to us) may be challenged by holders of trademarks who file opposition notices, or otherwise contest trademark applications by the Company for its brands. Similarly, domains owned and used by the Company may be challenged by others who contest the ability of the Company to use the domain name or URL. Such challenges could have a material adverse effect on the Company's consolidated financial results as well as your investment.

 

Computer, Website or Information System Breakdown Could Affect The Company's Business

 

Computer, website and/or information system breakdowns as well as cyber security attacks could impair the Company's ability to service its customers leading to reduced revenue from sales and/or reputational damage, which could have a material adverse effect on the Company's consolidated financial results as well as your investment.

  9  

 

 

Changes In The Economy Could Have a Detrimental Impact On The Company

 

Changes in the general economic climate could have a detrimental impact on consumer expenditure and therefore on the Company's revenue. It is possible that recessionary pressures and other economic factors (such as declining incomes, future potential rising interest rates, higher unemployment and tax increases) may adversely affect customers' confidence and willingness to spend. Any of such events or occurrences could have a material adverse effect on the Company's consolidated financial results and on your investment.

 

The Amount Of Capital The Company Is Attempting To Raise In This Offering Is Not Enough To Sustain The Company's Current Business Plan

 

In order to achieve the Company's near and long-term goals, the Company will need to procure funds in addition to the amount raised in the Offering. There is no guarantee the Company will be able to raise such funds on acceptable terms or at all. If we are not able to raise sufficient capital in the future, we will not be able to execute our business plan, our continued operations will be in jeopardy and we may be forced to cease operations and sell or otherwise transfer all or substantially all of our remaining assets, which could cause you to lose all or a portion of your investment.

 

Additional Financing May Be Necessary For The Implementation Of Our Growth Strategy

 

The Company may require additional debt and/or equity financing to pursue our growth and business strategies. These include, but are not limited to enhancing our operating infrastructure and otherwise respond to competitive pressures. Given our limited operating history and existing losses, there can be no assurance that additional financing will be available, or, if available, that the terms will be acceptable to us. Lack of additional funding could force us to curtail substantially our growth plans. Furthermore, the issuance by us of any additional securities pursuant to any future fundraising activities undertaken by us would dilute the ownership of existing shareholders and may reduce the price of our Shares.

 

Our Employees, Executive Officers, Directors And Insider Shareholders Beneficially Own Or Control A Substantial Portion Of Our Outstanding Shares

 

Our employees, executive officers, directors and insider shareholders beneficially own or control a substantial portion of our outstanding type of stock, which may limit your ability and the ability of our other shareholders, whether acting alone or together, to propose or direct the management or overall direction of our Company. Additionally, this concentration of ownership could discourage or prevent a potential takeover of our Company that might otherwise result in an investor receiving a premium over the market price for his Shares. The majority of our currently outstanding Shares of stock is beneficially owned and controlled by a group of insiders, including our employees, directors, executive officers and inside shareholders. Accordingly, our employees, directors, executive officers and insider shareholders may have the power to control the election of our directors and the approval of actions for which the approval of our shareholders is required. If you acquire our Shares, you will have no effective voice in the management of our Company. Such concentrated control of our Company may adversely affect the price of our Shares. Our principal shareholders may be able to control matters requiring approval by our shareholders, including the election of directors, mergers or other business combinations. Such concentrated control may also make it difficult for our shareholders to receive a premium for their Shares in the event that we merge with a third party or enter into different transactions, which require shareholder approval. These provisions could also limit the price that investors might be willing to pay in the future for our Shares.

 

Our Operating Plan Relies In Large Part Upon Assumptions And Analyses Developed By The Company. If These Assumptions Or Analyses Prove To Be Incorrect, The Company's Actual Operating Results May Be Materially Different From Our Forecasted Results

 

  10  

 

Whether actual operating results and business developments will be consistent with the Company's expectations and assumptions as reflected in its forecast depends on a number of factors, many of which are outside the Company's control, including, but not limited to:

 

·                     whether the Company can obtain sufficient capital to sustain and grow its business

·                     our ability to manage the Company's growth

·                     whether the Company can manage relationships with key vendors and advertisers

·                     demand for the Company's products and services

·                     the timing and costs of new and existing marketing and promotional efforts

·                     competition

·                     the Company's ability to retain existing key management, to integrate recent hires and to attract, retain and motivate qualified personnel

·                     the overall strength and stability of domestic and international economies

·                     consumer spending habits

 

Unfavorable changes in any of these or other factors, most of which are beyond the Company's control, could materially and adversely affect its business, consolidated results of operations and consolidated financial condition.

 

To Date, The Company Has Had Operating Losses And May Not Be Initially Profitable For At Least The Foreseeable Future, And Cannot Accurately Predict When It Might Become Profitable

 

The Company has been operating at a loss since the Company's inception, but has recently operated at a profit. The Company may not be able to generate significant revenues in the future. In addition, the Company expects to incur substantial operating expenses in order to fund the expansion of the Company's business. As a result, the Company expects to continue to experience substantial negative cash flow for at least the foreseeable future and cannot predict when, or even if, the Company might become profitable.

 

The Company May Be Unable To Manage Their Growth Or Implement Their Expansion Strategy

 

The Company may not be able to expand the Company's product and service offerings, the Company's markets, or implement the other features of the Company's business strategy at the rate or to the extent presently planned. The Company's projected growth will place a significant strain on the Company's administrative, operational and financial resources. If the Company is unable to successfully manage the Company's future growth, establish and continue to upgrade the Company's operating and financial control systems, recruit and hire necessary personnel or effectively manage unexpected expansion difficulties, the Company's consolidated financial condition and consolidated results of operations could be materially and adversely affected.

 

The Company Relies Upon Trade Secret Protection To Protect Its Intellectual Property; It May Be Difficult And Costly To Protect The Company's Proprietary Rights And The Company May Not Be Able To Ensure Their Protection

 

The Company currently relies on trade secrets. While the Company uses reasonable efforts to protect these trade secrets, the Company cannot assure that its employees, consultants, contractors or advisors will not, unintentionally or willfully, disclose the Company's trade secrets to competitors or other third parties. In addition, courts outside the United States are sometimes less willing to protect trade secrets. Moreover, the Company's competitors may independently develop equivalent knowledge, methods and know-how. If the Company is unable to defend the Company's trade secrets from others use, or if the Company's competitors develop equivalent knowledge, it could have a material adverse effect on the Company's business. Any infringement of the Company's proprietary rights could result in significant litigation costs, and any failure to adequately protect the Company's proprietary rights could result in the Company's competitors offering similar products, potentially resulting in loss of a competitive advantage and decreased revenue. Existing patent, copyright, trademark and trade secret laws afford only limited protection. In addition, the laws of some foreign countries do not protect the Company's proprietary rights to the same extent as do the laws of the United States. Therefore, the Company may not be able to protect the Company's proprietary rights against unauthorized third-party use. Enforcing a claim that a third party illegally obtained and is using the Company's trade secrets could be expensive and time consuming, and the outcome of such a claim is unpredictable. Litigation may be necessary in the future to enforce the Company's intellectual property rights, to protect the Company's trade secrets or to determine the validity and scope of the proprietary rights of others. This litigation could result in substantial costs and diversion of resources and could materially adversely affect the Company's future operating results.

  11  

 

 

The Company's Business Model Is Evolving

 

The Company's business model is unproven and is likely to continue to evolve. Accordingly, the Company's current business model may not be successful and may need to be changed. The Company's ability to generate significant revenues will depend, in large part, on the Company's ability to successfully market the Company's products to potential users who may not be convinced of the need for the Company's products and services or who may be reluctant to rely upon third parties to develop and provide these products. The Company intends to continue to develop the Company's business model as the Company's market continues to evolve.

 

The Company Needs to Increase Brand Awareness

 

Due to a variety of factors, the Company's opportunity to achieve and maintain a significant market share may be limited. Developing and maintaining awareness of the Company's brand name, among other factors, is critical. Further, the importance of brand recognition will increase as competition in the Company's market increases. Successfully promoting and positioning the Company's brand, products and services will depend largely on the effectiveness of the Company's marketing efforts. Therefore, the Company may need to increase the Company's financial commitment to creating and maintaining brand awareness. If the Company fails to successfully promote the Company's brand name or if the Company incurs significant expenses promoting and maintaining the Company's brand name, it would have a material adverse effect on the Company's consolidated results of operations.

 

The Company Faces Competition In The Company's Markets From A Number Of Large And Small Companies, Some Of Which Have Greater Financial, Research And Development, Production And Other Resources Than The Company

 

In many cases, the Company's competitors have longer operating histories, established ties to the market and consumers, greater brand awareness, and greater financial, technical and marketing resources. The Company's ability to compete depends, in part, upon a number of factors outside the Company's control, including the ability of the Company's competitors to develop alternatives that are superior. If the Company fails to successfully compete in its markets, or if the Company incurs significant expenses in order to compete, it would have a material adverse effect on the Company's consolidated results of operations.

 

A Data Security Breach Could Expose The Company To Liability And Protracted And Costly Litigation, And Could Adversely Affect The Company's Reputation And Operating Revenues

 

To the extent that the Company's activities involve the storage and transmission of confidential information, the Company and/or third-party processors will receive, transmit and store confidential customer and other information. Encryption software and the other technologies used to provide security for storage, processing and transmission of confidential customer and other information may not be effective to protect against data security breaches by third parties. The risk of unauthorized circumvention of such security measures has been heightened by advances in computer capabilities and the increasing sophistication of hackers. Improper access to the Company's or these third parties' systems or databases could result in the theft, publication, deletion or modification of confidential customer and other information. A data security breach of the systems on which sensitive account information is stored could lead to fraudulent activity involving the Company's products and services, reputational damage, and claims or regulatory actions against us. If the Company is sued in connection with any data security breach, the Company could be involved in protracted and costly litigation. If unsuccessful in defending that litigation, the Company might be forced to pay damages and/or change the Company's business practices or pricing structure, any of which could have a material adverse effect on the Company's operating revenues and profitability. The Company would also likely have to pay fines, penalties and/or other assessments imposed as a result of any data security

  12  

 

breach.

 

The Company Depends On Third-Party Providers For A Reliable Internet Infrastructure And The Failure Of These Third Parties, Or The Internet In General, For Any Reason Would Significantly Impair The Company's Ability To Conduct Its Business

 

The Company will outsource some or all of its online presence and data management to third parties who host the actual servers and provide power and security in multiple data centers in each geographic location. These third-party facilities require uninterrupted access to the Internet. If the operation of the servers is interrupted for any reason, including natural disaster, financial insolvency of a third-party provider, or malicious electronic intrusion into the data center, its business would be significantly damaged. As has occurred with many Internet-based businesses, the Company may be subject to 'denial-of-service' attacks in which unknown individuals bombard its computer servers with requests for data, thereby degrading the servers' performance. The Company cannot be certain it will be successful in quickly identifying and neutralizing these attacks. If either a third-party facility failed, or the Company's ability to access the Internet was interfered with because of the failure of Internet equipment in general or if the Company becomes subject to malicious attacks of computer intruders, its business and operating results will be materially adversely affected.

 

The Company's Employees May Engage In Misconduct Or Improper Activities

 

The Company, like any business, is exposed to the risk of employee fraud or other misconduct. Misconduct by employees could include intentional failures to comply with laws or regulations, provide accurate information to regulators, comply with applicable standards, report financial information or data accurately or disclose unauthorized activities to the Company. In particular, sales, marketing and business arrangements are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Employee misconduct could also involve improper or illegal activities which could result in regulatory sanctions and serious harm to the Company's reputation.

 

Limitation On Director Liability

 

The Company may provide for the indemnification of directors to the fullest extent permitted by law and, to the extent permitted by such law, eliminate or limit the personal liability of directors to the Company and its shareholders for monetary damages for certain breaches of fiduciary duty. Such indemnification may be available for liabilities arising in connection with this Offering. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling the Company pursuant to the foregoing provisions, the Company has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

 

Risks Relating to This Offering and Investment

 

The Company May Undertake Additional Equity or Debt Financing That May Dilute The Shares In This Offering

 

The Company may undertake further equity or debt financing, which may be dilutive to existing shareholders, including you, or result in an issuance of securities whose rights, preferences and privileges are senior to those of existing shareholders, including you, and also reducing the value of Shares subscribed for under this Offering.

 

An Investment In The Shares Is Speculative And There Can Be No Assurance Of Any Return On Any Such Investment

 

An investment in the Company's Shares is speculative, and there is no assurance that investors will obtain any return on their investment. Investors will be subject to substantial risks involved in an investment in the Company, including the risk of losing their entire investment.

 

The Shares Are Offered On A "Best Efforts" Basis And The Company May Not Raise The Maximum Amount Being Offered

  13  

 

 

Since the Company is offering the Shares on a "best efforts" basis, there is no assurance that the Company will sell enough Shares to meet its capital needs. If you purchase Shares in this Offering, you will do so without any assurance that the Company will raise enough money to satisfy the full Use Of Proceeds To Issuer which the Company has outlined in this Offering Circular or to meet the Company's working capital needs.

 

If The Maximum Offering Is Not Raised, It May Increase The Amount Of Long-Term Debt Or The Amount Of Additional Equity It Needs To Raise

 

There is no assurance that the maximum amount of Shares in this offering will be sold. If the maximum Offering amount is not sold, we may need to incur additional debt or raise additional equity in order to finance our operations. Increasing the amount of debt will increase our debt service obligations and make less cash available for distribution to our shareholders. Increasing the amount of additional equity that we will have to seek in the future will further dilute those investors participating in this Offering.

 

We Have Not Paid Dividends In The Past And Do Not Expect To Pay Dividends In The Future, So Any Return On Investment May Be Limited To The Value Of Our Shares

 

We have never paid cash dividends on our Shares and do not anticipate paying cash dividends in the foreseeable future. The payment of dividends on our Shares will depend on earnings, financial condition and other business and economic factors affecting it at such time that management may consider relevant. If we do not pay dividends, our Shares may be less valuable because a return on your investment will only occur if its stock price appreciates.

 

The Company May Not Be Able To Obtain Additional Financing

 

Even if the Company is successful in selling the maximum number of Shares in the Offering, the Company may require additional funds to continue and grow its business. The Company may not be able to obtain additional financing as needed, on acceptable terms, or at all, which would force the Company to delay its plans for growth and implementation of its strategy which could seriously harm its business, financial condition and results of operations. If the Company needs additional funds, the Company may seek to obtain them primarily through additional equity or debt financings. Those additional financings could result in dilution to the Company's current shareholders and to you if you invest in this Offering.

 

The Offering Price Has Been Arbitrary Determined

 

The offering price of the Shares has been arbitrarily established by the Company based upon its present and anticipated financing needs and bears no relationship to the Company's present financial condition, assets, book value, projected earnings, or any other generally accepted valuation criteria. The offering price of the Shares may not be indicative of the value of the Shares or the Company, now or in the future.

 

The Management Of The Company Has Broad Discretion In Application of Proceeds

 

The management of the Company has broad discretion to adjust the application and allocation of the net proceeds of this offering in order to address changed circumstances and opportunities. As a result of the foregoing, the success of the Company will be substantially dependent upon the discretion and judgment of the management of the Company with respect to the application and allocation of the net proceeds hereof.

 

An Investment in the Company's Shares Could Result In A Loss of Your Entire Investment

 

An investment in the Company's Shares offered in this Offering involves a high degree of risk and you should not purchase the Shares if you cannot afford the loss of your entire investment. You may not be able to liquidate your investment for any reason in the near future.

 

There Is No Assurance The Company Will Be Able To Pay Distributions To Shareholders

  14  

 

 

While the Company may choose to pay distributions at some point in the future to its shareholders, there can be no assurance that cash flow and profits will allow such distributions to ever be made.

 

There a Limited Public Trading Market for the Company's Shares

 

At present, the Company’s common stock is quoted on OTCMarkets.com under the trading symbol “ONCI.” Our common stock experiences fluctuation in volume and trading prices. There is no consistent and active trading market for the Company's securities and the Company cannot assure that a consistent trading market will develop. OTCMarkets.com provides significantly less liquidity than a securities exchange such as the NASDAQ Stock Market. Prices for securities traded solely on OTCMarkets.com may be difficult to obtain and holders of the Shares and the Company's securities may be unable to resell their securities at or near their original price or at any price. In any event, except to the extent that investors' Shares may be registered on a Form S-1 Registration Statement with the Securities and Exchange Commission in the future, there is absolutely no assurance that Shares could be sold under Rule 144 or otherwise. The Company has no plans at this time to file an S-1 Registration Statement and thus there is no assurance that the Shares could be sold in the future.

 

Sales Of A Substantial Number Of Shares Of Our Type Of Stock May Cause The Price Of Our Type Of Stock To Decline

 

If our shareholders sell substantial amounts of our Shares in the public market, Shares sold may cause the price to decrease below the current offering price. These sales may also make it more difficult for us to sell equity or equity-related securities at a time and price that we deem reasonable or appropriate.

 

The Company Has Made Assumptions In Its Projections and In Forward-Looking Statements That May Not Be Accurate

 

The discussions and information in this Offering Circular may contain both historical and "forward- looking statements" which can be identified by the use of forward-looking terminology including the terms "believes," "anticipates," "continues," "expects," "intends," "may," "will," "would," "should," or, in each case, their negative or other variations or comparable terminology. You should not place undue reliance on forward-looking statements. These forward-looking statements include matters that are not historical facts. Forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Forward-looking statements contained in this Offering Circular, based on past trends or activities, should not be taken as a representation that such trends or activities will continue in the future. To the extent that the Offering Circular contains forward-looking statements regarding the financial condition, operating results, business prospects, or any other aspect of the Company's business, please be advised that the Company's actual financial condition, operating results, and business performance may differ materially from that projected or estimated by the Company. The Company has attempted to identify, in context, certain of the factors it currently believes may cause actual future experience and results to differ from its current expectations. The differences may be caused by a variety of factors, including but not limited to adverse economic conditions, lack of market acceptance, reduction of consumer demand, unexpected costs and operating deficits, lower sales and revenues than forecast, default on leases or other indebtedness, loss of suppliers, loss of supply, loss of distribution and service contracts, price increases for capital, supplies and materials, inadequate capital, inability to raise capital or financing, failure to obtain customers, loss of customers and failure to obtain new customers, the risk of litigation and administrative proceedings involving the Company or its employees, loss of government licenses and permits or failure to obtain them, higher than anticipated labor costs, the possible acquisition of new businesses or products that result in operating losses or that do not perform as anticipated, resulting in unanticipated losses, the possible fluctuation and volatility of the Company's operating results and financial condition, adverse publicity and news coverage, inability to carry out marketing and sales plans, loss of key executives, changes in interest rates, inflationary factors, and other specific risks that may be referred to in this Offering Circular or in other reports issued by us or by third-party publishers.

