Table of Contents

As filed with the Securities and Exchange Commission on December 28, 2017

Registration No.: 333-210960

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

AMENDMENT NO. 3 TO

POST-EFFECTIVE AMENDMENT NO. 1 TO

FORM S-1

REGISTRATION STATEMENT

UNDER THE SECURITIES ACT OF 1933

 

RC-1, INC.

(Exact name of registrant as specified in its charter)

 

Nevada 7948 26-1449268
(State or other jurisdiction of
incorporation or organization)
(Primary Standard Industrial
Classification Code Number)
(I.R.S. Employer
Identification Number)

 

110 Sunrise Center Drive

Thomasville, NC 27360

Phone 800.348.2870

(Address, including zip code, and telephone number,

Including area code, of registrant’s principal executive offices)

Copies to:

Kevin P. O’Connell

Chief Executive Officer

110 Sunrise Center Dr.

Thomasville, NC 27360

Phone #949-721-1725

(Name, address, including zip code, and telephone number,

Including area code, of agent for service)

Brad Bingham Esq.

The Bingham Law Group, APC

1106 Second St. Suite 195

Encinitas, California 92024

(760) 230-1617 Office

(760) 579-7699 Fax

As soon as practicable after the effective date of this Registration Statement.

(Approximate date of commencement of proposed sale to the public)

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: x

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act Registration Statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one)

  Large accelerated filer  o Accelerated filer  o
  Non-accelerated filer  o Smaller reporting company  x
  Emerging growth company  o  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act, as amended, or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to such Section 8(a), may determine.

     

 

 

EXPLANATORY NOTE

 

 

On April 27, 2016, we filed a registration statement with the Securities and Exchange Commission, or the SEC, on Form S-1 (File No.  333-210960 ) (the “Registration Statement”). The Registration Statement, as amended, was declared effective by the SEC on July 15, 2016 to initially register for resale by the selling stockholders identified in the prospectus an aggregate of 1,574,477 shares of our common stock, par value $0.0001 per share. This post-effective amendment is being filed to (i) include information from our Annual Report on Form 10-K for the year ended December 31, 2016 (the “Annual Report”) and for the nine month period ended September 30, 2017; and (ii) update certain other information in the prospectus relating to the offering and sale of the shares that were registered for resale on the Form S-1.

 

No additional securities are being registered under this post-effective amendment. All applicable registration and filing fees were paid at the time of the original filing of the Registration Statement.

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

The information in this prospectus is not complete and may be changed. We may not sell these securities until the Securities and Exchange Commission declares our registration statement effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

 

 

SUBJECT TO COMPLETION

 

PROSPECTUS

 

RC-1, INC.

1,574,477 Shares of Common Stock

 

Date of Prospectus:  December __, 2017

 

This prospectus relates to the resale by the selling stockholders of an aggregate of 1,574,477 shares of our common stock, par value $.001, per share, by the selling shareholders named in this prospectus in the section entitled “Selling Shareholders,” including their donees, pledgees, assignees, transferees and other successors-in-interest, whom we refer to in this prospectus as the “Selling Shareholders.” The shares of common stock are being registered to permit the selling stockholders to sell the shares from time to time in the public market at a price of $.25 per share. The stockholders may sell the shares through ordinary brokerage transactions, directly to market makers of our shares or through any other means described in the section entitled “Plan of Distribution". We cannot assure you that the selling stockholders will sell all or any portion of the shares offered in this prospectus.

 

Investing in these securities involves significant risks. Investors should not buy these securities unless they can afford to lose their entire investment.

 

We are an “emerging growth company” within the meaning of the recently enacted Jumpstart Our Business Startups Act and will be subject to reduced public company reporting requirements.

 

SEE “ RISK FACTORS " BEGINNING ON PAGE 9.

 

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

 

 

 

The date of this prospectus is December __, 2017.

 

 

     

 

 

 

TABLE OF CONTENTS

 

  Page #
PROSPECTUS SUMMARY 1
USE OF PROCEEDS 9
RISK FACTORS 9
THE OFFERING 15
DILUTION 15
PRICE RANGE OF COMMON STOCK 15
RELIANCE ON INFORMATION ONLY IN THIS PROSPECTUS 15
DIVIDEND POLICY 16
BUSINESS OF THE COMPANY 16
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION 24
MANAGEMENT 33
EXECUTIVE COMPENSATION 34
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 35
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 36
DESCRIPTION OF SECURITIES 37
PENNY STOCK 37
SELLING STOCKHOLDERS 38
PLAN OF DISTRIBUTION 41
LEGAL PROCEEDINGS 42
LEGAL MATTERS 42
FORWARD-LOOKING STATEMENTS 42
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES 43
EXPERTS 43
AVAILABLE INFORMATION 43
FINANCIAL STATEMENTS F-1

 

 

 

  i  

 

PROSPECTUS SUMMARY

 

The following summary is qualified in its entirety by reference to, and should be read in conjunction with, the more detailed information and financial statements (including the notes thereto) appearing elsewhere in this prospectus. Each prospective investor is urged to read this prospectus in its entirety. When used in this prospectus, the terms “Company,” “our,” “ours” and “us” refer to RC-1, Inc., unless otherwise specified or the context requires otherwise.