 

You Should Be Aware Of The Long-Term Nature Of This Investment

 

Because the Shares have not been registered under the Securities Act or under the securities laws of any state or non-United States jurisdiction, the Shares may have certain transfer restrictions. It is not currently contemplated that registration under the Securities Act or other securities laws will be effected. Limitations on the transfer of the Shares may also adversely affect the price that you might be able to obtain for the Shares in a private sale. You should be aware of the long-term nature of your investment in the Company. You will be required to represent that you are purchasing the Securities for your own account, for investment purposes and not with a view to resale or distribution thereof.

  15  

 

 

Neither The Offering Nor The Securities Have Been Registered Under Federal Or State Securities Laws, Leading To An Absence Of Certain Regulation Applicable To The Company

 

The Company also has relied on exemptions from securities registration requirements under applicable state and federal securities laws. Investors in the Company, therefore, will not receive any of the benefits that such registration would otherwise provide. Prospective investors must therefore assess the adequacy of disclosure and the fairness of the terms of this Offering on their own or in conjunction with their personal advisors.

 

The Shares In This Offering Have No Protective Provisions.

 

The Shares in this Offering have no protective provisions. As such, you will not be afforded protection, by any provision of the Shares or as a Shareholder in the event of a transaction that may adversely affect you, including a reorganization, restructuring, merger or other similar transaction involving the Company. If there is a 'liquidation event' or 'change of control' the Shares being offered do not provide you with any protection. In addition, there are no provisions attached to the Shares in the Offering that would permit you to require the Company to repurchase the Shares in the event of a takeover, recapitalization or similar transaction.

 

You Will Not Have Significant Influence On The Management Of The Company

 

Substantially all decisions with respect to the management of the Company will be made exclusively by the officers, directors, managers or employees of the Company. You will have a very limited ability, if at all, to vote on issues of Company management and will not have the right or power to take part in the management of the Company and will not be represented on the board of directors or by managers of the Company. Accordingly, no person should purchase Shares unless he or she is willing to entrust all aspects of management to the Company.

 

No Guarantee of Return on Investment

 

There is no assurance that you will realize a return on your investment or that you will not lose your entire investment. For this reason, you should read this Form 1-A, Offering Circular and all exhibits and referenced materials carefully and should consult with your own attorney and business advisor prior to making any investment decision.

 

IN ADDITION TO THE RISKS LISTED ABOVE, BUSINESSES ARE OFTEN SUBJECT TO RISKS NOT FORESEEN OR FULLY APPRECIATED BY THE MANAGEMENT. IT IS NOT POSSIBLE TO FORESEE ALL RISKS THAT MAY AFFECT THE COMPANY. MOREOVER, THE COMPANY CANNOT PREDICT WHETHER THE COMPANY WILL SUCCESSFULLY EFFECTUATE THE COMPANY'S CURRENT BUSINESS PLAN. EACH PROSPECTIVE PURCHASER IS ENCOURAGED TO CAREFULLY ANALYZE THE RISKS AND MERITS OF AN INVESTMENT IN THE SECURITIES AND SHOULD TAKE INTO CONSIDERATION WHEN MAKING SUCH ANALYSIS, AMONG OTHER FACTORS, THE RISK FACTORS DISCUSSED ABOVE.

 


 

DILUTION

 

The term 'dilution' refers to the reduction (as a percentage of the aggregate Shares outstanding) that occurs for any given share of stock when additional Shares are issued. If all of the Shares in this offering are fully subscribed and sold, the Shares offered herein will constitute approximately 9% of the total Shares of stock of the Company. The Company anticipates that subsequent to this offering the Company may require additional capital and such capital may take the form of Common Stock, other stock or securities or debt convertible into stock. Such future fund raising will further dilute the percentage ownership of the Shares sold herein in the Company.

  16  

 

 

If you invest in our Common Stock, your interest will be diluted immediately to the extent of the difference between the offering price per share of our Common Stock and the pro forma net tangible book value per share of our Common Stock after this offering. As of July 31, 2019 , the net tangible book value of the Company was approximately $5,077,820 based on the number of Shares of Common Stock 3,741,520,603 issued and outstanding. As of July 31,2019, that equates to a net tangible book value of approximately $0.001357 per share of Common Stock on a pro forma basis. Net tangible book value per share consists of shareholders' equity adjusted for the retained earnings (deficit), divided by the total number of Shares of Common Stock outstanding. The pro forma net tangible book value, assuming full subscription in this Offering, would be $0.001276 per share of Common Stock.

 

Thus, if the Offering is fully subscribed, the net tangible book value per share of Common Stock owned by our current shareholders will have immediately decreased by approximately $0.000081 without any additional investment on their part and the net tangible book value per Share for new investors will be immediately diluted to $0.0009 per Share. These calculations do not include the costs of the offering, and such expenses will cause further dilution.

 

The following table illustrates this per Share dilution:

 

Offering price per Share* $0.0006
Net Tangible Book Value per Share before Offering (based on 3,741,520,603 Shares) $0.001357
Increase (Decrease) in Net Tangible Book Value per Share Attributable to Shares Offered Hereby (based on 450,000,000 Shares) ($0.000081)
Net Tangible Book Value per Share after Offering (based on 4,191,520,603 Shares) $0.001276
Dilution of Net Tangible Book Value per Share to Purchasers in this Offering ($0.000081)

 

*Before deduction of offering expenses

 

There is no material disparity between the price of the Shares in this Offering and the effective cash cost to officers, directors, promoters and affiliated persons for shares acquired by them in a transaction during the past year, or that they have a right to acquire.

 

PLAN OF DISTRIBUTION

 

We are offering a Maximum Offering of up to 450,000,000 in Shares of our Common Stock. This offering is being conducted on a best-efforts basis without any minimum number of 2,000,000 shares required to be sold.

 

The Company will not initially sell the Shares through commissioned broker-dealers. The Company will undertake one or more closings on a rolling basis as funds are received from investors. The Company will take a number of considerations into account when determining when to hold a closing. Such considerations will include the amount of funds raised in the Offering prior to such closing, the feedback received from market participants regarding their interest in participating in the Offering and the impact that a closing would have on the continuation of the Offering. The Company may terminate the offering at any time for any reason at its sole discretion, and may extend the Offering past the termination date of 90 days from the date of qualification by the Commission in the absolute discretion of the Company and in accordance with the rules and provisions of Regulation A of the JOBS Act.

 

None of the Shares being sold in this offering are being sold by existing securities holders.

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After the Offering Statement has been qualified by the Securities and Exchange Commission (the "SEC"), the Company will accept tenders of funds to purchase the Shares. No escrow agent is involved and the Company will receive the proceeds directly from any subscription.

 

The Shares will be sold only to a person who is not an accredited investor if the aggregate purchase price paid by such person is no more than 10% of the greater of such person's annual income or net worth, not including the value of his primary residence, as calculated under Rule 501 of Regulation D promulgated under Section 4(a)(2). Each accredited investor will complete a subscription agreement in order to invest.

 

No broker-dealer registered with the SEC and a member of the Financial Industry Regulatory Authority ("FINRA"), is being engaged as an underwriter or for any other purpose in connection with this Offering.

 

This offering will commence on the qualification of this Offering Circular, as determined by the Securities and Exchange Commission and continue for a period of 90 days. The Company may extend the Offering for an additional time period unless the Offering is completed or otherwise terminated by us, or unless we are required to terminate by application of Regulation A of the JOBS Act. Funds received from investors will be counted towards the Offering only if the form of payment, such as a check or wire transfer, clears the banking system and represents immediately available funds held by us prior to the termination of the subscription period, or prior to the termination of the extended subscription period if extended by the Company.

 

If you decide to subscribe for any Common Stock in this offering, you must deliver funds for acceptance or rejection. The minimum investment amount for a single investor is 2,000,000 Shares of Common Stock in the principal amount of $1,200.00. All subscription checks should be sent to the following address:

 

On4 Communications, Inc.

21515 Hawthorne Blvd, Suite 220

Torrance, CA 90503

 

In such case, subscription checks should be made payable to On4 Communications, Inc. If a subscription is rejected, all funds will be returned to subscribers within ten days of such rejection without deduction or interest. Upon acceptance by the Company of a subscription, a confirmation of such acceptance will be sent to the investor.

The Company maintains the right to accept or reject subscriptions in whole or in part, for any reason or for no reason. All monies from rejected subscriptions will be returned by the Company to the investor, without interest or deductions.

 

This is an offering made under "Tier 1" of Regulation A, and the Shares will not be listed on a registered national securities exchange upon qualification. The Shares will be sold only to a person who is not an accredited investor if the aggregate purchase price paid by such person is no more than 10% of the greater of such person's annual income or net worth, not including the value of his primary residence, as calculated under Rule 501 of Regulation D promulgated under Section 4(a)(2) of the Securities Act of 1933, as amended.

 

Each investor must represent in writing that he/she/it meets the applicable requirements set forth above and in the Subscription Agreement, including, among other things, that (i) he/she/it is purchasing the shares for his/her/its own account and (ii) he/she/it has such knowledge and experience in financial and business matters that he/she/it is capable of evaluating without outside assistance the merits and risks of investing in the shares, or he/she/it and his/her/its purchaser representative together have such knowledge and experience that they are capable of evaluating the merits and risks of investing in the shares.

 

Broker-dealers and other persons participating in the offering must make a reasonable inquiry in order to verify an investor's suitability for an investment in the Company. Transferees of the shares will be required to meet the above suitability standards.

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The shares may not be offered, sold, transferred, or delivered, directly or indirectly, to any person who (i) is named on the list of "specially designated nationals" or "blocked persons" maintained by the U.S. Office of Foreign Assets Control ("OFAC") at www.ustreas.gov/offices/enforcement/ofac/sdn or as otherwise published from time to time, (ii) an agency of the government of a Sanctioned Country, (iii) an organization controlled by a Sanctioned Country, or (iv) is a person residing in a Sanctioned Country, to the extent subject to a sanctions program administered by OFAC. A "Sanctioned Country" means a country subject to a sanctions program identified on the list maintained by OFAC and available at www.ustreas.gov/offices/enforcement/ofac/sdn or as otherwise published from time to time. Furthermore, the shares may not be offered, sold, transferred, or delivered, directly or indirectly, to any person who (i) has more than fifteen percent (15%) of its assets in Sanctioned Countries or (ii) derives more than fifteen percent (15%) of its operating income from investments in, or transactions with, sanctioned persons or Sanctioned Countries.

The sale of other securities of the same class as those to be offered for the period of distribution will be limited and restricted to those sold through this Offering. Because the Shares being sold are not publicly or otherwise traded, the market for the securities offered is presently stabilized.

 

 

USE OF PROCEEDS TO ISSUER

 

The Use of Proceeds is an estimate based on the Company's current business plan. We may find it necessary or advisable to reallocate portions of the net proceeds reserved for one category to another, or to add additional categories, and we will have broad discretion in doing so.

 

The maximum gross proceeds from the sale of the Shares in this Offering are $270,000.00. The net proceeds from the offering, assuming it is fully subscribed, are expected to be approximately $270,000.00 after the payment of offering costs, but before printing, mailing, marketing, legal and accounting costs, and other compliance and professional fees that may be incurred. The estimate of the budget for offering costs is an estimate only and the actual offering costs may differ from those expected by management.

 

Management of the Company has wide latitude and discretion in the use of proceeds from this Offering. Ultimately, management of the Company intends to use a substantial portion of the net proceeds for general working capital. At present, management's best estimate of the use of proceeds, at various funding milestones, is set out in the chart below. However, potential investors should note that this chart contains only the best estimates of the Company's management based upon information available to them at the present time, and that the actual use of proceeds is likely to vary from this chart based upon circumstances as they exist in the future, various needs of the Company at different times in the future, and the discretion of the Company's management at all times.

 

A portion of the proceeds from this Offering may be used to compensate or otherwise make payments to officers or directors of the issuer. The officers and directors of the Company may be paid salaries and receive benefits that are commensurate with similar companies, and a portion of the proceeds may be used to pay these ongoing business expenses.

 

USE OF PROCEEDS

 

      10 %     25 %     50 %     75 %     100 %
                                         
Working Capital   $ 27,000     $ 67,500     $ 110,000     $ 127,500     $ 170,000  
Acquisition Capital                   $ 25,000     $ 75000     $ 100,000  
TOTAL   $ 27,000     $ 67,500     $ 135,000     $ 202,500     $ 270,000  

  

 

Substantially all of the Company's debt is owed to Steve Berman, the Company's CEO. Mr. Berman has confirmed that he will defer any repayment of this debt until there are additional sufficient funds to do so, excluding any proceeds from the Regulation A offering. The monies raised from the Regulation A Offering will not be used to discharge any indebtedness on the part of the company.

 

Working Capital: The monies will be used to create, develop, code, market, advertise and distribute new apps for the auto after-market that we have developed concepts for over the past year.

 

Acquisition Capital: The Company seeks to acquire other businesses, apps, or companies in emerging industries with the goal of creating value and growth for shareholders. At this time, the Company is pursuing letters of intent with various targets, but the Company does not have definitive agreements in place to acquire any specific businesses, apps or companies. 

 

The Company reserves the right to change the use of proceeds set out herein based on the needs of the ongoing business of the Company and the discretion of the Company's management. The Company may reallocate the estimated use of proceeds among the various categories or for other uses if management deems such a reallocation to be appropriate.

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MANAGEMENT'S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATION

 

You should read the following discussion and analysis of our financial condition and results of our operations together with our financial statements and related notes appearing at the end of this Offering Circular. This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed in the section entitled "Risk Factors" and elsewhere in this Offering Circular.

 

Forward-looking Statements

 

This section contains certain statements that may include "forward-looking statements". These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects," "anticipate," "optimistic," "intend," "will" or other similar expressions. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with OTCMarkets and available on its website at http://www.otcmarkets.com. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under applicable securities laws, the Company does not assume a duty to update these forward-looking statements.

 

Description of Business

 

On4 Communications, Inc. (“We’ or the “Company” or “ONCI”) was originally incorporated on June 4, 2001 under the laws of the State of Delaware as Sound Revolution Inc. Our common stock is quoted on the Pink Sheets Quotation system under the symbol "ONCI.PK".

 

ONCI is a holding company that seeks to acquire companies in emerging industries with the goal of creating value and growth for our shareholders. The majority of our revenue comes from sales of bSafeMobile. bSafeMobile is an app which our subsidiary, FMS Marketing, has the exclusive rights to sell in the USA, Europe and South America. We purchase bSafeMobile directly from its owner, CogoSense Technology,Inc., a Canadian company, and then sell bSafeMobile via dealer groups and various auto dealers throughout the USA, Canada, and Europe. We also sell and distribute on Amazon, Facebook and other Social Media outlets. This relationship between FMS Marketing and Cogosense has been in existence since March of 2015, and is a verbal agreement.

 

On March 12, 2009, Sound Revolution Inc. entered into a merger agreement with On4 Communications, Inc., a private Arizona company incorporated on June 5, 2006 (“On4”). On May 1, 2009 we completed the merger with On4, with Sound Revolutions Inc as the surviving entity. On October 2, 2009 the Company then changed its name to On4 Communications, Inc.

 

On April 29, 2010, we sold certain specific assets to On4 Communications Inc.(a private Canadian company) and to a shareholder (“On4 Canada”) pursuant to an asset purchase agreement in exchange for On4 Canada returning 2,000,000 shares of our common stock to our treasury for cancellation.

 

On March 16, 2011, we sold our interest in the Sound Revolution business to Empire Success, LLC in exchange for $15,000 and 6,300 shares of Empire’s common stock.

 

 On November 3, 2011, we entered into a binding letter of intent (“LOI”) to acquire 100% of the issued and outstanding shares of NetCents Systems Ltd. (“NetCents”), a private Alberta corporation engaged in the development and implementation of a then unique and secure electronic payment system for online merchants and consumers. The LOI provided for a period of due diligence which was intended to lead to a formal agreement whereby the Company would acquire 100% of the issued and outstanding capital of NetCents. Clayton Moore, an officer and director of our Company until March 5, 2015, and Ryan Madson, an officer of our Company until January 2, 2015, were shareholders of NetCents and Mr. Moore was the president and director of Net Cents.

 

On November 4, 2011, Clayton Moore was appointed as a director, president and chief executive officer of our Company, Steven Allmen was appointed a director, Ryan Madson was appointed chief operating officer, Tom Locke was appointed as a director, chief financial officer, secretary and treasurer, and John Kaczmarowski was appointed chief technical officer.

 

On December 15, 2011, we entered into a share exchange agreement with NetCents and the selling shareholders of NetCents (“Share Exchange Agreement”). Pursuant to the terms of the Share Exchange Agreement, our Company and NetCents agreed to engage in a share exchange which, if completed, would result in NetCents becoming a wholly owned subsidiary of our Company. However, this transaction never in fact closed and on November 12, 2014 the Company announced that the proposed merger agreement between On4 Communications, Inc. and NetCents Systems Ltd. had been officially rescinded. Effective July 23, 2012, Tom Locke resigned as chief financial officer, secretary, treasurer and as a director of our Company.

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By March 5, 2015 there was a total change in management with the resignations of Mr. Steve Allmen, Mr. Ryan Madson and Mr. Clayton Moore, and the appointment of on March 5, 2015, of Mr. Timothy J. Owens as the Company's President, Chief Executive Officer, Chief Financial Officer, Treasurer, and Director of the Company and the appointment on March 16, 2015 of Mr. Steve Dallas as the Company’s Secretary and Director. With this management change, the Company also changed its business model to finance the production, marketing and distribution of QwickMed (emergency medical kits) to non-profit organizations.

 

On June 4, 2015 the Company filed with the State of Delaware to increase its authorized capital to 5,030,000,000 shares, comprising 5,000,000,000 common shares of $ 0.0001 par value each and 30,000,000 preferred stock of no par value.

 

On September 28, 2015 the QwickMed license originally granted to the Company on March 5, 2015 was cancelled. On October 5, 2015, Timothy Owens resigned as Director, CEO, President and Treasurer and Steve Dallas resigned as Director and Secretary.

 

On October 9, 2015 Giorgio Johnson was appointed Director and acting CEO. The prior QwickMed business plan was abandoned and a new business plan was to be developed focused on the production of selective Apps and related platforms. However, on March 9, 2016 Giorgio Johnson resigned as an Officer and Director of the Company. The Company’s previous business plan, under Mr. Johnson’s direction, was then abandoned without additional cost to the Company.

 

On March 9, 2016 Mr. Steve Berman was appointed Chief Executive Officer and Director of the Company. With his appointment, the Company began to aggressively pursue other business opportunities to produce a profitable business model going forward.

 

On November 4, 2016 the Company acquired a 49% equity/ownership stake in Family Mobil Safety (“FMS”) Marketing, the distributor of a safe driving App. Under terms of the deal, FMS and their global distribution network of the drive safe app remains fully operational and continues as a standalone brand following the close of the acquisition. The FMS safe driving app is intended to do a number of things to keep attention on the road while you're driving and not on your smart phone. As soon as the FMS app detects that the vehicles wheels are in motion the App will be programmed to automatically shut down all voice and social media for safe, distraction-free driving.

 

On December 9, 2016 the Company acquired a Forty-Nine Percent (49%) Joint-Venture equity/ownership stake in Digital Media Management & Consulting (“DMCC”) a fast-rising digital signage privately-held company headquartered in New York, NY. The DMCC platform supports advanced implementation of electronic sell-through and content advertising supported networks. 

 

On September 1, 2017 the Company acquired, from the Company’s CEO, the remaining 51% share of the FMS Safe Driving App. business and IP. The acquisition price was $2 million, payable in cash, convertible promissory note and/or in stock. The cash portion is expected to be financed against the Company’s accounts receivable.

 

On September 7, 2017, the Company entered into a Settlement Agreement with Livingston Asset Management LLC, a Florida limited liability company (“LAM”), pursuant to which the Company agreed to issue certain common stock to LAM, in tranches, as necessary, in exchange for the settlement of certain past-due obligations and accounts payable of the Company acquired by LAM (the “LAM Assigned Accounts”). Such past-due obligations and accounts payable contained in the Settlement Amount covered approximately $1.6 million of the Company’s obligations, which LAM had settled with the Company’s creditors at an overall discount of approximately 45%, resulting in a net settlement of approximately $ 886,000.

 

On September 26, 2017, the Circuit Court of Baltimore County, Maryland (the “Court”), entered an Order Granting Approval Of Settlement Agreement And Stipulation (the “LAM Order”) approving, among other things, the fairness of the terms and conditions of an exchange of the Company’s common stock to settle the LAM Acquired Accounts, pursuant to Section 3(a)(10) of the Securities Act of 1933, as amended (the “Securities Act”), in the matter entitled Livingston Asset Management LLC v. On4 Communications, Inc. (the “LAM Action”). The LAM Order provided for the full and final settlement of the LAM Action. The Settlement Agreement became effective and binding upon the Company and LAM upon execution of the LAM Order by the Court on September 26, 2017.

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Pursuant to the terms of the Settlement Agreement approved under the LAM Order, the Company agreed to issue to LAM shares (the “LAM Settlement Shares”) of the Company’s common stock, $0.0001 par value (the “Common Stock”) at a forty five percent (45%) discount. The Settlement Agreement provided that the LAM Settlement Shares could be issued in one or more tranches, as necessary, sufficient to satisfy the LAM Settlement Agreement through the issuance of freely trading securities, exempt from registration, issued pursuant to Section 3(a)(10) of the Securities Act. A total of 610 million common shares were issued in various tranches by the Company, which LAM realized total proceeds, net of direct selling costs, of approximately $1.61 million, at an overall average sales price of $ 0.002641 per share. LAM retained 45% of these net proceeds ($ 724,893) as its administrative, legal and handling fees, and the balance of $885,980was used in settlement with outstanding creditors participating in the program.

 

On November 7, 2017 the Board of Directors approved a Plan of Conversion whereby it is the Company’s intent (“On4-Delaware”) to convert its present domicile in the state of Delaware to a new corporation with the same name to domiciled and incorporated in the state of Colorado (“On4-Colorado”). Each of the On4-Delaware present common and Series “A” preferred shares would to be converted into an equal number (1 for 1 ) of fully paid shares in those same stock classes of On4-Colorado. In accordance with this Plan, On4 Communications, Inc.(“On4-Colorado”) was duly incorporated in the state of Colorado on December 15, 2017 with the same number of authorized shares, being of 5 billion common shares and 30 million “Series A” preferred shares. Also on December 15,2017 Hexagon Holdings Corporation (“HHC”) was incorporated in Colorado with an authorized share capital of 4 billion common shares and 20 million Series “A” preferred shares of $0.0001 par value each. The HHC Series “A” preferred shares are entitled to receive a preferential dividend of 10% annually and each preferred share is entitled to 200 votes per preferred share, together with the right to convert each one Series “A” preferred share to 200 common shares. The Plan anticipates that all of the issued and outstanding stock of the new On4 Communications, Inc. Colorado would be exchanged for an equal number (1 for 1) of shares and class in Hexagon Holdings Corporation (except that Steve Berman has indicated his intention to surrender to Treasury 1.4 billion of the common shares that he holds). Concurrently, Hexagon Holdings Corporation intends to apply to FINRA for a new symbol and CUSIP number, and it is planned for Hexagon Holdings Corporation to become the successor operating business going forward after FINRA approval has been received. At the date of this filing however, none of the above plan has been implemented, such that the Company’s domicile remains with Delaware at this point.

 

During the 12 months ended October 31, 2018 the Company invested a total of $1,045,000 towards the purchase price of $ 2.6 million to acquire CogoSense Technology,Inc., a Canadian company, which has developed and is selling its FleetSafer App – an enterprise software solution for smart phones and tablets that detects the driving state of an entire on-the-road vehicle fleet and automatically places those devices into “safe mode” while driving occurs, to prevent distractions. CogoSense has also developed an individual consumer version called bSafeMobile and the bFoundMobile App which is a fleet vehicle tracking system to monitor vehicle locations at any time. During the 9 Months ended July 31, 2019 the Company increased its investment to a total of $1,475,000 towards the overall purchase price, which consideration includes the IP, technology assets, revenue stream and customer base of CogoSense.

On September 14, 2018 the Company announced that it has signed a letter of intent to purchase 75% of a craft Cannabis company called Sifthouse BC for a total consideration of $ 1 million contingent upon Sifthouse BC obtaining a license to distribute Cannabis related product in Canada. Sifthouse is a craft Cannabis company and a new business based in Vancouver. Their plan is to grow highly profitable, specialty blends of cannabis. Terms of financing are being worked out. The Company’s investment commitment to date is $100,000.

 

On February 10, 2019 the Company’s Board of Directors approved the request of Mr. Steve Berman, the Company’s CEO, to surrender, to the Company’s Treasury, 1.4 billion issued common shares, in exchange for which Mr. Berman was issued with 25,000,000 “ Series A” preferred shares. These stock transactions therefore occurred effective as of that date.

 

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Results of Operations

 

9 Months Ended July 31, 2019 Compared to 9 Months Ended July 31, 2018

 

Net Revenues

 

For the 9 Months ended July 31, 2019 and 2018, our business had total sales of $4,323,684 and $3,229,842, respectively, an increase of 34% or $ 1,093,842 due to a continued growth in new customers and new sales contracts

 

Gross Profits

 

For the 9 Months ended July 31, 2019 and 2018, our business had total gross profits of $2,328,223 and $2,409,112 respectively, a decrease of $80,889 attributable to higher cost of sales and commission costs.

 

Management Compensation

 

For the 9 Months ended July 31, 2019 and 2018, our business had management compensation of $180,000 and $135,000, respectively.

 

Legal and Accounting Costs

 

For the 9 Months ended July 31, 2019 and 2018, our business had legal and accounting expenses of $109,786 and $105,100, respectively.

 

General and Administrative Expenses

 

For the 9 Months ended July 31, 2019 and 2018, our business had general and administrative expenses of $473,995 and $421,740, respectively.

 

Liquidity and Capital Resources

 

Net cash from operating activities for the 9 Months ended July 31, 2019 and July 31, 2018 was $ 159,876 and $275,483, respectively, net of changes in operating assets and liabilities. The reduction was related to and increase in accounts receivable.

 

Net cash used in investing activities for the 9 Months ended July 31 2019 and July 31,2018 was ($ 430,000) and ($800,000), respectively. The decrease was primarily due to a reduction in investing activity

 

Net cash provided in financing activities for the 9 Months ended July 31, 2018 and July 31,2018 31, 2017 was $ 373,839 and

$ 571,473, respectively. The change was primarily due a lower amount provided by related party.

 

For the 9 Months Ended July 31,2019 the Company recorded net income of $ 1,410,890 and provided $ 159,876 of cash in operating activities. For the 9 Months Ended July 31, 2018, the Company recorded net income of $ 997,123 and provided $ 275,483 of cash in operating activities.

 

As of July 31, 2019, the Company had $ 221,000 in cash to fund its operations. While the Company believes its current cash balance, coupled with the collection of accounts receivable, may be sufficient to allow the Company to fund its planned operating activities for the next twelve months, the Company plans to raise additional equity capital through the issuance of up to 450,000 common shares through this Offering.

 

Year Ended October 31, 2018 Compared to Year Ended October 31, 2017

 

Net Revenues

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For the years ended October 31, 2018 and 2017, our business had total sales of $4,551,116 and $1,679,105, respectively. For twelve months ended October 31, 2018, revenues increased by 171% or $ 2,872,011 due to a substantial increase in new customers and new sales contracts

 

Gross Profits

 

For the years ended October 31, 2018 and 2017, our business had total gross profits of $3,400,227 and $1,194,874 respectively. For the twelve months ended October 31, 2018 gross profits increased by $2,205,353, primarily due to the increase in revenues offset costs of sales and commissions.

 

Management Compensation

 

For the years ended October 31, 2018 and 2017, our business had management compensation of $195,000 and $120,000, respectively.

 

Corporate Advisory Fees

 

For the years ended October 31, 2018 and 2017, our corporate advisory fee expenses was $0 and $185,000 , respectively.

 

Legal and Accounting Costs

 

For the years ended October 31, 2018 and 2017, our business had legal and accounting expenses of $162,688 and $69,205, respectively.

 

General and Administrative Expenses

 

For the years ended October 31, 2018 and 2017, our business had general and administrative expenses of $588,749 and $124,448, respectively. For the twelve months ended October 31, 2018 general and administrative expenses increased by $ 464,301 primarily due to higher salary and travel costs.

 

Liquidity and Capital Resources

 

 

Net cash from operating activities for the years ended October 31, 2018, and October 31, 2017 was $ 268,491 and $5,334, respectively, net of changes in operating assets and liabilities. The increase was primarily due to higher operating income.

 

Net cash used in investing activities for the years ended October 31, 2018, and October 31, 2017 was ($1,145,000) and ($2,000,000), respectively. The decrease was primarily due to a reduction in investing activity

 

Net cash provided in financing activities for the years ended October 31, 2018, and October 31, 2017 was $ 949,473 and $ 2,038,987, respectively. The change was primarily due a lower amount provided by related party..

 

For the year ended October 31, 2018 the Company recorded net income of $ 1,619,050 and provided $ 268,491 of cash in operating activities. For the year ended October 31, 2017, the Company recorded net income of $542,418 and provided $5,334 of cash in operating activities.

 

As of October 31, 2018, the Company had $ 117,285 in cash to fund its operations. While the Company believes its current cash balance, coupled with the collection of accounts receivable, may be sufficient to allow the Company to fund its planned operating activities for the next twelve months, the Company plans to raise additional equity capital through the issuance of up to 450,000 common shares through this Offering

.

Off-Balance Sheet Arrangements

  24  

 

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

 

Critical Accounting Policies

We have identified the policies outlined below as critical to our business operations and an understanding of our results of operations. The list is not intended to be a comprehensive list of all of our accounting policies. In many cases, the accounting treatment of a particular transaction is specifically dictated by accounting principles generally accepted in the United States, with no need for management's judgment in their application. The impact and any associated risks related to these policies on our business operations is discussed throughout Management's Discussion and Analysis of Financial Condition and Results of Operation where such policies affect our reported and expected financial results. Note that our preparation of the consolidated financial statements requires us to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of our consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. There can be no assurance that actual results will not differ from those estimates.

 

Income taxes are one such critical accounting policy. Income taxes are recorded on an accrual basis of accounting based on tax positions taken or expected to be taken in a tax return. A tax position is defined as a position in a previously filed tax return or a position expected to be taken in a future tax filing that is reflected in measuring current or deferred income tax assets and liabilities. Tax positions are recognized only when it is more likely than not (i.e., likelihood of greater than 50%), based on technical merits, that the position would be sustained upon examination by taxing authorities. Tax positions that meet the more likely than not threshold are measured using a probability-weighted approach as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement. Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in our financial statements or tax returns. A valuation allowance is established to reduce deferred tax assets if all or some portion, of such assets will more than likely not be realized. Should they occur, our policy is to classify interest and penalties related to tax positions as income tax expense. Since our inception, no such interest or penalties have been incurred.

 

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). In connection with the preparation of the financial statements, we are required to make assumptions and estimates about future events that affect the reported amounts of assets, liabilities, revenue, expenses and the related disclosures. We base our assumption and estimate on historical experience and other factors that management believes are relevant at the time our financial statements are prepared. On a periodic basis, management reviews the accounting policies, assumptions and estimates to ensure that our financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from the estimates and assumptions, and such differences could be material.

 

Use of Estimates

 

The preparation of the unaudited condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. Certain of our estimates, including evaluating the collectability of accounts receivable, could be affected by external conditions, including those unique to our industry, and general economic conditions. It is possible that these external factors could have an effect on our estimates that could cause actual results to differ from our estimates. In the opinion of management, the condensed financial statements included herein contain all adjustments necessary to present fairly the Company’s financial position and the results of its operations and cash flows for the periods presented. Such adjustments are of a normal recurring nature.

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Cash

 

The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. At times, the Company’s cash balances may exceed the current insured amounts under the Federal Deposit Insurance Corporation. There were no accounts that exceeded federally insured limits at October 31, 2018 and October 31, 2017.

 

Accounts Receivable

 

Accounts receivable are carried at their estimated collectible amounts. Trade accounts receivable are periodically evaluated for collectability based on past credit history with customers and their current financial condition

 

 

Impairment of Long-Lived Assets

 

The Company’s long-lived assets (consisting primarily of the fixed assets) are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the undiscounted future net cash flows expected to be generated by that asset. If the carrying amount of an asset exceeds its estimated future undiscounted cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Through October 31, 2018, the Company had not experienced impairment losses on its long-lived assets.

 

 

Fixed Assets

Fixed assets are stated at cost less accumulated depreciation and amortization. Routine maintenance and repairs and minor replacement costs are charged to expense as incurred, while expenditures that extend the life of these assets are capitalized. Depreciation and amortization are provided for in amounts sufficient to write off the cost of depreciable assets to operations over their estimated service lives. The Company uses the straight-line method of depreciation method for both financial reporting and tax purposes. Upon the sale or retirement of property and equipment, the cost and related accumulated depreciation and amortization will be removed from the accounts and the resulting profit or loss will be reflected in the statement of income. At October 31 2018 and 2017, all fixed assets were fully depreciated.

 

 

Revenue Recognition

 

The Company recognizes revenue in accordance with ASC 605, Revenue Recognition. ASC 605 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery of product has met the criteria established in the arrangement or services rendered; (3) the fee is fixed and determinable; and (4) collectability is reasonably assured. This occurs when the services are completed in accordance with the contracts we have with clients. In connection with our products and services arrangements, when we are paid in advance, these amounts are classified as deferred revenue and recognized as revenue in the period the services were performed.

 

Deferred Revenue

 

Prepayments from customers before the period in which service is delivered are recorded as deferred revenue.

 

Fair Value Measurements

 

The Company adopted the provisions of ASC Topic 820, “Fair Value Measurements and Disclosures”, which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements.

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ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:

 

Level 1 — quoted prices in active markets for identical assets or liabilities

Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable

Level 3 — inputs that are unobservable (for example cash flow modeling inputs based on assumptions)

 

The fair value of the Company’s current assets and current liabilities approximate their carrying values due to their short-term nature.

 

Income Taxes

 

We record a provision for income taxes for the anticipated tax consequences of the reported results of operations using the asset and liability method. Under this method, we recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities, as well as for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the tax rates that are expected to apply to taxable income for the years in which those tax assets and liabilities are expected to be realized or settled. We record a valuation allowance to reduce our deferred tax assets to the net amount that we believe is more likely than not to be realized.

 

We recognize tax benefits from uncertain tax positions only if we believe that it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. Although we believe that we have adequately reserved for our uncertain tax positions, we can provide no assurance that the final tax outcome of these matters will not be materially different. We make adjustments to these reserves when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made and could have a material impact on our financial condition and operating results.

 

Recent Accounting Pronouncements

 

In August 2017, the FASB issued ASU No. 2017-15, Statement of Cash Flows (Topic 230). This standard addresses the classification of eight specific cash flow issues with the objective of reducing the existing diversity in practice. ASU 2017-15 will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted. We are currently evaluating the impact of this new guidance on our consolidated financial statements.

 

 

Additional Company Matters

 

The Company has not filed for bankruptcy protection nor has it ever been involved in receivership or similar proceedings.

 

Legal Proceedings

 

On December 15,2016 LG Capital Funding, LLC(“LG”) ,one of the Company's convertible note holders, commenced an action against the Company claiming that it had been prevented from converting a remaining principal balance of $ 1,500 and accrued interest thereon of$ 1,013 into common shares of the Company at the then contracted 50% discount to market stock price. LG additionally claimed $45,239 in compensatory damages and $ 11,344 in legal fees and costs. The Company filed a motion to vacate the alleged default, which in turn was challenged by LG. A judgement in favor of LG for $ 54,543 was issued by the Eastern District Court of New York on September 25,2018. However, this order was appealed by the Company on October 12,2018, with a further continuance to November 14,2018. Settlement of this matter is therefore subject to further discussion and negotiation between the parties.

  27  

 

The Company is not presently involved in any other legal proceedings material to the business or financial condition of the Company. The Company does not anticipate any material reclassification, merger, consolidation, or purchase or sale of a significant amount of assets not in the ordinary course of business, in the next 12 months.

 

DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES

 

As of November 14, 2018, the On4 Communications, Inc. had 6 full-time employees, who were not an executive officer of the Company.

 

The directors and executive officers of the Company as of November 14, 2018 are as follows:

 

Steve Berman, President, CEO, Treasurer, Secretary, Director

 

Mr. Steve Berman is a native of New York with more than 30 years of sales success and executive leadership experience and a successful entrepreneur, having founded several companies and serving in the CEO role. He has been instrumental in capital financings for several public and private companies, including but not limited to start-ups and pre revenue businesses. Most recently, Mr. Berman co-founded 3DMC, a premier digital multimedia company, and served as CEO of Stealth Sports and Marketing, a consulting firm specializing in marketing and multimedia solutions to professional sports teams.

 

Prior to working with 3DMC and Stealth Sports and Marketing, Mr. Berman held the position of Senior Vice Present at YES Network, the number one regional sports network. Throughout his career, Mr. Berman has developed key relationships in the top 10 markets and was responsible for developing the adverting platform for YES, which ultimately resulted in significant sales increases for the Network.

 

Prior to that, Mr. Berman served as Senior Vice President of Time Warner Cable NY, where he successfully grew the company's advertising sales from$ 11 million to more than$ 100 million, and increased national sales by 200%, resulting in Time Warner Cable NY being the number one billing cable company in the U.S. In joining On4Communications, Inc. Mr. Berman's focus, subject to being successful in raising new capital, intends to be to lead several initiatives to build long-term shareholder value through the development of new sales and revenue opportunities.