 

SUMMARY OF PROSPECTUS

 

Implications of Being an Emerging Growth Company

 

We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, or the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2013, or the JOBS Act. As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

 

We could remain an “emerging growth company” for up to five years, or until the earliest of (a) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (b) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (c) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three-year period.

 

We are also considered a "smaller reporting company," If we are still considered a "smaller reporting company" at such time as we cease to be an "emerging growth company," we will be subject to increased disclosure requirements. However, the disclosure requirements will still be less than they would be if we were not considered either an "emerging growth company" or a "smaller reporting company."

 

For more information, please see our Risk Factor entitled “ As an “emerging growth company” under the Jumpstart our Business Startups Act (JOBS Act), we are permitted to rely on exemptions from certain disclosure requirements.”

 

Decision to Go Public

 

The Company’s officers and directors believe that potential investors are more inclined to invest in the Company if the Company is subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which provides investors with update material information about the Company and the ability of the company’s investors to resell their shares through the facilities of the securities markets. The common stock of the Company is currently quoted on the OTC Pink Sheets marketplace. The Company intends to have its common stock quoted on the OTCQB Bulletin Board, or the OTCQX tier of the OTC Markets when the Company meets the criteria for having its common stock listed on those markets. Our officers and director believe that the disadvantages of becoming a public company are the continuing reporting costs of being a reporting issuer under the Exchange Act and reluctance of persons qualified to serve as directors of the Company because of director’s exposure to possible legal claims. Additional disadvantages include management’s lack of experience in the business of the Company as well as in running a public company, the Company’s status as a development stage company, and management’s limited amount of time that will be devoted to the Company.

 

The Company

 

History

 

We were organized in October of 2007 as R-Course Promotions, LLC, a California limited liability company. At the time of our formation, Kevin O'Connell was the managing member of our company and the sole member of General Pacific Partners, LLC ("GPP"), a California limited liability company. At our inception, GPP owned a majority of R-Course Promotions, LLC membership interests. In May of 2009, R-Course Promotions, LLC was merged with RC-1, Inc., a Nevada corporation with no prior operations. The reason for the merger was the potential liquidity for our shareholders. As of May 31, 2016, Kevin O'Connell is the Managing Member of (a) GPP, (b) Devcap, (c) Revete, and (d) Continental. Together, Mr. O'Connell and GPP, Devcap, Revete, and Continental own 63.5% of our outstanding common shares.

 

 

 

  1  

 

 

We are a development stage small motorsports company which was organized to participate in “Road Racing” motorsports events organized by several motorsports sanctioning bodies such as The National Association for Stock Car Auto Racing ("NASCAR"), and The International Motorsports Association ("IMSA") and the Sports Car Vintage Racing Association (SVRA). The Road Racing motorsports events require the use of “Stock Cars” that are professionally modified for Road Racing, and “Sports Cars” that are specifically manufactured for competition Road Racing. From inception through December 31, 2016, we participated in racing events by exclusively leasing vehicles from unaffiliated third parties for each racing event in which we participated. In June of 2014, we acquired 3 vehicles; a Chevrolet Monte Carlo Super Sport fully equipped Stock Car; a Chevrolet Monte Carlo Super Sport "Roller" (a Roller is a Stock Car that is complete with all of the required racing components, but without a competition engine and transmission; and a 2012 Ford BOSS Mustang R (the "Mustang R). In March of 2017, the Ford BOSS Mustang R was sold for 833,333 shares of our common stock, which was returned to the company and subsequently cancelled.

 

In 2012, we commenced offering racing production services to potential clients that wish to participate in motorsports racing. Our production services include producing a full motorsports racing team for clients by providing, a full "turnkey" Racing Team, to enable a client to participate in one or more racing event as a Team Owner, or providing management of, or access to, any part of equipment or human services required to participate in a racing event, including:

 

  · fully prepared racing cars
     
  · decaling the race cars
     
  · driver(s)
     
  · crew chiefs
     
  · car chiefs
     
  · mechanic crews
     
  · "over the wall" pit crews
     
  · liaison between the client and the sanctioning body (entry fees, equipment specifications and membership)
     
  · pre- and post-race social events

 

Background

 

The National Association for Stock Car Auto Racing (NASCAR) is a family-owned and -operated business that sanctions and governs multiple auto racing sports events. NASCAR is the largest sanctioning body of stock car in the United States. The three largest racing series sanctioned by NASCAR are the Monster Energy Cup Series, the NASCAR Xfinity Series and the Camping World Truck Series. NASCAR also oversees the Whelen Modified Tour and the NASCAR Iracing.com Series. NASCAR sanctions over 1500 races at over 100 tracks in 39 US states and Canada. NASCAR has presented exhibition races at the circuits in Japan, Mexico and Australia. NASCAR is a separate and distinct entity from us and we do not have any formal contractual arrangements with NASCAR. We have participated in over twenty five NASCAR sanctioned and embodied road racing events both regionally and nationally to date.

  

 

 

  2  

 

The International Motor Sports Association ("IMSA") is an auto racing sanctioning body based in Daytona Beach, Florida, United States. Beginning in 2014, IMSA became the sanctioning body of the WeatherTech SportsCar Championship, the premier road racing series resulting from the merger of the former Grand-Am Road Racing and the American Le Mans Series.

  

The Sports Car Vintage Racing Association ("SVRA") is the largest and one of the oldest Vintage Racing organization in the United States. SVRA now has to over 1,200 members. SVRA conducts Vintage events at legendary race tracks throughout the country. The series accepts entries that feature classic MGs, Triumphs, BMWs, Allards, Jaguars, and Lotuses as well as contemporary Camaros, Audis, Porsches and Corvettes among others.

 

The Vintage Auto Racing Association ("VARA") is the largest vintage car racing member organization on the West Coast of the United States. Race fields are made up of production and sports cars through 1979. 

 

The "Toyota Southwest Superlates" Series (SWS) is owned by the operators of Willow Springs International Raceway in Rosamond, California. It is presently run only at the Willow Springs International Raceway in Lancaster, California.

 

In addition to motorsports production services, we expect revenue to be derived from the sale of advertising space on each vehicle we enter in race and from winning a share of the “cash purses” that are provided by Sanctioning Organizations, Promoters and Sponsors of the events. In addition, we expect to utilize our race cars to provide marketing and public corporate branding services to clients desiring to use our cars and equipment to market their product or service by having our vehicles promote their brand by carrying their logo. Our ability to attract advertisers will, in part, be dependent upon the success of our racecars in the races we may decide to enter. We believe that if we win, or finish within the top 10 finishing places in a race, our ability to attract advertisers will be enhanced. Further, our past record of sporadic "Top 10" finishing places, has diminished our ability to attract advertisers.

 

Competition Events Attended

 

Since inception, we have participated in various NASCAR, IMSA and SVRA road course events using road racing prepared race cars. For these events, we either entered our own race cars for competition in the event or leased race cars as a part of an overall vendor relationship.

 

We participated in limited road racing events 2014, 2015 and 2016. We did have a regular racing schedule with a regional sanctioning body, the Toyota Southwest Superlate Model Series. Below is a list of 2014 and 2015 and 2016 events attended:

 

  Toyota Southwest Superlates  
  2014 Schedule  
Date Location Purse
4/19/2014 Willow Springs Raceway, Rosamond, CA $400
5/31/2014 Willow Springs Raceway, Rosamond, CA $0
6/21/2014 Willow Springs Raceway, Rosamond, CA $600
7/19/2014 Willow Springs Raceway, Rosamond, CA $400
8/30/2014 Willow Springs Raceway, Rosamond, CA $0
9/21/2014 Willow Springs Raceway, Rosamond, CA $1,500
11/9/2014 Willow Springs Raceway, Rosamond, CA $400
12/14/2014 Willow Springs Raceway, Rosamond, CA $5,000

  

  Toyota Southwest Superlates  
  2015 Schedule  
Date Location Purse
5/30/2015 Willow Springs Raceway, Rosamond, CA $0
6/27/2015 Willow Springs Raceway, Rosamond, CA $0
7/18/2015 Willow Springs Raceway, Rosamond, CA $0
8/29/2015 Willow Springs Raceway, Rosamond, CA $0
9/19/2015 Willow Springs Raceway, Rosamond, CA $0
11/7/2015 Willow Springs Raceway, Rosamond, CA $0

 

 

 

  3  

 

 

  NASCAR  
3/13/2015 Phoenix International Raceway $0
5/17/2015 Canadian Tire Motorsports Park $0
8/8/2015 Xfinity Series Watkins Glen, NY $0
8/29/2015 Xfinity Series, Road America Wisconsin $0

 

  SVRA  
  2016 Schedule  
9/17/2016 Coronado Annual Speed Fest $0

 

Sanctioning Bodies

 

Sports Car Vintage Racing Association (SVRA)

 

The Sports Car Vintage Racing Association (SVRA) is the largest and one of the oldest Vintage Racing organization in the United States. SVRA now has over 1,200 members. SVRA conducts Vintage events at legendary race tracks throughout the country. The series accepts entries that feature classic MGs, Triumphs, BMWs, Allards, Jaguars, and Lotuses as well as contemporary Camaros, Audis, Porsches and Corvettes among others.