 

 

Alan Bailey, CFO

 

From 1975 through 2009 Alan was a Senior Financial Executive with Paramount Pictures, including being its Senior Vice President and Treasurer. In this capacity, he was responsible for Paramount’s global cash and financial management, including working and closing deals with investors seeking to invest in Paramount’s motion pictures etc. as well as internal audit, disaster recovery, foreign currency management and deal and tax structuring.

 

Currently, Alan acts as a “virtual” CFO to a number of publicly traded companies primarily engaged in aspects of the motion picture and television industry, and he is fully familiar with SEC reporting (10K’s and 10Q’s etc), reverse mergers and acquisitions, OTC Pink Sheet alternative reporting, preparation of business plans, financial accounting and reporting, S- 1’s, Regulation D (504) and Regulation A filings, business modelling and financial budgeting. In his film festival career, Alan is the founder/owner and Executive Producer of the Movieville International Film Festival.

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He has also co-produced the Action on Film Festival, the Asian American International Film Festival and HopeFest, a Christian themed film festival. Alan is a CPA and a Fellow of the Institute of UK Chartered Accountants and is an alumni of public accounting firms Ernst & Young and Grant Thornton.

 

 

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

 

The directors of On4 Communications, Inc. are, at present, not compensated by the Company for their roles as directors. For the three present directors, only expenses are reimbursed for their participation on the board of directors. The Company may choose to compensate the present directors in the future, as well as compensate future directors, in the Company's discretion.

Executive Compensation

 

During the years ended October 31, 2017, October 31, 2018, On4 Communications, Inc. paid the following annualized salaries to its executive officers:

 

 

Steve Berman, CEO 2018 $195,000.00
  2017 $120,000.00
     
Alan J. Bailey, CFO 2018 $11,350
  2017 $5,000

 

 

Employment Agreements

 

The Company entered into an Employment Agreement with Mr. Berman as of March 9, 2016 which provides compensation to Mr. Berman at the rate of $10,000 per month and which grants Mr. Berman the right to acquire up to 50,000,000 shares of the Company’s restricted common shares at a price of $0.0001 per share, plus the grant of 70,000,000 stock options exercisable at the rate of 2,500,000 common shares per calendar quarter over 7 years at a price equal to the lowest daily trading price in the previous quarter. Through July 31, 2017 he was also entitled to receive a profit incentive bonus by way of sales commissions equal to 25% of the value of all new executed contracts, net of any payments to outside services, derived by the Company from such new contracts. Mr. Berman voluntarily agreed to reduce his commission rate commencing August 1, 2017 to 12.5%. The Company has the right to terminate Mr. Berman’s Employment Agreement at any time upon payment of 6 months salary payable in 16 monthly installments following termination.

 

Stock Incentive Plan

 

In the future, we may establish a management stock incentive plan pursuant to which stock options and awards may be authorized and granted to our directors, executive officers, employees and key employees or consultants. Details of such a plan, should one be established, have not been decided yet. Stock options or a significant equity ownership position in us may be utilized by us in the future to attract one or more new key senior executives to manage and facilitate our growth.

 

Board of Directors

 

Our board of directors currently consists of three directors. None of our directors is "independent" as defined in Rule 4200 of FINRA's listing standards. We may appoint additional independent directors to our board of directors in the future, particularly to serve on committees should they be established.

 

Committees of the Board of Directors

 

We may establish an audit committee, compensation committee, a nominating and governance committee and other committees to our Board of Directors in the future, but have not done so as of the date of this Offering Circular. Until such committees are established, matters that would otherwise be addressed by such committees will be acted upon by the Board of Directors.

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Director Compensation

 

We currently do not pay our directors any compensation for their services as board members, with the exception of reimbursing and board related expenses. In the future, we may compensate directors, particularly those who are not also employees and who act as independent board members, on either a per meeting or fixed compensation basis.

 

Limitation of Liability and Indemnification of Officers and Directors

 

Our Bylaws limit the liability of directors and officers of the Company to the maximum extent permitted by Delaware law. The Bylaws state that the Company shall indemnify and hold harmless each person who was or is a party or is threatened to be made a party to, or is otherwise involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was a director or an officer of the Company or such director or officer is or was serving at the request of the Company as a director, officer, partner, member, manager, trustee, employee or agent of another company or of a partnership, limited liability company, joint venture, trust or other enterprise.

 

The Company believes that indemnification under our Bylaws covers at least negligence and gross negligence on the part of indemnified parties. The Company also may secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in connection with their services to us, regardless of whether our Bylaws permit such indemnification.

 

The Company may also enter into separate indemnification agreements with its directors and officers, in addition to the indemnification provided for in our Bylaws. These agreements, among other things, may provide that we will indemnify our directors and officers for certain expenses (including attorneys' fees), judgments, fines and settlement amounts incurred by a director or executive officer in any action or proceeding arising out of such person's services as one of our directors or officers, or rendering services at our request, to any of its subsidiaries or any other company or enterprise. We believe that these provisions and agreements are necessary to attract and retain qualified persons as directors and officers.

 

There is no pending litigation or proceeding involving any of our directors or officers as to which indemnification is required or permitted, and we are not aware of any threatened litigation or proceeding that may result in a claim for indemnification.

 

For additional information on indemnification and limitations on liability of our directors and officers, please review the Company's Bylaws, which are attached to this Offering Circular.

 

SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITYHOLDERS

 

The following table sets forth information regarding beneficial ownership of our Common Stock as of July 31,2019. None of our Officers or Directors are selling stock in this Offering.

 

Beneficial ownership and percentage ownership are determined in accordance with the rules of the Securities and Exchange Commission and includes voting or investment power with respect to Shares of stock. This information does not necessarily indicate beneficial ownership for any other purpose.

 

Unless otherwise indicated and subject to applicable community property laws, to our knowledge, each Shareholder named in the following table possesses sole voting and investment power over their Shares of Common Stock. Percentage of beneficial ownership before the offering is based on 3,741,520,603 Shares of Common Stock outstanding as of July 31,2019.

 

Name and Position  Shares Beneficially Owned Prior to Offering Shares Beneficially Owned After Offering
       
Steve Berman 1,061,739 Common Shares 1,061,739 Common Shares
CEO, President, Director 25,000,000 Series A Preferred Shares 25,000,000 Series A Preferred Shares
       
Alan Bailey 0 Common Shares 0 Common Shares  
CFO      

 

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INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS

 

SECURITIES BEING OFFERED

 

The Company is offering Shares of its Common Stock. Except as otherwise required by law, the Company's Articles of Incorporation or Bylaws, each Shareholder shall be entitled to one vote for each Share held by such Shareholder on the record date of any vote of Shareholders of the Company. The Shares of Common Stock, when issued, will be fully paid and non-assessable.

 

Since it is anticipated that at least for the next 12 months the majority of the Company's voting power will be held by Management through Mr. Berman’s ownership of 25,000,000 shares of Series A Preferred stock, (each of which is entitled to 5000 votes) and 1,061,739 shares of Common Stock, the holders of Common Stock issued pursuant to this Offering Circular should not expect to be able to influence any decisions by management of the Company through the voting power of such Common Stock.

 

The Company does not expect to create any additional classes of Common Stock during the next 12 months, but the Company is not limited from creating additional classes which may have preferred dividend, voting and/or liquidation rights or other benefits not available to holders of its common stock.

 

The Company does not expect to declare dividends for holders of Common Stock in the foreseeable future. Dividends will be declared, if at all (and subject to rights of holders of additional classes of securities, if any), in the discretion of the Company's Board of Directors. Dividends, if ever declared, may be paid in cash, in property, or in shares of the capital stock of the Company, subject to the provisions of law, the Company's Bylaws and the Certificate of Incorporation. Before payment of any dividend, there may be set aside out of any funds of the Company available for dividends such sums as the Board of Directors, in its absolute discretion, deems proper as a reserve for working capital, to meet contingencies, for equalizing dividends, for repairing or maintaining any property of the Company, or for such other purposes as the Board of Directors shall deem in the best interests of the Company.

 

The minimum subscription that will be accepted from an investor is One Thousand, Two Hundred Dollars ($1,200.00) for the purchase of Two Million (2,000,000) Shares (the 'Minimum Subscription').

 

A subscription for One Thousand Two Hundred Dollars ($1,200.00) or more in the Shares may be made only by tendering to the Company the executed Subscription Agreement (electronically or in writing) delivered with the subscription price in a form acceptable to the Company, via check, wire, credit or debit card, or ACH. The execution and tender of the documents required, as detailed in the materials, constitutes a binding offer to purchase the number of Shares stipulated therein and an agreement to hold the offer open until the Expiration Date or until the offer is accepted or rejected by the Company, whichever occurs first.

 

The Company reserves the unqualified discretionary right to reject any subscription for Shares, in whole or in part. If the Company rejects any offer to subscribe for the Shares, it will return the subscription payment, without interest or reduction. The Company's acceptance of your subscription will be effective when an authorized representative of the Company issues you written or electronic notification that the subscription was accepted.

 

There are no liquidation rights, preemptive rights, conversion rights, redemption provisions, sinking fund provisions, impacts on classification of the Board of Directors where cumulative voting is permitted or required related to the Common Stock, provisions discriminating against any existing or prospective holder of the Common Stock as a result of such Shareholder owning a substantial amount of securities, or rights of Shareholders that may be modified otherwise than by a vote of a majority or more of the shares outstanding, voting as a class defined in any corporate document as of the date of filing. The Common Stock will not be subject to further calls or assessment by the Company. There are no restrictions on alienability of the Common Stock in the corporate documents other than those disclosed in this Offering Circular. The Company has engaged Pacific Stock Transfer to serve as the transfer agent and registrant for the Shares. For additional information regarding the Shares, please review the Company's Bylaws, which are attached to this Offering Circular.

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DISQUALIFYING EVENTS DISCLOSURE

 

Recent changes to Regulation A promulgated under the Securities Act prohibit an issuer from claiming an exemption from registration of its securities under such rule if the issuer, any of its predecessors, any affiliated issuer, any director, executive officer, other officer participating in the offering of the interests, general partner or managing member of the issuer, any beneficial owner of 20% or more of the voting power of the issuer's outstanding voting equity securities, any promoter connected with the issuer in any capacity as of the date hereof, any investment manager of the issuer, any person that has been or will be paid (directly or indirectly) remuneration for solicitation of purchasers in connection with such sale of the issuer's interests, any general partner or managing member of any such investment manager or solicitor, or any director, executive officer or other officer participating in the offering of any such investment manager or solicitor or general partner or managing member of such investment manager or solicitor has been subject to certain "Disqualifying Events" described in Rule 506(d)(1) of Regulation D subsequent to September 23, 2013, subject to certain limited exceptions. The Company is required to exercise reasonable care in conducting an inquiry to determine whether any such persons have been subject to such Disqualifying Events and is required to disclose any Disqualifying Events that occurred prior to September 23, 2013 to investors in the Company. The Company believes that it has exercised reasonable care in conducting an inquiry into Disqualifying Events by the foregoing persons and is aware of the no such Disqualifying Events.

 

It is possible that (a) Disqualifying Events may exist of which the Company is not aware and (b) the SEC, a court or other finder of fact may determine that the steps that the Company has taken to conduct its inquiry were inadequate and did not constitute reasonable care. If such a finding were made, the Company may lose its ability to rely upon exemptions under Regulation A, and, depending on the circumstances, may be required to register the Offering of the Company's Common Stock with the SEC and under applicable state securities laws or to conduct a rescission offer with respect to the securities sold in the Offering.

 

 

 

ERISA CONSIDERATIONS

 

Trustees and other fiduciaries of qualified retirement plans or IRAs that are set up as part of a plan sponsored and maintained by an employer, as well as trustees and fiduciaries of Keogh Plans under which employees, in addition to self-employed individuals, are participants (together, "ERISA Plans"), are governed by the fiduciary responsibility provisions of Title 1 of the Employee Retirement Income Security Act of 1974 ("ERISA"). An investment in the Shares by an ERISA Plan must be made in accordance with the general obligation of fiduciaries under ERISA to discharge their duties (i) for the exclusive purpose of providing benefits to participants and their beneficiaries; (ii) with the same standard of care that would be exercised by a prudent man familiar with such matters acting under similar circumstances; (iii) in such a manner as to diversify the investments of the plan, unless it is clearly prudent not do so; and (iv) in accordance with the documents establishing the plan. Fiduciaries considering an investment in the Shares should accordingly consult their own legal advisors if they have any concern as to whether the investment would be inconsistent with any of these criteria.

 

Fiduciaries of certain ERISA Plans which provide for individual accounts (for example, those which qualify under Section 401(k) of the Code, Keogh Plans and IRAs) and which permit a beneficiary to exercise independent control over the assets in his individual account, will not be liable for any investment loss or for any breach of the prudence or diversification obligations which results from the exercise of such control by the beneficiary, nor will the beneficiary be deemed to be a fiduciary subject to the general fiduciary obligations merely by virtue of his exercise of such control. On October 13, 1992, the Department of Labor issued regulations establishing criteria for determining whether the extent of a beneficiary's independent control over the assets in his account is adequate to relieve the ERISA Plan's fiduciaries of their obligations with respect to an investment directed by the beneficiary. Under the regulations, the beneficiary must not only exercise actual, independent control in directing the particular investment transaction, but also the ERISA Plan must give the participant or beneficiary a reasonable opportunity to exercise such control, and must permit him to choose among a broad range of investment alternatives.

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Trustees and other fiduciaries making the investment decision for any qualified retirement plan, IRA or Keogh Plan (or beneficiaries exercising control over their individual accounts) should also consider the application of the prohibited transactions provisions of ERISA and the Code in making their investment decision. Sales and certain other transactions between a qualified retirement plan, IRA or Keogh Plan and certain persons related to it (e.g., a plan sponsor, fiduciary, or service provider) are prohibited transactions. The particular facts concerning the sponsorship, operations and other investments of a qualified retirement plan, IRA or Keogh Plan may cause a wide range of persons to be treated as parties in interest or disqualified persons with respect to it. Any fiduciary, participant or beneficiary considering an investment in Shares by a qualified retirement plan IRA or Keogh Plan should examine the individual circumstances of that plan to determine that the investment will not be a prohibited transaction. Fiduciaries, participants or beneficiaries considering an investment in the Shares should consult their own legal advisors if they have any concern as to whether the investment would be a prohibited transaction.

Regulations issued on November 13, 1986, by the Department of Labor (the "Final Plan Assets Regulations") provide that when an ERISA Plan or any other plan covered by Code Section 4975 (e.g., an IRA or a Keogh Plan which covers only self-employed persons) makes an investment in an equity interest of an entity that is neither a "publicly offered security" nor a security issued by an investment company registered under the Investment Company Act of 1940, the underlying assets of the entity in which the investment is made could be treated as assets of the investing plan (referred to in ERISA as "plan assets"). Programs which are deemed to be operating companies or which do not issue more than 25% of their equity interests to ERISA Plans are exempt from being designated as holding "plan assets." Management anticipates that we would clearly be characterized as an "operating" for the purposes of the regulations, and that it would therefore not be deemed to be holding "plan assets."

 

Classification of our assets of as "plan assets" could adversely affect both the plan fiduciary and management. The term "fiduciary" is defined generally to include any person who exercises any authority or control over the management or disposition of plan assets. Thus, classification of our assets as plan assets could make the management a "fiduciary" of an investing plan. If our assets are deemed to be plan assets of investor plans, transactions which may occur in the course of its operations may constitute violations by the management of fiduciary duties under ERISA. Violation of fiduciary duties by management could result in liability not only for management but also for the trustee or other fiduciary of an investing ERISA Plan. In addition, if our assets are classified as "plan assets," certain transactions that we might enter into in the ordinary course of our business might constitute "prohibited transactions" under ERISA and the Code.

 

Under Code Section 408(i), as amended by the Tax Reform Act of 1986, IRA trustees must report the fair market value of investments to IRA holders by January 31 of each year. The Service has not yet promulgated regulations defining appropriate methods for the determination of fair market value for this purpose. In addition, the assets of an ERISA Plan or Keogh Plan must be valued at their "current value" as of the close of the plan's fiscal year in order to comply with certain reporting obligations under ERISA and the Code. For purposes of such requirements, "current value" means fair market value where available. Otherwise, current value means the fair value as determined in good faith under the terms of the plan by a trustee or other named fiduciary, assuming an orderly liquidation at the time of the determination. We do not have an obligation under ERISA or the Code with respect to such reports or valuation although management will use good faith efforts to assist fiduciaries with their valuation reports. There can be no assurance, however, that any value so established (i) could or will actually be realized by the IRA, ERISA Plan or Keogh Plan upon sale of the Shares or upon liquidation of us, or (ii) will comply with the ERISA or Code requirements.

 

The income earned by a qualified pension, profit sharing or stock bonus plan (collectively, "Qualified Plan") and by an individual retirement account ("IRA") is generally exempt from taxation. However, if a Qualified Plan or IRA earns "unrelated business taxable income" ("UBTI"), this income will be subject to tax to the extent it exceeds $1,000 during any fiscal year. The amount of unrelated business taxable income in excess of $1,000 in any fiscal year will be taxed at rates up to 36%. In addition, such unrelated business taxable income may result in a tax preference, which may be subject to the alternative minimum tax. It is anticipated that income and gain from an investment in the Shares will not be taxed as UBTI to tax exempt shareholders, because they are participating only as passive financing sources.

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INVESTOR ELIGIBILITY STANDARDS

 

The Shares will be sold only to a person who is not an accredited investor if the aggregate purchase price paid by such person is no more than 10% of the greater of such person's annual income or net worth, not including the value of his primary residence, as calculated under Rule 501 of Regulation D promulgated under Section 4(a)(2) of the Securities Act of 1933, as amended. In the case of sales to fiduciary accounts (Keogh Plans, Individual Retirement Accounts (IRAs) and Qualified Pension/Profit Sharing Plans or Trusts), the above suitability standards must be met by the fiduciary account, the beneficiary of the fiduciary account, or by the donor who directly or indirectly supplies the funds for the purchase of Shares. Investor suitability standards in certain states may be higher than those described in this Offering Circular. These standards represent minimum suitability requirements for prospective investors, and the satisfaction of such standards does not necessarily mean that an investment in the Company is suitable for such persons.

 

Each investor must represent in writing that he/she meets the applicable requirements set forth above and in the Subscription Agreement, including, among other things, that (i) he/she is purchasing the Shares for his/her own account and (ii) he/she has such knowledge and experience in financial and business matters that he/she is capable of evaluating without outside assistance the merits and risks of investing in the Shares, or he/she and his/her purchaser representative together have such knowledge and experience that they are capable of evaluating the merits and risks of investing in the Shares. Transferees of Shares will be required to meet the above suitability standards.

 

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 Los Angeles, California, on October 31,2019.

 

On4 Communications, Inc.

 

By: /s/ Steve Berman Chief Executive Officer and Director

On4 Communications, Inc.

November 15, 2019

 

 

 

This offering statement has been signed by the following persons in the capacities and on the dates indicated.

 

By: /s/ Alan Bailey

Chief Financial Officer

On4 Communications, Inc.

November 15, 2019

 

ACKNOWLEDGEMENT ADOPTING TYPED SIGNATURES

 

The undersigned hereby authenticate, acknowledge and otherwise adopt the typed signatures above and as otherwise appear in this filing and Offering.

 

By: /s/ Steve Berman Chief Executive Officer and Director

On4 Communications, Inc.

November 15, 2019

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QUARTERLY FINANCIAL STATEMENTS

ON4 COMMUNICATIONS, INC.

for the 9 Months Ending

JULY 31, 2019

 

INDEX

 

 

 

Condensed Balance Sheets as of July 31, 2018 and October 31, 2018 (unaudited)  Page F-1  
     
Condensed Statements of Operations for the 3 and 9 Months Ended July 31, 2019    
and July 31, 2018 (unaudited)  Page F-2  
     
Statement of Changes in Shareholders’ Equity (Deficit) for the Period Ended    
July 31, 2019 (unaudited)  Page F-3  
     
Condensed Statements of Cash Flows for the 9 Months Ended July 31, 2019    
and July 31, 2018 (unaudited )  Page F-4  
     
Notes to the Condensed Financial Statements(unaudited)  Pages F-5-F-8

 

 

 

Condensed Balance Sheets as of October 31, 2018 and October 31, 2017(unaudited)  Page F-9  
     
Condensed Statements of Operations for the 12 Months Ended October 31, 2018    
and October 31, 2017(unaudited)  Page F-10  
     
Statement of Changes in Shareholders’ Equity (Deficit) for the 12 Months Ended    
October 31, 2018 and October 31,2017(unaudited)  Page F-11  
     
Condensed Statements of Cash Flows for the 12 Months Ended October 31, 2018    
and October 31, 2017(unaudited )  Page F-12  
     
Notes to the Condensed Financial Statements(unaudited)  Pages F-13-F-17

 

 

 

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ON4 COMMUNICATIONS, INC.

Condensed Balance Sheets

(Unaudited)

    July 31,     October 31,  
    2019     2018  
Assets            
Current assets                
Cash   $ 221,000     $ 117,285  
Accounts receivable     7,163,056       4,851,862  
      7,384,056       4,969,147  
                 
Fixed assets, net of accumulated depreciation            
Other assets, at cost                
Investment in Family Mobile Safety (“FMS”)     2,000,000       2,000,000  
Investment in Cogosense Technology Inc.     1,475,000       1,045,000  
Investment in Sifthouse BC     100,000       100,000  
      3,575,000       3,145,000  
                 
Total Assets   $ 10,959,056     $ 8,114,147  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY                
Current liabilities                
Accounts payable and accrued expenses   $ 126,182     $ 112,495  
Accrued note interest     77,032       83,873  
Due to related party     3,332,840       2,074,506  
Notes payable     106,549       106,549  
Convertible notes payable     238,633       348,633  
      3,881,236       2,726,056  
Non-current liabilities                
Due to related party     2,000,000       2,000,000  
                 
Stockholders’ Equity                
Preferred stock:                
30,000,000 shares authorized, no par value 25,000,000 and 30,000,000 shares issued and outstanding at July 31, 2019 and October 31, 2018 respectively   $     $  
Common stock:                
5,000,000,000 shares authorized of $0.0001 par value each 3,741,520,603 and 4,505,705,518 issued and outstanding, at July 31, 2019 and October 31, 2018 respectively     374,152       450,571  
Additional paid-in capital     17,710,586       17,495,328  
Treasury stock     210,000       70,000  
Accumulated deficit     (13,216,918 )     (14,627,808 )
      5,077,820       3,388,091  
                 
Total Liabilities and Stockholders’ Equity   $ 10,959,056     $ 8,114,147  

 

The accompanying notes are an integral part of these unaudited financial statements

  F-1  

 

ON4 COMMUNICATIONS, INC.
Condensed Statements of Operations
(Unaudited)

 

    3 Months Ended     9 Months Ended  
    July 31, 2019     July 31, 2018     July 31, 2019     July 31, 2018  
Sales   $ 1,407,800     $ 1,203,631     $ 4,323,684     $ 3,229,842  
Less: Cost of sales     (650,000 )     (145,000 )     (1,455,000 )     (417,000 )
Sales commission     (175,975 )     (150,454 )     (540,461 )     (403,730 )
Gross Margin     581,825       908,177       2,328,223       2,409,112  
                                 
Operating expenses                                
General and administrative     158,968       139,260       473,995       421,740  
Marketing and promotion     37,000             111,000        
Management compensation     60,000       60,000       180,000       135,000  
Legal     42,766       37,250       109,766       105,100  
      298,734       236,510       847,761       661,840  
                                 
Operating income     283,091       671,667       1,480,462       1,747,272  
                                 
Other income (expense)                                
Section 3(a)10 deal costs                       (724,893 )
Interest     (24,534 )     (13,164 )     (69,572 )     (25,256 )
      (24,534 )     (13,164 )     (69,572 )     (750,149 )
                                 
Net income   $ 258,557     $ 658,503     $ 1,410,890     $ 997,123  
                                 
Weighted average shares outstanding     3,602,933,967       4,444,166,304       4,311,987,401       4,222,350,733  
                                 
Earnings per share outstanding   $ 0.00007     $ 0.00015     $ 0.00033     $ 0.00024  

 

The accompanying notes are an integral part of these unaudited financial statements

 

 

  F-2  

 

ON4 COMMUNICATIONS, INC.

Statement of Changes In Stockholders’ Equity (Deficit)

(Unaudited)

 

    Preferred Stock     Common Stock     Additional     Treasury     Accumulated     Stockholders’  
    Number     Amount     Number     Amount     Paid-In Capital     Stock     Deficit     Equity (Deficit)  
Balance:                                                
November 1, 2017     30,000,000             3,858,547,369     $ 385,855     $ 14,800,687     $ 70,000     $ (16,246,858 )   $ (990,316 )
                                                                 
12 Months ended October 31, 2018                                                                
                                                                 
Stock issued to financier of Section 3(a)10 deal                     570,000,000       57,000       1,281,461                       1,338,461  
                                                                 
Stock issued to CEO for expense reimbursements                     22,500,000       2,250       50,250                       52,500  
                                                                 
Stock issued to redeem convertible notes                     54,658,149       5,466       76,862                       82,328  
                                                                 
Liabilities deemed by Management to be unenforceable                                 1,286,068                        1,286,068  
                                                                 
Net income for year                                                     1,619,050       1,619,050  
Balance:                                                                
October 31, 2018     30,000,000             4,505,705,518     $ 450,571     $ 17,495,328     $ 70,000     $ (14,627,808 )   $ 3,388,091  
                                                                 
9 Months Ended July 31, 2019                                                                
                                                                 
Stock issued to redeem convertible note and interest                     635,815,085       63,581       215,258                   278,839  
                                                                 
Surrender of shares to Treasury     (30,000,000 )           (1,400,000,000 )     (140,000 )           140,000              
                                                                 
Issuance of Preferred Shares to CEO     25,000,000                                            
                                                                 
Net income for period                                         1,410,890       1,410,890  
Balance:                                                                
July 31, 2019     25,000,000             3,741,520,603     $ 374,152     $ 17,710,586     $ 210,000     $ (13,216,918 )   $ 5,077,820  

 

The accompanying notes are an integral part of these unaudited financial statements

  F-3  

 

 

 

ON4 COMMUNICATIONS, INC.
Condensed Statements of Cash Flows
(Unaudited)

 

    9 Months Ended
July 31, 2019
    9 Months Ended
July 31, 2018
 
Net cash from (used in) operating activities:                
Net income for period   $ 1,410,890     $ 997,123  
Adjustments to reconcile net income to net cash:                
Section3(a)(10) costs paid by stock issuance     724,893          
Net changes in operating assets and liabilities                
Increase in accounts receivable     (2,311,194 )     (2,188,576 )
Decrease in deposit held by financier           272,414  
Increase in accounts payable and accrued expenses     6,846       4,394  
Increase in amounts due related party     1,053,334       465,234  
      (1,251,014 )     (721,642 )
                 
Net cash from operating activities     159,876       275,483  
                 
Net cash used in investing activities:                
Acquisition of interest in Cogosense Technology, Inc     (430,000 )     (800,000 )
      (430,000 )     (800,000 )
                 
Net cash from(used in) financing activities:                
Loans from related party     205,000       571,473  
Increase in notes payable(net)     168,839        
      373,839       571,473  
                 
Change in cash     103,715       46,954  
Cash – beginning of period     117,285       44,321  
Cash – end of period   $ 211,000     $ 91,275  
Supplemental information:                
Transactions not involving cash flows:                
Issuance of common stock to financier of Section 3(a)10 deal   $     $ 1,338,461  
Issuance of common stock to CEO           39,750  
Stock issued to redeem convertible notes and interest     278,839       82,328  
Liabilities deemed by Management as no longer enforceable           1,286,068  
Increase in issued common stock     (63,581 )     (63,966 )
Increase in additional paid-in capital     (215,258 )     (2,682,641 )
    $     $  

 

The accompanying notes are an integral part of these unaudited financial statements

 

  F-4  

 

 

ON4 COMMUNICATIONS, INC.

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the 9 Months Ended July 31, 2019

(Unaudited)

 

1. The Company’s Organization, History, and Current Operations

 

The Company was originally incorporated on June 4, 2001 under the laws of the State of Delaware as Sound Revolution Inc. Our common stock is quoted on the Pink Sheets Quotation system under the symbol “ONCI.PK” and on the Berlin Stock Exchange under the symbol “O4C:GR”.

 

On March 12, 2009, Sound Revolution Inc. entered into a merger agreement with On4 Communications, Inc., a private Arizona company incorporated on June 5, 2006 (“On4”). On May 1, 2009 we completed the merger with On4, with Sound Revolutions Inc as the surviving entity. On October 2, 2009 the Company then changed its name to On4 Communications, Inc. On April 29, 2010, we sold certain specific assets to On4 Communications Inc.(a private Canadian company) and to a shareholder (“On4 Canada”) pursuant to an asset purchase agreement in exchange for On4 Canada returning 2,000,000 shares of our common stock to our treasury for cancellation.

 On March 16, 2011, we sold our interest in the Sound Revolution business to Empire Success, LLC in exchange for $15,000 and 6,300 shares of Empire’s common stock.  

 

On November 3, 2011, we entered into a binding letter of intent (“LOI”) to acquire 100% of the issued and outstanding shares of NetCents Systems Ltd. (“NetCents”), a private Alberta corporation engaged in the development and implementation of a then unique and secure electronic payment system for online merchants and consumers. The LOI provided for a period of due diligence which was intended to lead to a formal agreement whereby the Company would acquire 100% of the issued and outstanding capital of NetCents. On December 15, 2011, we entered into a share exchange agreement with NetCents and the selling shareholders of NetCents (“Share Exchange Agreement”). Pursuant to the terms of the Share Exchange Agreement, our Company and NetCents agreed to engage in a share exchange which, if completed, would result in NetCents becoming a wholly owned subsidiary of our Company. However, this transaction never in fact closed and on November 12, 2014 the Company announced that the proposed merger agreement between On4 Communications, Inc. and NetCents Systems Ltd. had been officially rescinded. Effective July 23, 2012, Tom Locke resigned as chief financial officer, secretary, treasurer and as a director of our Company.

 

On June 4, 2015 the Company filed with the State of Delaware to increase its authorized capital to 5,030,000,000 shares, comprising 5,000,000,000 common shares of $ 0.0001 par value each and 30,000,000 preferred stock of no par value.

 

On March 9, 2016 Mr. Steve Berman was appointed Chief Executive Officer and Director of the Company ( Mr. Berman also hold those positions today). With his appointment, the Company totally changed its previous business plan and began to aggressively pursue business opportunities to produce a profitable business model going forward.

 

On November 4, 2016 the Company acquired a 49% equity/ownership stake in Family Mobil Safety (“FMS”) Marketing, the distributor of a safe driving App. Under terms of the deal, FMS and their global distribution network of the drive safe app remains fully operational and continues as a standalone brand following the close of the acquisition. The FMS safe driving app is intended to do a number of things to keep attention on the road while you're driving and not on your smart phone. As soon as the FMS app detects that the vehicles wheels are in motion the App will be programmed to automatically shut down all voice and social media for safe, distraction-free driving. On December 9, 2016 the Company acquired a Forty-Nine Percent (49%) Joint-Venture equity/ownership stake in Digital Media Management & Consulting (“DMCC”) a fast-rising digital signage privately-held company headquartered in New York, NY. The DMCC platform supports advanced implementation of electronic sell-through and content advertising supported networks. On September 1, 2017 the Company acquired, from the Company’s CEO, the remaining 51% share of the FMS Safe Driving App. business and IP. The acquisition price was $2 million, payable in cash, convertible promissory note and/or in stock. The cash portion is expected to be financed against the Company’s accounts receivable.

 

On September 7, 2017, the Company entered into a Settlement Agreement with Livingston Asset Management LLC, a Florida limited liability company (“LAM”), pursuant to which the Company agreed to issue certain common stock to LAM, in tranches, as necessary, in exchange for the settlement of certain past-due obligations and accounts payable of the Company acquired by LAM (the “LAM Assigned Accounts”). Such past-due obligations and accounts payable contained in the Settlement Amount covered approximately $1.6 million of the Company’s obligations, which LAM had settled with the Company’s creditors at an overall discount of approximately 45%, resulting in a net settlement of approximately $ 886,000. On September 26, 2017, the Circuit Court of Baltimore County, Maryland (the “Court”), entered an Order Granting Approval Of Settlement Agreement And Stipulation (the “LAM Order”) approving, among other things, the fairness of the terms and conditions of an exchange of the Company’s common stock to settle the LAM Acquired Accounts, pursuant to Section 3(a)(10) of the Securities Act of 1933, as amended (the “Securities Act”), in the matter entitled Livingston Asset Management LLC v. On4 Communications, Inc. (the “LAM Action”). The LAM Order provided for the full and final settlement of the LAM Action. The Settlement Agreement became effective and binding upon the Company and LAM upon execution of the LAM Order by the Court on September 26, 2017.

  F-5  

 

 

Pursuant to the terms of the Settlement Agreement approved under the LAM Order, the Company agreed to issue to LAM shares (the “LAM Settlement Shares”) of the Company’s common stock, $0.0001 par value (the “Common Stock”) at a forty five percent (45%) discount. The Settlement Agreement provided that the LAM Settlement Shares could be issued in one or more tranches, as necessary, sufficient to satisfy the LAM Settlement Agreement through the issuance of freely trading securities, exempt from registration, issued pursuant to Section 3(a)(10) of the Securities Act. A total of 610 million common shares were issued in various tranches by the Company, which LAM realized total proceeds, net of direct selling costs, of approximately $1.61 million, at an overall average sales price of $ 0.002641 per share. LAM retained 45% of these net proceeds ($ 724,893) as its administrative, legal and handling fees, and the balance of $885,980was used in settlement with outstanding creditors participating in the program.

 

On November 7, 2017 the Board of Directors approved a Plan of Conversion whereby it is the Company’s intent (“On4-Delaware”) to convert its present domicile in the state of Delaware to a new corporation with the same name to domiciled and incorporated in the state of Colorado (“On4-Colorado”). Each of the On4-Delaware present common and Series “A” preferred shares would to be converted into an equal number (1 for 1 ) of fully paid shares in those same stock classes of On4-Colorado. In accordance with this Plan, On4 Communications, Inc.(“On4-Colorado”) was duly incorporated in the state of Colorado on December 15, 2017 with the same number of authorized shares, being of 5 billion common shares and 30 million “Series A” preferred shares. Also on December 15,2017 Hexagon Holdings Corporation (“HHC”) was incorporated in Colorado with an authorized share capital of 4 billion common shares and 20 million Series “A” preferred shares of $0.0001 par value each. The HHC Series “A” preferred shares are entitled to receive a preferential dividend of 10% annually and each preferred share is entitled to 200 votes per preferred share, together with the right to convert each one Series “A” preferred share to 200 common shares. The Plan anticipates that all of the issued and outstanding stock of the new On4 Communications, Inc. Colorado would be exchanged for an equal number (1 for 1) of shares and class in Hexagon Holdings Corporation (except that, effective February 10,2019, Steve Berman surrendered to Treasury 1.4 billion of the common shares that he held). Concurrently, Hexagon Holdings Corporation intends to apply to FINRA for a new symbol and CUSIP number, and it is planned for Hexagon Holdings Corporation to become the successor operating business going forward after FINRA approval has been received. At the date of this filing however, none of the above plan has been implemented, such that the Company’s domicile remains with Delaware at this point.

During the 12 months ended October 31, 2018 the Company invested a total of $1,045,000 towards the purchase price of $ 2.6 million to acquire CogoSense Technology,Inc., a Canadian company, which has developed and is selling its FleetSafer App – an enterprise software solution for smart phones and tablets that detects the driving state of an entire on-the-road vehicle fleet and automatically places those devices into “safe mode” while driving occurs, to prevent distractions. CogoSense has also developed an individual consumer version called bSafeMobile and the bFoundMobile App which is a fleet vehicle tracking system to monitor vehicle locations at any time. The Company increased its cash investment by $430,000 to $1,475,000 during the 9 months ended July 31,2019.

On September 14 2018 the Company announced that it has signed a letter of intent to purchase 75% of a craft Cannabis company called Sifthouse BC for a total consideration of $ 1 million contingent upon Sifthouse BC obtaining a license to distribute Cannabis related product in Canada. Sifthouse is a craft Cannabis company and a new business based in Vancouver. Their plan is to grow highly profitable, specialty blends of cannabis. Terms of financing are being worked out. The Company’s investment commitment to date is $100,000.

2: Summary of Significant Accounting Policies

Basis of Presentation

These annual unaudited financial statements of On4 Communications, Inc. (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States and contain all normal recurring accruals and adjustments that, in the opinion of management, are necessary to present fairly the Company’s financial position at July 31, 2019 and at October 31,2018, and the results of its operations and cash flows for the 3 and 9 months ended July 31, 2019 and April 30,2018 respectively.

 

Cash

At July 31, 2019 the Company had a cash balance of $211,000 compared with a cash balance of $ 117,285 at October 31,2018.

 

Accounts Receivable

Accounts receivable arise from the Company’s sales of the Cogosense and FMS safe driving Apps and its net share of sales derived by Digital Media Management & Consulting, less payments received to date. Receivables are supported by executed sales contracts with customers.

Investment in Family Mobile Safety (“FMS”)

On September 1, 2017 the Company acquired, from the Company’s CEO, the remaining 51% share of the FMS Safe Driving App. business and IP. The acquisition price was $2 million, payable in cash, convertible promissory note and/or in stock. The cash portion is expected to be financed against the Company’s accounts receivable. July 31, 2019 the Company reflected and equal non-current liability to the Company’s CEO of $ 2 million.

 

Investment in CogoSense Technology, Inc.

On August 17,2017 the Company entered into a non-binding Letter of Intent to purchase 100% of CogoSense Technology, Inc., a Canadian company, for total consideration of $ 2.6 million. CogoSense has developed and is selling its FleetSafer App – an enterprise software solution for smart phones and tablets that detects the driving state of an entire on-the-road vehicle fleet and automatically places those devices into “safe mode” while driving occurs, to prevent distractions. CogoSense has also developed an individual consumer version called bSafeMobile and the bFoundMobile App which is a fleet vehicle tracking system to monitor vehicle locations at any time. At July 31, 2019 the Company had invested a total of $ 1,475,000 towards the overall purchase price, which consideration includes the IP, technology assets, revenue stream and customer base of CogoSense.

  F-6  

 

Investment in Sifthouse BC

On September 14 2018 the Company signed a letter of intent to purchase 75% of a craft Cannabis company called Sifthouse BC for a total consideration of $ 1 million contingent upon Sifthouse BC obtaining a license to distribute Cannabis related product in Canada. Sifthouse is a craft Cannabis company and a new business based in Vancouver. Their plan is to grow highly profitable, specialty blends of cannabis. Terms of financing are being worked out. The Company’s investment commitment to date is $100,000.

Fixed Assets

The Company has fully amortized its fixed assets.

Revenue Recognition

The Company recorded , supported by sales contracts, totaling $4,323,684 for the 9 months ended July 31, 2019 arising primarily through the sale of the FMS safe driving App and the CogoSense Apps. This compares with sales of $ 3,229,842 for the 9 months ended July 31, 2018 (representing an increase of approximately 34% year-over-year).,

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions (if any) that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Provision for Income Taxes

At this time, no provision for the payment of income taxes is required on the results of the Company’s operations through July 31, 2019. The Company has approximately $ 12.8 million of net operating losses carried forward to potentially offset taxable income in future years, which expire commencing in calendar 2026.

Current Liabilities

The Company’s liabilities at July 31, 2019 and October 31,2018 are as follows:

Accounts payable and accrued expenses totaled $ 126,182 and $ 112,495 at July 31, 2019 and October 31,2018. Accrued interest expense on third party debt payable totaled $ 77,032 and $ 83,863 at July 31, 2019 and October 31, 2018, respectively. Notes Payable totaled $106,549 , unchanged at July 31, 2019 and October 31, 2018 respectively.

Convertible notes payable amounted to $ 238,633 and $ 348,633 at July 31, 2019 and October 31 2018 respectively. During the 9 months ended July 31,2019 the Company converted of certain Notes, plus accrued interest, totaling $ 278,839 in exchange for the issuance of 635,815,085 common shares. The convertible loan balance at July 31,2019 of $228,633 includes 12 month convertible notes payable to Machiavelli Ltd LLC, to Carpathia LLC and to J.P. Carey Enterprises, Inc. totaling $178,000 all of which carry interest at the rate of 12% annum and which are convertible at a rate of 50% of the average market price of the Company’s common stock based on the lowest 3 intraday trading prices quoted by OTCMarkets during the 10 day trading period prior to conversion. 

3. Amounts Due Related Party

The amounts due related party represent amounts due to the Company’s CEO, Steve Berman, as follows:

 

 

At July 31,

2019

  At October 31, 2018
Accrued but unpaid compensation   $ 420,763     $ 240,763  
Unreimbursed business expenses paid by the CEO     536,712       236,412  
Accrued but unpaid sales commissions     1,363,081       822,620  
5% loans to the Company, together with accrued interest thereon                     1,012,284       774,711  
           Total currently due   $ 3,332,840   $ 2,074,506  
Unpaid consideration to acquire 51% interest in FMS     2,000,000       2,000,000  
           Total non-currently due   $ 2,000,000     $ 2,000,000  

 

  F-7  

 

4. Contingent Obligations/Liabilities

 

(1) The Company entered into an Employment Agreement with Mr. Berman as of March 9, 2016 which provides compensation to Mr. Berman at the rate of $10,000 per month and which grants Mr. Berman the right to acquire up to 50,000,000 of the Company’s restricted common shares at a price of $0.0001 per share, plus the grant of 70,000,000 stock options exercisable at the rate of 2,500,000 common shares per calendar quarter over 7 years at a price equal to the lowest daily trading price in the previous quarter. Through July 31,2017 he was also entitled to receive a profit incentive bonus by way of sales commissions equal to 25% of the value of all new executed contracts, net of any payments to outside services, derived by the Company from such new contracts. Mr. Berman voluntarily agreed to reduce his commission rate commencing August 1, 2017 to 12.5% and his monthly compensation rate was increased to $ 20,000. The Company has the right to terminate Mr. Berman’s Employment Agreement at any time upon payment of 6 months’ salary payable in 16 monthly installments following termination.

 

(2) On December 15,2016 LG Capital Funding, LLC (one of the Company’s convertible note holders) commenced an action against the Company claiming that it had been prevented from converting a remaining principal balance of $ 1,500 and accrued interest thereon of $ 1,013 into common shares of the Company at the then contracted 50% discount to market stock price. LG additionally claimed $ 45,239 in compensatory damages and $ 11,344 in legal fees and costs. The Company filed a motion to vacate the alleged default, which in turn was challenged by LG Capital. A judgement in favor of LG Capital for $54,543 was issued by the Eastern District Court of New York on September 25, 2018. However, this order was appealed by the Company on October 12, 2018 and the Company was been granted a stay, pending the outcome of a similar case submitted to the Second Circuit of Appeals which pleads that these types of convertible debt contracts are usurious under New York law. In April 2019 the New York Court of Appeals declined to hear the question certified to it – whether loans with terms such as the Note in our case are void for being usurious.  As a result, the federal Court of Appeals lifted the stay in our matter and requested our appellate brief by May.  Our brief was filed May 20, 2019.  LG Capital submitted their opposing brief August 9, 2019 and our reply brief was submitted at the end of August, 2019.  There will not be oral arguments.  No decision has been rendered yet.

 

5. Regulation A financing proposal in progress

On March 12,2019 the Company filed a preliminary Form 1-A with the SEC to raise capital of up to $ 270,000 from the issuance of 450 million common shares of the Company at the offering price of $ 0.0006 per share made available pursuant to Regulation A of the Securities Act of 1933. Such offering requires the review and qualification by the SEC before it can be effective. At the date of this filing, such approval and qualification has not yet been obtained.

  

  F-9  

 

ON4 COMMUNICATIONS, INC.

Condensed Balance Sheets

(Unaudited)

 

    October 31,   October 31,
    2018   2017
ASSETS                
  Current assets                
    Cash   $ 117,285     $ 44,321  
    Trade accounts receivable     4,851,862       1,485,572  
    Deposit held by debt financier     —         272,414  
      4,969,147       1,802,307  
  Fixed assets, net of accumulated depreciation     —         —    
  Other assets                
       Investment in Family Mobile Safety ("FMS")     2,000,000       2,000,000  
       Investment in CogoSense Technology Inc.     1,045,000       —    
       Investment in Sifthouse BC     100,000          
      3,145,000       2,000,000  
                 
Total Assets   $ 8,114,147     $ 3,802,307  
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT                
   Current liabilities                
      Accounts payable and accrued expenses   $ 112,495     $ 1,520,782  
      Accrued note interest     83,873       44,796  
      Due to related party     2,074,506       670,883  
      Notes payable     106,549       400,529  
      Convertible notes payable     348,633       155,633  
      2,726,056       2,792,623  
                 
     Non current liabilities                
       Due to related party     2,000,000       2,000,000  
                 
STOCKHOLDERS' EQUITY (DEFICIT)                
     Preferred stock:                
       30,000,000 shares authorized, no par value                
       30,000,000  issued and outstanding   $ —       $ —    
     Common stock:                
       5,000,000,000  shares authorized of $0.0001 par value                
       4,505,705,518 and 3,858,547,369 issued and outstanding                
       respectively     450,571       385,855  
      Additional paid-in capital     17,495,328       14,800,687  
      Treasury stock     70,000       70,000  
      Accumulated deficit     (14,627,808 )     (16,246,858 )
      3,388,091       (990,316 )
                 
Total Liabilities and Stockholders' Equity   $ 8,114,147     $ 3,802,307  

 

  The accompanying notes are an integral part of these unaudited financial statements

 

 

  F-10  

 

                ON4 COMMUNICATIONS INC.

       Condensed  Statements of Operations

         (Unaudited)  

         
    12 Months Ended   12 Months Ended
    October 31,2018   October 31,2017
Sales   $ 4,551,116     $ 1,679,105  
Less: Cost of sales     (582,000 )     (160,000 )
           Sales commission     (568,889 )     (324,231 )
Gross Margin     3,400,227     $ 1,194,874  
                 
Operating Expenses                
  General and administrative     588,749       124,448  
  Management compensation     195,000       120,000  
  Corporate advisory fees     —         185,000  
  Legal and accounting     162,668       69,205  
    Total operating expenses     946,417       498,653  
                 
Operating income (loss)     2,453,810       696,221  
                 
Other income (expense)                 
  Section 3(a)(10) deal costs     (724,893 )     (117,500 )
  Interest     (109,867 )     (36,303 )
    Total other income (expense)     (834,760 )     (153,803 )
                 
Net income (loss)   $ 1,619,050     $ 542,418  
                 
                 
Weighted average shares outstanding     4,291,500,000       3,509,779,200  

 

  The accompanying notes are an integral part of these unaudited financial statements

   

  F-11  

 

                             ON4 COMMUNICATIONS INC.

                         Statement  of Changes in Stockholders' Equity

             For the  12 Months Ended October 31, 2018

                          (Unaudited)

                   

    Preferred   Stock   Common   Stock   Additional   Treasury   Accumulated   Stockholders'
    Number   Amount   Number   Amount   Paid-in Capital   Stock   Deficit   Equity(Deficit)
Balance :                                                                
November 1,2016     30,000,000       —         2,798,719,698     $ 279,872     $ 13,736,108     $ 70,000     $ (16,789,276 )   $ (2,703,296 )
                                                                 
12 months ended October 31,2017:                                                                
                                                                 
Stock issued to                                                                
repay convertible debt     —         —         1,002,327,671       100,233       69,239       —         —         169,472  
                                                                 
Stock issued to pay                                                                
accrued CEO executive                                                                
compensation                     17,500,000       1,750       82,500                       84,250  
                                                                 
Stock issued as a deposit to financier                                                                
of Section 3(a)(10) debt reorganization                     40,000,000       4,000       268,413                       272,413  
                                                                 
Accrued note interest forgiven in                                                                
Section 3(a)(10) debt reorganization                                     644,427                       644,427  
                                                                 
Net income for year     —         —         —         —         —         —         542,418       542,418  
                                                                 
Balance:                                                                
October 31,2017     30,000,000       —         3,858,547,369     $ 385,855     $ 14,800,687     $ 70,000     $ (16,246,858 )   $ (990,316 )
                                                                 
12 Months Ended October 31, 2018                                                                
                                                                 
Stock issued to financier                                                                
of Section 3(a)(10) debt reorganization                     570,000,000       57,000       1,281,461                       1,338,461  
                                                                 
Stock issued to CEO for expense reimbursements                     22,500,000       2,250       50,250                       52,500  
                                                                 
Stock issued to redeem convertible notes                                                                
plus interest                     54,658,149       5,466       76,862                       82,328  
                                                                 
Liabilities deemed by Management to be                                                                
unenforceable                                     1,286,068                       1,286,068  
                                                                 
Net Income for period                                                     1,619,050       1,619,050  
                                                                 
Balance:                                                                
October 31,2018     30,000,000       —         4,505,705,518     $ 450,571     $ 17,495,328     $ 70,000     $ (14,627,808 )   $ 3,388,091  

 

                                    The accompanying notes are an integral part of these unaudited financial statements

             

  F-12  

 

 

                       ON4 COMMUNICATIONS INC.

                       Condensed Statements of Cash Flows

                             (Unaudited)       

 

    12 Months Ended   12 Months Ended
    October 31,2018   October 31,2017
Net cash from operating activities:                
 Net income  from operations   $ 1,619,050     $ 542,418  
                 
 Adjustments to reconcile net loss to net cash:                
   Section 3(a)(10) costs paid by stock issuance     724,893       —    
 Changes in operating assets and liabilities:                
   Management compensation paid in stock     —         84,250  
   Increase in accounts receivable     (3,366,290 )     (1,485,572 )
   Decrease in deposit held by financier     272,414       —    
   Increase  in accounts payable and accrued expenses     371,274       299,739  
   Increase in amounts due related party     647,150       564,499  
      (1,350,559 )     (537,084 )
                 
Net cash from  operating activities     268,491       5,334  
                 
Net cash used in investing activities:                
     Acquisition of majority interest in FMS     —         (2,000,000 )
     Acquisition of interest in CogoSense Technology,Inc     (1,045,000 )     —    
     Acquisition of interest in Sifthouse BC     (100,000 )     —    
      (1,145,000 )     (2,000,000 )
                 
Net cash from  financing activities:                
    Increase in non-current amount due to related party     —         2,000,000  
    Loans from related party     756,473       —    
    Increase  in convertible notes payable(net)     193,000       38,987  
      949,473       2,038,987  
                 
Change in cash     72,964       44,321  
       `           
Cash - beginning of period     44,321       —    
                 
Cash - end of period   $ 117,285     $ 44,321  
                 
Supplemental information:                
     Transactions not involving cash flows:                
         Issuance of common stock                
         to financier of Section 3(a)(10) deal   $ 1,338,461     $ 272,414  
         Forgiveness of cumulative note interest                
         under Section 3(a) 10 settlement     —         644,426  
        Stock issued to redeem convertible notes and interest     82,328       169,472  
        Stock issued to CEO to reduce expense reimbursements     52,500          
        Liabilities deemed by Management                
        to be no longer enforceable     1,286,068       —    
            Increase in issued common stock     (64,716 )     (104,233 )
            Increase in additional paid-in capital     (2,694,641 )     (982,079 )
    $ —       $ —    

 

  The accompanying notes are an integral part of these unaudited financial statements

  F-13  

 

ON4 COMMUNICATIONS INC.

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

12 Months Ended October 31,2018

(Unaudited)

 

 

1. The Company’s Organization, History, and Current Operations

 

The Company was originally incorporated on June 4, 2001 under the laws of the State of Delaware as Sound Revolution Inc. Our common stock is quoted on the Pink Sheets Quotation system under the symbol “ONCI.PK” and on the Berlin Stock Exchange under the symbol “O4C:GR”.

 

On March 12, 2009, Sound Revolution Inc. entered into a merger agreement with On4 Communications, Inc., a private Arizona company incorporated on June 5, 2006 (“On4”). On May 1, 2009 we completed the merger with On4, with Sound Revolutions Inc as the surviving entity. On October 2, 2009 the Company then changed its name to On4 Communications, Inc.

 

On April 29, 2010, we sold certain specific assets to On4 Communications Inc.(a private Canadian company) and to a shareholder (“On4 Canada”) pursuant to an asset purchase agreement in exchange for On4 Canada returning 2,000,000 shares of our common stock to our treasury for cancellation.

 

On March 16, 2011, we sold our interest in the Sound Revolution business to Empire Success, LLC in exchange for $15,000 and 6,300 shares of Empire’s common stock.

 

 On November 3, 2011, we entered into a binding letter of intent (“LOI”) to acquire 100% of the issued and outstanding shares of NetCents Systems Ltd. (“NetCents”), a private Alberta corporation engaged in the development and implementation of a then unique and secure electronic payment system for online merchants and consumers. The LOI provided for a period of due diligence which was intended to lead to a formal agreement whereby the Company would acquire 100% of the issued and outstanding capital of NetCents. Clayton Moore, an officer and director of our Company until March 5, 2015, and Ryan Madson, an officer of our Company until January 2, 2015, were shareholders of NetCents and Mr. Moore was the president and director of Net Cents.

 

On November 4, 2011, Clayton Moore was appointed as a director, president and chief executive officer of our Company, Steven Allmen was appointed a director, Ryan Madson was appointed chief operating officer, Tom Locke was appointed as a director, chief financial officer, secretary and treasurer, and John Kaczmarowski was appointed chief technical officer.

 

On December 15, 2011, we entered into a share exchange agreement with NetCents and the selling shareholders of NetCents (“Share Exchange Agreement”). Pursuant to the terms of the Share Exchange Agreement, our Company and NetCents agreed to engage in a share exchange which, if completed, would result in NetCents becoming a wholly owned subsidiary of our Company. However, this transaction never in fact closed and on November 12, 2014 the Company announced that the proposed merger agreement between On4 Communications, Inc. and NetCents Systems Ltd. had been officially rescinded. Effective July 23, 2012, Tom Locke resigned as chief financial officer, secretary, treasurer and as a director of our Company.

 

By March 5, 2015 there was a total change in management with the resignations of Mr. Steve Allmen, Mr. Ryan Madson and Mr. Clayton Moore, and the appointment of on March 5, 2015, of Mr. Timothy J. Owens as the Company's President, Chief Executive Officer, Chief Financial Officer, Treasurer, and Director of the Company and the appointment on March 16, 2015 of Mr. Steve Dallas as the Company’s Secretary and Director. With this management change, the Company also changed its business model to finance the production, marketing and distribution of QwickMed (emergency medical kits) to non-profit organizations.

 

On June 4, 2015 the Company filed with the State of Delaware to increase its authorized capital to 5,030,000,000 shares, comprising 5,000,000,000 common shares of $ 0.0001 par value each and 30,000,000 preferred stock of no par value.

 

On September 28, 2015 the QwickMed license originally granted to the Company on March 5, 2015 was cancelled. On October 5, 2015, Timothy Owens resigned as Director, CEO, President and Treasurer and Steve Dallas resigned as Director and Secretary.

 

On October 9, 2015 Giorgio Johnson was appointed Director and acting CEO. The prior QwickMed business plan was abandoned and a new business plan was to be developed focused on the production of selective Apps and related platforms. However, on March 9, 2016 Giorgio Johnson resigned as an Officer and Director of the Company. The Company’s previous business plan, under Mr. Johnson’s direction, was then abandoned without additional cost to the Company.

 

  F-14  

 

 

On March 9, 2016 Mr. Steve Berman was appointed Chief Executive Officer and Director of the Company. With his appointment, the Company began to aggressively pursue other business opportunities to produce a profitable business model going forward,

 

On November 4, 2016 the Company acquired a 49% equity/ownership stake in Family Mobil Safety (“FMS”) Marketing, the distributor of a safe driving App. Under terms of the deal, FMS and their global distribution network of the drive safe app remains fully operational and continues as a standalone brand following the close of the acquisition. The FMS safe driving app is intended to do a number of things to keep attention on the road while you're driving and not on your smart phone. As soon as the FMS app detects that the vehicles wheels are in motion the App will be programmed to automatically shut down all voice and social media for safe, distraction-free driving.

 

On December 9, 2016 the Company acquired a Forty-Nine Percent (49%) Joint-Venture equity/ownership stake in Digital Media Management & Consulting (“DMCC”) a fast-rising digital signage privately-held company headquartered in New York, NY. The DMCC platform supports advanced implementation of electronic sell-through and content advertising supported networks. 

 

On September 1, 2017 the Company acquired, from the Company’s CEO, the remaining 51% share of the FMS Safe Driving App. business and IP. The acquisition price was $2 million, payable in cash, convertible promissory note and/or in stock. The cash portion is expected to be financed against the Company’s accounts receivable.

 

On September 7, 2017, the Company entered into a Settlement Agreement with Livingston Asset Management LLC, a Florida limited liability company (“LAM”), pursuant to which the Company agreed to issue certain common stock to LAM, in tranches, as necessary, in exchange for the settlement of certain past-due obligations and accounts payable of the Company acquired by LAM (the “LAM Assigned Accounts”). Such past-due obligations and accounts payable contained in the Settlement Amount covered approximately $1.6 million of the Company’s obligations, which LAM had settled with the Company’s creditors at an overall discount of approximately 45%, resulting in a net settlement of approximately $ 886,000.

 

On September 26, 2017, the Circuit Court of Baltimore County, Maryland (the “Court”), entered an Order Granting Approval Of Settlement Agreement And Stipulation (the “LAM Order”) approving, among other things, the fairness of the terms and conditions of an exchange of the Company’s common stock to settle the LAM Acquired Accounts, pursuant to Section 3(a)(10) of the Securities Act of 1933, as amended (the “Securities Act”), in the matter entitled Livingston Asset Management LLC v. On4 Communications, Inc. (the “LAM Action”). The LAM Order provided for the full and final settlement of the LAM Action. The Settlement Agreement became effective and binding upon the Company and LAM upon execution of the LAM Order by the Court on September 26, 2017.

 

Pursuant to the terms of the Settlement Agreement approved under the LAM Order, the Company agreed to issue to LAM shares (the “LAM Settlement Shares”) of the Company’s common stock, $0.0001 par value (the “Common Stock”) at a forty five percent (45%) discount. The Settlement Agreement provided that the LAM Settlement Shares could be issued in one or more tranches, as necessary, sufficient to satisfy the LAM Settlement Agreement through the issuance of freely trading securities, exempt from registration, issued pursuant to Section 3(a)(10) of the Securities Act. A total of 610 million common shares were issued in various tranches by the Company, which LAM realized total proceeds, net of direct selling costs, of approximately $1.61 million, at an overall average sales price of $ 0.002641 per share. LAM retained 45% of these net proceeds ($ 724,893) as its administrative, legal and handling fees, and the balance of $885,980was used in settlement with outstanding creditors participating in the program.

  F-15  

 

On November 7, 2017 the Board of Directors approved a Plan of Conversion whereby it is the Company’s intent (“On4-Delaware”) to convert its present domicile in the state of Delaware to a new corporation with the same name to domiciled and incorporated in the state of Colorado (“On4-Colorado”). Each of the On4-Delaware present common and Series “A” preferred shares would to be converted into an equal number (1 for 1 ) of fully paid shares in those same stock classes of On4-Colorado. In accordance with this Plan, On4 Communications, Inc.(“On4-Colorado”) was duly incorporated in the state of Colorado on December 15, 2017 with the same number of authorized shares, being of 5 billion common shares and 30 million “Series A” preferred shares. Also on December 15,2017 Hexagon Holdings Corporation (“HHC”) was incorporated in Colorado with an authorized share capital of 4 billion common shares and 20 million Series “A” preferred shares of $0.0001 par value each. The HHC Series “A” preferred shares are entitled to receive a preferential dividend of 10% annually and each preferred share is entitled to 200 votes per preferred share, together with the right to convert each one Series “A” preferred share to 200 common shares. The Plan anticipates that all of the issued and outstanding stock of the new On4 Communications, Inc. Colorado would be exchanged for an equal number (1 for 1) of shares and class in Hexagon Holdings Corporation (except that Steve Berman has indicated his intention to surrender to Treasury 1.4 billion of the common shares that he holds). Concurrently, Hexagon Holdings Corporation intends to apply to FINRA for a new symbol and CUSIP number, and it is planned for Hexagon Holdings Corporation to become the successor operating business going forward after FINRA approval has been received. At the date of this filing however, none of the above plan has been implemented, such that the Company’s domicile remains with Delaware at this point.

 

During the 12 months ended October 31, 2018 the Company invested a total of $1,045,000 towards the purchase price of $ 2.6 million to acquire CogoSense Technology,Inc., a Canadian company, which has developed and is selling its FleetSafer App – an enterprise software solution for smart phones and tablets that detects the driving state of an entire on-the-road vehicle fleet and automatically places those devices into “safe mode” while driving occurs, to prevent distractions. CogoSense has also developed an individual consumer version called bSafeMobile and the bFoundMobile App which is a fleet vehicle tracking system to monitor vehicle locations at any time.

 

On September 14 2018 the Company announced that it has signed a letter of intent to purchase 75% of a craft Cannabis company called Sifthouse BC for a total consideration of $ 1 million contingent upon Sifthouse BC obtaining a license to distribute Cannabis related product in Canada. Sifthouse is a craft Cannabis company and a new business based in Vancouver. Their plan is to grow highly profitable, specialty blends of cannabis. Terms of financing are being worked out. The Company’s investment commitment to date is $100,000.

 

2: Summary of Significant Accounting Policies

 

Basis of Presentation

These annual unaudited financial statements of On4 Communications, Inc. (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States and contain all normal recurring accruals and adjustments that, in the opinion of management, are necessary to present fairly the Company’s financial position at October 31, 2018, and the results of its operations and cash flows for the 12 months ended October 31, 2018 and October 31,2017 respectively.

 

Cash

At October 31, 2018 the Company had a cash balance of $117,285 compared with a cash balance of $ 44,321 at October 31,2017.

 

Trade Accounts Receivable

Accounts receivable arise from the Company’s sales of the Cogosense and FMS safe driving Apps and its net share of sales derived by Digital Media Management & Consulting, less payments received to date. Receivables are supported by executed sales contracts with customers.

 

Investment in Family Mobile Safety (“FMS”)

On September 1, 2017 the Company acquired, from the Company’s CEO, the remaining 51% share of the FMS Safe Driving App. business and IP. The acquisition price was $2 million, payable in cash, convertible promissory note and/or in stock. The cash portion is expected to be financed against the Company’s accounts receivable. At October 31, 2018 the Company reflected and equal non-current liability to the Company’s CEO of $ 2 million.

 

Investment in CogoSense Technology, Inc.

On August 17,2017 the Company entered into a non-binding Letter of Intent to purchase 100% of CogoSense Technology, Inc., a Canadian company, for total consideration of $ 2.6 million. CogoSense has developed and is selling its FleetSafer App – an enterprise software solution for smart phones and tablets that detects the driving state of an entire on-the-road vehicle fleet and automatically places those devices into “safe mode” while driving occurs, to prevent distractions. CogoSense has also developed an individual consumer version called bSafeMobile and the bFoundMobile App which is a fleet vehicle tracking system to monitor vehicle locations at any time. At October 31, 2018 the Company had paid a total of $ 1.045,000 towards the overall purchase price, which consideration includes the IP, technology assets, revenue stream and customer base of CogoSense.

 

Fixed Assets

The Company has fully amortized its fixed assets.

  F-16  

 

 

 

Revenue Recognition

The Company recorded sales totaling $4,551,116 for the 12 months ended October 31, 2018 arising primarily through the sale of the FMS safe driving App and the CogoSense Apps, and secondarily through the Company’s Joint-Venture equity/ownership stake in Digital Media Management & Consulting (“DMCC”), based on executed customer contracts.

 

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions (if any) that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Provision for Income Taxes

At this time, no provision for the payment of income taxes is required on the results of the Company’s operations through October 31, 2018. The Company has approximately $ 14 million of net operating losses carried forward to potentially offset taxable income in future years, which expire commencing in calendar 2026.

 

Current Liabilities

During the quarter ended January 31, 2018 Management reassessed the validity ( or otherwise) of certain accounts payable and other liabilities which were primarily inherited from past management dating back prior to 2015. In doing so, Management believed that such brought forward liabilities totaling $1,286,068 were no longer reasonably enforceable, and accordingly they have been written off to Additional Paid-In Capital.

 

The Company’s liabilities at October 31 2018 and 2017 are as follows: 

Accounts payable totaled $ 112,495 and $ 1,520,782 at October 31, 2018 and October 31,2017 respectively (the decrease is mainly attributable to the write off of unenforceable payables explained above). Accrued interest expense on debt payable totaled $ 83,873 and $ 44,796 at October 31, 2018 and October 31, 2017, respectively. Notes Payable totaled $ 106,549 and $400,529 at October 31, 2018 and October 31, 2017 respectively.

 

Convertible notes payable amounted to $ 348,633 and $ 155,633 at October 31, 2018 and October 31 2017 respectively. The increase related to new convertible notes totaling $288,000 payable to Machiavelli Ltd LLC, which carry interest at the rate of 10% annum and which are convertible at a rate of 50% of the average market price of the Company’s common stock based on the lowest 3 intraday trading prices quoted by OTCMarkets during the 10 day trading period prior to conversion.

 

Stockholders’ Equity

Stockholders’ equity at October 31,2018 totaled $ 3,388,091 which represented a book value per common share issued of $ 0.00075. The compares with a shareholders’ deficit of $ (990,316) at October 31,2017 (see page 8 for favorable changes).



3. Going Concern

 

These financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets, collection of its accounts receivable of $4,851,862 at October 31,2018 and discharge its liabilities in the normal course of business. While the Company is presently operating profitably, its continuance as a going concern may be dependent upon its ability to obtain additional equity and/or debt financing. These financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern, which in turn may be dependent upon obtaining additional working capital necessary to accomplish its objectives. Management continues to seek funding and equity financing, to raise additional working capital and investment resources.

 

4. Contingent Obligations/Liabilities

 

(1) The Company entered into an Employment Agreement with Mr. Berman as of March 9, 2016 which provides compensation to Mr. Berman at the rate of $10,000 per month and which grants Mr. Berman the right to acquire up to 50,000,000 of the Company’s restricted common shares at a price of $0.0001 per share, plus the grant of 70,000,000 stock options exercisable at the rate of 2,500,000 common shares per calendar quarter over 7 years at a price equal to the lowest daily trading price in the previous quarter. Through July 31,2017 he was also entitled to receive a profit incentive bonus by way of sales commissions equal to 25% of the value of all new executed contracts, net of any payments to outside services, derived by the Company from such new contracts. Mr. Berman voluntarily agreed to reduce his commission rate commencing August 1, 2017 to 12.5%. The Company has the right to terminate Mr. Berman’s Employment Agreement at any time upon payment of 6 months’ salary payable in 16 monthly installments following termination.

 

(2) On December 15,2016 LG Capital Funding, LLC (one of the Company’s convertible note holders) commenced an action against the Company claiming that it had been prevented from converting a remaining principal balance of $ 1,500 and accrued interest thereon of $ 1,013 into common shares of the Company at the then contracted 50% discount to market stock price. LG additionally claimed $ 45,239 in compensatory damages and $ 11,344 in legal fees and costs. The Company filed a motion to vacate the alleged default, which in turn was challenged by LG Capital. A judgement in favor of LG Capital for $54,543 was issued by the Eastern District Court of New York on September 25, 2018. However, this order was appealed by the Company on October 12, 2018, with a further continuance filed on November 14, 2018. Settlement of this matter is therefore subject to further discussion and negotiation between the parties.

 

  F-17  

 

     

Item 4. Exhibits

INDEX TO EXHIBITS

Description Item Exhibit

 

Articles of Incorporation* Item 17.2 1A-2A
Bylaws* Item 17.2 1A-2B
Form of Subscription Agreement Item 17.4 1A-4
Employment Agreement with Steve Berman Item 17.6 1A-6
Legal Opinion of Matheau J. W. Stout Item 17.12 1A-12

 

 * Filed previously

 

SIGNATURES

Pursuant to the requirements of Regulation A, the issuer has duly caused this special financial report on Form 1-A to be signed on its behalf by the undersigned, thereunto duly authorized, in Los Angeles, California on November 15, 2019

 

ON4 COMMUNICATIONS, INC.

 

By: /s/ Steve Berman

Chief Executive Officer and Director
On4 Communications, Inc.
November 15, 2019

 

 

Pursuant to the requirements of Regulation A, this report has been signed below by the following persons on behalf of the issuer in the capacities and on the dates indicated.

 

Signature

 

By: /s/ Steve Berman

Chief Executive Officer and Director
On4 Communications, Inc.

November 15, 2019

 

 

PART III: EXHIBITS

  35  

SUBSCRIPTION AGREEMENT

BETWEEN 

AND

ON4 COMMUNICATIONS, INC.

 

This SUBSCRIPTION AGREEMENT (this “Agreement”) effective ___________________, by and between, ON4 COMMUNICATIONS, INC. A Delaware Corporation (the “Seller”) and _________________________ (the “Purchaser”) with respect to the following facts and circumstances:

 

A. Seller publicly traded Delaware Corporation, (“the Company”), and,

 

B. Purchaser desires to purchase the Securities at the purchase price and subject to the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements, representations and warranties set forth herein, each of the parties hereto hereby agrees as follows:

 

1.1 Purchase of Common Stock.

 

a)       Purchase. Subject to the terms and conditions of this Agreement, Seller hereby agrees to sell to Purchaser the Securities, _____________________ shares at per share of $ _________ per shares and the Purchaser gives notice that Purchaser wishes to purchase said shares.

 

b)       Receipt of Information: Purchaser represents that it has received all of the information it considers necessary or appropriate for deciding whether to purchase the Shares. The Purchaser further represents that it has had the opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the purchase of the Shares and the business, properties, prospects and financial condition of the Company and to obtain additional information necessary to verify the accuracy of any information furnished to him which he has access.

c)       Purchase Entirely For Own Account: The Purchaser represents that the Shares to be purchased will be acquired for investment purposes for its own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof. 

 

1.2 Delivery of Securities. The Securities shall be transferred upon payment by Purchaser to Seller at (the “Issue Date”), to the Purchaser.

 

1.4 Further Assurances. Each of the parties hereto shall execute any and all further documents and writings and perform such other reasonable actions that may be or become necessary or expedient to effectuate the purchase of the Securities as contemplated hereby.

 

  1  

 

 

      2. Representations, Warranties and Covenants of Seller.

 

2.1 As an inducement for Purchaser to enter into this Agreement, as of the date hereof and as of the Issue Date, Seller represents, warrants, and agrees as follows:

 

2.1.1 This Agreement has been or, as of the Closing Date, will have been duly executed and delivered by Seller and constitutes or, upon execution, will constitute a legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms (except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar laws affecting creditors' rights generally and by limitations on the availability of equitable remedies).

 

2.1.2 On the Issue Date, Seller will deliver the Securities free and clear of any liens, claims, security interest or other encumbrances created by or through Seller, and Seller has full power and right to issue the Securities pursuant to the terms hereof. On and at all times after the Issue Date, all of the Securities shall be duly authorized, validly issued, fully paid, and non-assessable.

 

3. Representations, Warranties and Covenants of the Purchaser. The Purchaser hereby represents, warrants and covenants to the Company and each officer, employee and agent of the Company that The Purchaser is an “accredited investor” within the meaning of SEC Regulation D, as presently in effect.

 

 

(a)     The Purchaser has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Securities.

 

(b)     The Purchaser recognizes that this investment in the Securities involves a high degree of risk which may result in the loss of the total amount of his/her investment. The Purchaser acknowledges that it has carefully considered all risks incident to the purchase of the Securities and that he/she has been advised and is fully aware that an investment in the Company is highly speculative.

 

(c)     The Purchaser is acquiring the Securities for its own account (as principal) or for the account of his spouse (either in a joint tenancy, tenancy by the entirety or tenancy in common) or for his family trust for investment and not with a view to the distribution or resale thereof.

 

(d)      The Purchaser is aware that it must bear the economic risk of its investment in the Securities for an indefinite period of time because the Securities have not been registered under the Securities Act of 1933, as amended, or under the securities laws of any state, and therefore cannot be sold unless they are subsequently registered under the Securities Act of 1933, as amended, and any applicable state securities laws or unless an exemption from such registration is available and, further that only the Company can take action to register the Securities and the Company is under no obligation and do not propose to attempt to do so.

 

  2  

 

(e)     The Purchaser represents that it has never been guaranteed or warranted to the undersigned by the company, its officers or directors or by any other person, expressly or by implication, that the undersigned will receive any approximate or exact amount of return or other type of consideration, profit or loss as a result of any investment in the Securities; or that the past performance or experience on the part of the Company, any director, officer or any affiliate, will in any way indicate or predict the results of the ownership of Securities or of the overall success of the Company.

 

(f)     The Purchaser understands and agrees that the following restrictions and limitations imposed by the Securities Act of 1933, as amended, and by applicable state securities laws, are applicable to his/her purchase and the resale, assignment, pledge, hypothecation or other transfer of the Securities:

 

(i)                   The Purchaser agrees that the Securities shall not be sold, assigned, pledged, hypothecated or otherwise transferred unless they are registered under the Securities Act of 1933, as amended, and applicable state securities laws or unless an exemption from such registration is available.

 

(ii)                 A legend in substantially the following form will be placed on each Certificate and will be placed on any certificate(s) or other document(s) evidencing the Securities:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THESE SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS SUCH TRANSACTION IS DULY REGISTERED UNDER THE ACT OR UNLESS IN THE OPINION OF COUNSEL FOR THE COMPANY SUCH TRANSACTION IS EXEMPT FROM THE REGISTRATION PROVISION OF THE ACT. THE SALE, IF ANY, OF THESE SECURITIES SHALL BE GOVERNED BY THE PROVISIONS OF RULE 144 OR ANY OTHER RULE PROMULGATED BY THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

(iii)                Stop transfer instructions have been or will be issued with respect to the Securities so as to restrict the resale, assignment, pledge, hypothecation or other transfer thereof.

 

 

4. Indemnification. The undersigned acknowledges that he/she understands the meaning and legal consequences of the representations, warranties and covenants set forth in Section 3 hereof and that the Company has relied and will rely upon such representations, warranties, covenants and certifications, and he/she hereby agrees to indemnify and hold harmless the Company and its respective officers, directors, controlling persons, agents and employees, from and against any and all loss, damage or liability, joint or several, and any action in respect thereof, to which any such person may become subject due to or arising out of a breach of any such representation, warranty or covenant or the inaccuracy of such certifications. Notwithstanding the foregoing, however, no representation, warranty, acknowledgement, or agreement made herein by the undersigned shall in any manner be deemed to constitute a waiver of any rights granted to him/her under federal or state securities laws.

 

5. Miscellaneous.

 

5.1 All representations and warranties of Seller made under Section 2 of this Agreement shall survive for a period of one (1) year from execution hereon.

 

5.2 This Agreement constitutes the entire agreement among the parties and supersedes all prior agreements, representations, warranties, statements and understandings, whether oral or written, with respect to the subject matter hereof.

 

  3  

 

5.3 This Agreement shall be governed by the laws of the State of Delaware, without giving effect to the conflict of law provisions thereof.

 

5.4 This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assign. This Agreement and the rights and obligations of the parties hereto shall not be assignable by any party hereto without the written consent of the other parties hereto.

 

5.5 The validity, legality, or enforceability of the remainder of this Agreement shall not be affected even if one or more of the provisions of this Agreement shall be held to be invalid, illegal, or unenforceable in any respect.

 

 

5.6 None of the terms or provisions of this Agreement shall be modified, waived, or amended, except by a written instrument signed by the party against which any modification, waiver, or amendment is to be enforced.

 

5.7 This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first written above.

 

Seller acknowledges receipt of funds this _________________day of ____________2019.

 

 

 

SELLER:     PURCHASER:
       
       
ON4 COMMUNICATIONS, INC.      
       
       
       
       
       
       
Steve Berman, CEO      

 

 

  4  

 

 

EMPLOYMENT AGREEMENT

 

This Agreement made as of march 9 2016, (the “Effective Date”) by and between Steve Berman (the “Employee”), and On4 Communications, Inc., (the “Company”) located at the address set forth below.

 

WITNESSETH:

 

WHEREAS, Company wishes to employ Employee and Employee wishes to be employed by Company, all on the terms and conditions contained herein.

 

NOW, THEREFORE, in consideration of the mutual covenants of the parties hereafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.             ENGAGEMENT: Subject to the provisions of this Agreement the Company agrees to engage the Employee to perform and Employee agrees to perform services, upon the terms and conditions herein specified.

 

2.             TERM: The term of this Agreement (the “Term”) shall commence on the Effective Date, and shall continue for a term of forty eight months is subject to termination, extension, and automatic termination as set forth hereunder.

 

3.             DUTIES AND RESPONSIBILITIES

 

a)           Duties. Employee agrees to perform all of the functions and duties generally associated with the position of Senior Executive of the publicly traded company On4 Communications, Inc., upon the terms and conditions herein specified, to the best of Employee’s ability.

 

Core Responsibilities:

 

●          Responsible for the efficient management of the multi-location Services, and Operations while ensuring compliance with regulatory compliance/ procedures.

●          Promoting consistency, continuity and cooperation amongst the production units and assisting in establishing, monitoring and delivering measurable results based on the company’s strategic plan.

●          Overall accountability for effective operations and sales levels that meet external and internal stakeholder requirements along with proactive business plan execution that results in meeting the financial goals of the company’s strategic plan.

●          Manages subordinates’ production priorities and performance objectives by mentoring, coaching and providing performance feedback based on the implementation and achievement of the financial goals of the company.

●          Accountable for the financial success of through the fiscal management of all its units, the development of financial margin controls, budget and project risk management, the adherence to production standards and the management of strict financial guidelines for projects.

 

1

 

 

b)          Location of Services. Employee further agrees to attend all reasonably necessary meetings at such places that may be deemed reasonably necessary for the performance of Employee’s duties, hereunder.

 

c)          Outside Interests. It is understood employee has investments and interest in other business. Those interest shall never interfere with the employee employment per this contract.

 

4.            COMPENSATION: As full and complete consideration for Employee’s Services and Employee’s undertakings hereunder, and for all rights granted to Company hereunder, and subject to Employee’s full compliance with the terms and conditions of this Agreement, Company agrees to pay Employee as follows:

 

a)          Fixed Compensation: The Employee’s fixed compensation shall be based on a monthly salary of Ten Thousand ($10,000.00) payable monthly.

 

b)          Benefits: During the term, Employee shall be entitled to receive all benefits of employment, if any. The Company reserves the right to modify, suspend, or discontinue any and all benefits offered by the Company at any time without notice to or recourse by Employee, so long as such action is taken generally with respect to other similarly situated persons and does not single out Employee.

 

c)          The Fixed Compensation, if any, shall be subject to standard withholding taxes as mandated by federal, state and local authorities.

 

d)          Stock Incentive: The Employee shall also have the right to purchase fifty Million (50,000,000) shares of common stock at par value of the Company’s Common Stock at a price of .0001. These share will be restricted shares of common stock. 

The employee shall also be granted 2.500.000 shares of stock every quarter on the 15 day of the following month ie june 15 sept 15 dec 15 march 15.

 

e)          Profit Incentive: The Employee and or his designee shall receive a bonus of 25% overriding royalty in all new conracts started after the execution of this agreement. This amt will be net of any payments to any outside services and be payable on the 15th of the following month ie payable on net to company,

 

TERMINATION NOTICE TO EMPLOYEE:

 

a)          Notwithstanding any provision of this Agreement to the contrary, the employment hereunder shall terminate on the first to occur of the following:

 

2

 

 

(i)          the date of the Employee’s death;

 

(ii)         the date on which Company or the Secured Creditors give the Employee notice of termination for Cause (as defined below) (subject to any applicable cure period);

 

(iii)        Thirty (30) days after the Employee delivers written notice of his resignation to Company; or

 

(iv)        the execution of a permanent employment agreement;

 

(v)         any mutually agreed upon time.

 

b)            Company shall have the right, in its sole discretion, to terminate the Employee for Cause. For purposes of this Agreement, “Cause” shall mean the occurrence of any of the following, as reasonably determined by the Board of Directors:

 

(i)          the willful failure or refusal or the continued failure, in the reasonable judgment of the Secured Creditors, by the Employee to perform and discharge his material duties and responsibilities under this Agreement, or any breach by the Employee. If such failure, refusal or breach is not cured within Thirty (30) days of written notice to Employee, which notice specifically identifies the conduct complained of, Company may terminate employment for Cause; or

 

(ii)          the willful engaging by the Employee in conduct which in the opinion of the Secured Creditors is demonstrably damaging to the Company; or which violates any federal or state securities laws or regulations or causes any censure of Company; or

 

(iii)         the conviction of the Employee (or the entering by the Employee a pleas of guilty or nolo contendere) for (i) any felony, (ii) any misdemeanor involving moral turpitude, or (iii) any crime involving Company, its property, any of Company’s subsidiaries or affiliates, or any of their respective property.

 

c)            In the event the Employment is terminated because of death pursuant to Paragraph 5(a)(i) hereof, the Employee or his estate, legal representative or designated beneficiary, as the case may be, shall be entitled to payment of any earned but unpaid compensation, upon the date of death, without annualization and through the date of termination (collectively, the “Accrued Salary”) paid in one lump sum within Sixty (60) days from the date of death.

 

d)            Upon the termination of the Agreement, Employee shall immediately:

 

(i)          return all property of the Company to the Board of Directors, or their designate, including but not limited to manuals, client lists, employee files and all Confidential Information described in Paragraph 9(b);

 

(ii)         vacate the property of the Company;

 

(iii)        cease and desist all contact with clients, vendors and employees of the Company; and

 

3

 

 

(iv)        assist the transition of the successor as reasonably requested by the General Manager for a period of not less than Thirty (30) days.

 

e)            Company shall have the right, in its sole discretion, to terminate the Employee who becomes disabled. Subject to the provisions of the Operating Agreement, upon the permanent disability of Employee (the “Disabled Employee”) as defined below, and upon written notice of such permanent disability, (the “Event”) Company and the Disabled Employee hereby agree as follows:

 

(i)          “Disability” in this Agreement shall mean the inability of a person to perform his normal employment responsibilities for six (6) consecutive months or twelve (12) months out of any eighteen (18) month period. The Employee agrees to submit to such medical examinations as may be necessary to determine whether a Disability exists, pursuant to reasonable requests which may be made by Company from time to time. The refusal of the Employee to submit to such requests for examination will result in the presumption that the disability does exist.

 

(ii)          In the event the Employment is terminated because of Disability the Employee shall be entitled to payment of Accrued Salary paid in one lump sum within Sixty (60) days from the end of the date of termination because of Disability.

 

f)            Golden Parachute: Company shall have the right, in its sole discretion, to terminate the Employee for any reason. In the event the Company elects to terminate the Employee, the Employee shall receive a maximum of 6 months of salary, this amount shall be paid in sixteen month installment after terminate and guaranteed by the parent corporation. On4 Communications, Inc. also acknowledge that the employee guaranteed a loan for the benefit of the company personal and Paradigm will assume the liability of making loan payments to the investor and shall reimburse the employee for any cost he may incur regarding this loan.

 

6.            TRAVEL AND EXPENSES: Company shall reimburse Employee for any necessary travel or other expenses incurred in the performance hereinabove specified provided such expenses constitute proper business deductions from taxable income for Company and are excludable from taxable income to Employee under the Internal Revenue Code and governing regulations. In addition, the Company is responsible for all other expenses Employee incurs related to On4 Communications, Inc. including Employee’s cell phone, notwithstanding if such cell phone is also used for personal usage and for mileage on Employee’s personal vehicle at a rate of Fifty Cents ($0.50) per mile and for fuel costs.

 

7.            TRADE SECRETS: Employee shall not disclose Company’s trade secrets, learned in the scope of Employee’s employment nor use them in any way prior to the Term of employment, during the Term of employment or thereafter, except as required by operation of law. For the purpose of this Agreement, “trade secrets” is defined as information not readily available to, or accessible by, the general public or the internet community.

 

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8.            RESTRICTIVE COVENANTS/PROTECTION OF CONFIDENTIALITY:

 

a)            Restrictive Covenants. It is agreed that Employee’s services hereunder are of a special, unique and extraordinary character and are vital to the future success and viability of Company. Employee acknowledges that Employee’s compensation is partly in consideration of and conditioned upon Employee agreeing to the covenants contained in this Paragraph and that the restrictions set forth herein are a material inducement to Company’s agreement to employ Employee hereunder. Accordingly, Employee agrees that as long as Employee shall remain a Employee of Company and for a period of One (1) years thereafter, Employee will not directly or indirectly, individually, or through any other person or corporate or other business entity, except on behalf of Company:

 

(i)          Employ, engage or solicit (or attempt to employ, engage or solicit) any person who at that time is, or at any time during the preceding One (1) year period was, in the employ of Company either as an Employee or an independent contractor, or

 

(ii)         Solicit business from any client (as defined below) or render any services to or for any client, in each case whether or not the relationship between Company and such clients was originally established in whole or in part through Employee’s efforts; or

 

(iii)        Attempt in any manner to persuade any client to cease or to reduce the amount of business which such client has customarily done or contemplates doing with Company.

 

Employee acknowledges that because of the nature of the business engaged in by Company and the fact that Clients can be and are serviced by Company wherever located, it is impractical and unreasonable to place a geographic limitation on the above covenants and the restrictions set forth herein are reasonable and necessary to protect Company’s interest.

For the purpose of this Paragraph, the term “client” shall mean, any person or entity (A) who is then a client of Company; (B) who was a client of Company, at any time during the One (1) year period immediately preceding the Determination Date (as defined below); and (C) to whom Company had made a presentation within a period of one (1) year immediately preceding the Determination Date (i.e. prospective client); the term “Determination Date” means, as applicable, the date of termination of Employee’s employment, or if Employee’s employment shall not have terminated, the date of the prohibited conduct described in Section 5 (b).

The Company acknowledges that it wishes only to limit Employee’s right to compete only to the extent necessary to protect the Company from unfair competition. The Company further acknowledges that: (1) Employee will be able to earn a livelihood in his profession as a business coach and consultant without violating the foregoing restrictions and (2) that his ability to earn a livelihood as a business coach and consultant without violating such restrictions is a material condition to Employee’s executing this Agreement.

 

5

 

 

b)            Confidentiality. Employee also agrees that, during and after the term of Employee’s employment, Employee will not disclose to any person or entity any Confidential Information or proprietary information or ideas of Company or any client, prospective client or former client of Company or directly or indirectly, individually, or through a corporation or other business entity, utilize any such Confidential Information or proprietary information or ideas for Employee’s own benefit, or for the benefit of any third party. “Confidential Information” shall be defined as any nonpublic information disclosed by one party to the other party and shall be deemed to include the following information of the respective parties, without limitation: (a) e-mail addresses, customer lists, the names of customer contacts, business plans, technical data, product ideas, personnel, contracts and financial information; (b) patents, trade secrets, techniques, processes, business methodologies, schematics, Employee suggestions, development tools and processes, computer printouts, computer programs, design drawings and manuals, and improvements; (c) information about costs, profits, markets and sales; (d) plans for future development and new product concepts; (e) all documents, books, papers, drawings, models, sketches, and other data of any kind and description, including electronic data recorded or retrieved by any means, that have been or will be disclosed, as well as written or oral instructions or comments.

 

c)            Injunctive Relief. Employee agrees that any breach or threatened breach of restrictions set forth in this Paragraph will result in irreparable injury to Company for which it shall have no meaningful remedy in law and Company shall be entitled to injunctive relief in order to enforce the provision thereof, without being required to post a bond or other security. In addition, Company may take all such other actions and remedies available to it under law or in equity and shall be entitled to such damages as it can show it has sustained by reason of such breach. If any provision of this Paragraph of this Agreement is found to be unreasonably restrictive by a court of competent jurisdiction, then such provision shall me modified by such court so as to apply such provision to the maximum extent allowed by law, without affecting the validity of any other provision of this Agreement.

 

9.            ARBITRATION: Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be settled by arbitration and by a neutral arbitrator to be chosen by both parties, and the parties hereby agree to be bound by the results. Such arbitration shall be held before the American Arbitration Association in accordance with their rules and procedures. Payment of arbitration fees is to be decided by the arbitrator and judgment upon the award rendered may be entered in any court possessing jurisdiction of arbitration awards.

 

10.          BINDING AGREEMENT: This Agreement is a binding agreement between Company and Employee, inuring to the parties respective personal and legal representatives, successors and permitted transferees and assigns.

 

11.          NOTICES: All notices shall be in writing and shall be personally delivered, or sent by Certified Mail-Return Receipt Requested. All notices to Company shall be sent to On4 Communications, Inc. at the location to_________________________. All notices to Employee shall be sent to the location set forth below.

 

Steve Berman  
24 flamingo rd n   
East Hills NY  
11576  

 

6

 

12.          BREACH: No breach of this Agreement by any party shall be deemed material unless the offended party shall give written notice of such breach, and the offending party shall have failed to cure the breach within Five (5) business days after receipt of such notice, or commenced to cure with reasonable diligence if such breach is not capable of being fully cured within Five (5) days.

 

13.          COUNTERPARTS/FACSIMILE: This Agreement may be executed in counterparts, each one of which will be deemed to be an original, and it may be executed and delivered by facsimile transmission.

 

14.          SEVERABILITY: If, for any reason any provision of this Agreement is held invalid, the other provisions of this Agreement will remain in effect.

 

15.          ASSIGNMENT: Employee acknowledges that the services to be rendered are unique and personal. Accordingly, the Employee may not assign any of these rights or delegate any of his duties or obligations under this Agreement. The rights and obligations of Company under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of Company.

 

16.          ENTIRE AGREEMENT: This Agreement constitutes the entire Agreement between Employee and Company with respect to the subject matter and supersedes any and all prior understandings, written or oral. Further, no amendments or additions to this Agreement shall be binding unless in writing and signed by the party to be charged. This Agreement shall be construed, interpreted and enforced under and in accordance with the laws of the State of New York

 

IN WITNESS WHEREOF, the parties have executed this Agreement on the date set forth in the introduction hereto.

           
EMPLOYEE:   On4 Communications, Inc.
     
By:     By:  
     
Steve Berman   Name: Giorgio Johnson
     
Address:  24 Flamingo Rd N    Title: CEO
Roslyn Ny 11576    
     
Date: 3/10/16   Date: 3/9/16

 

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Board also allows employee to hire one admin for up to $5000 per month and lease one van or SUV to be used in delivering units to various places around the tri state area.

 

Board also authorizes CEO to find office space for company at no greater than $3,000 per month for a 12 month period.

 

8

Stout Law Group, P.A.

201 International Circle, Suite 230

Hunt Valley, Maryland 21030

 

 

November 15, 2019

Steve Berman

Chief Executive Officer

On4 Communications, Inc.

1875 Century Park East, 6th Floor
Los Angeles, CA 90067 

 

Re:           Offering Statement on Form 1-A (the "Offering Statement") 

 

Mr. Berman:

 

I have acted as counsel to On4 Communications, Inc. (the "Company") in connection with its filing with the Securities and Exchange Commission of an Offering Statement on Form 1-A (the “Offering Statement”), pursuant to Regulation A of the Securities Act of 1933, as amended (the “Act”). The Offering Statement relates to the proposed sale of up to 450,000,000 shares of common stock held by the Company (the “Shares”).

 

In connection therewith, I have examined and relied upon original, certified, conformed, photostat or other copies of (a) the Articles of Incorporation and Bylaws of the Company; (b) Resolutions of the Board of Directors of the Company; (c) the Offering Statement and the exhibits thereto; and (d) such corporate records of the Company, certificates of public officials, certificates of officers of the Company and other documents, agreements and instruments as I have deemed necessary as a basis for the opinions herein contained. In all such examinations, I have assumed the genuineness of all signatures on original documents, and the conformity to originals or certified documents of all copies submitted to us as conformed, photostat or other copies. In passing upon certain corporate records and documents of the Company, I have necessarily assumed the correctness and completeness of the statements made or included therein by the Company, and I express no opinion thereon.

 

Based on my examination mentioned above, I am of the opinion that the 450,000,000 shares of common stock being offered by the company, when sold, will be legally issued, fully paid and non-assessable.

 

I am an attorney admitted to practice in Maryland. I am familiar with the applicable provisions of the Delaware Revised Statutes, the applicable provisions of the Delaware Constitution and reported judicial decisions interpreting these laws, and I have made such inquiries with respect thereto as I consider necessary to render this opinion with respect to a Delaware corporation. This opinion letter is opining upon and is limited to the current federal securities laws of the United States and, Delaware law, including the statutory provisions, all applicable provisions of the Delaware Constitution and reported judicial decisions interpreting those laws, as such laws presently exist and to the facts as they presently exist. I express no opinion with respect to the effect or applicability of the laws of any other jurisdiction.

 

I hereby consent to the filing of this opinion as an exhibit to the Offering Statement and to the reference to my firm under the caption "Legal Matters" in the prospectus forming a part of the Offering Statement.  In giving such consent, I do not thereby admit that I am included within the category of persons whose consent is required under Section 7 of the Act or the rules and regulations promulgated thereunder.

 

Sincerely,

 

/s/

Matheau J. W. Stout, Esq.