 

NASCAR Monster Energy Cup Series

 

The NASCAR Monster Energy NASCAR Cup Series is the sport's highest level of professional competition. It is consequently the most popular and most profitable NASCAR series. Since 2001, the Monster Energy NASCAR Cup season has consisted of approximately thirty-six (36) races over 10 months.

 

NASCAR Xfinity Series

 

The NASCAR Xfinity Series (formerly Nationwide Series) is the second-highest level of professional competition in NASCAR today.

 

International Motor Sports Association (IMSA)

 

The International Motorsports Association (IMSA) is an auto racing sanctioning body based in Daytona Beach, Florida, United States. Beginning in 2014, IMSA is the sanctioning body of the WeatherTech Sports Car Championship the premier series resulting from the merger of Grand Am and the American LeMans Series presented by Tequilia Patron.

  

ARCA

 

The ARCA Racing Series powered by Menards is an American stock car series, the premier division of the ARCA. It is considered professional league of stock car racing, perhaps two steps down from the top-level NASCAR Monster Energy Cup & Xfinity Series. Though some events occur the same weekend as NASCAR events, the Series is not affiliated with NASCAR.

 

Revenues

 

We expect to have three revenue streams for our business.

 

 

 

  4  

 

 

PRODUCTION SERVICES

 

In 2012, we commenced offering consulting and management services to potential clients that wish to participate in motorsports racing. Our services include providing, sourcing and managing a full "turnkey" racing car and race team, and all ancillary equipment and services to enable a client to participate in a racing event as a Team Owner, or providing management of, or access to, any part of equipment or human services required to participate in a racing event, including:

 

·   fully prepared racing cars

 

·   decaling the race cars

 

·   driver(s)

 

·   crew chiefs

 

·   mechanic crews

 

·   "over the wall" pit crews

 

·   liaison between the client and the sanctioning body (entry fees, equipment specifications and membership)

 

·   pre- and post-race social events

 

Our fees for this management ranges from 5% to 10% of the total budget for the event.

 

On January 1, 2014, the Company entered into an event services agreement with Carolina Pro Am Services, Inc., ("Carolina") a company owned and controlled by Richard Ware who is also the owner and controller of Rick Ware Racing LLC. Rick Ware Racing LLC is the owner of 8.85% of our issued and outstanding common shares. During the years ended December 31, 2016 and 2015 the Company paid $-0- and $125,500 respectively to Carolina.

 

ADVERTISING REVENUE

 

The second potential source of revenue is from direct advertising from companies interested in advertising their product or service on our racing equipment. Though this part of our business, we offer a client access to national television, spectator sports and social media concurrently or individually depending on the racing series and venue. We believe we can attract advertising clients because the client's brand will be displayed on the following outlets:

 

National Television – NASCAR and IMSA races are live broadcasts. With their logos and brands displayed on our race vehicles, our client can expose their products or services to consumers.

 

Spectator Sports – In each racing event there are spectators that pay a gate attendance ticket fees to view events in person. With our client’s logos and brands displayed on our race vehicles, the client can expose their products or services to consumers, in this case live spectators.

 

Social Media – Through the proliferation of social media, fans, teams, sanctioning bodies, driver and spectators have access to real time information and a place to share their ideas and messaging. Our clients benefit from these activities as their logo and brand receive additional exposure and real time commentary.

 

In certain cases where a custom solution is required to accommodate the client, we will modify or revenue model and adjust fees accordingly either increased, decreased or with terms.

 

 

 

  5  

 

RACE PURSES

 

Revenue is expected to be derived from our winning a share of cash purses that are provided by event advertisers and sanctioning bodies. Purse for the events we participate in can range from $0 to $100,000 for the sanctioning bodies we compete within. The winning purses we have received have been in regional events only.

  

We have had no present commitments from prospective advertisers. There can be no assurance that we will be able to obtain any such sponsor revenue or management clients in the future. We have conducted limited operations to date, and our operations will continue to be limited until such time as we are able to obtain additional funds to carry out our overall business plans.

 

Acquisitions of Competition Equipment

 

In June of 2014, we acquired two (2) NASCAR type stock cars for competition in SVRA vintage racing events. The first race car is considered a “complete roller”. A “complete roller” is a purpose-built race car that is complete with all of the required racing components in place minus a competition engine and transmission. The engine and transmission can be purchased or leased.

 

The second racing vehicle our company acquired is a “turnkey” NASCAR type road course stock car acquired in with all racing components including a racing engine and transmission.

 

The NASCAR stock cars were acquired from Cassin Farlow, LLC for 1,200,000 common shares on May 1, 2014. Cassin Farlow’s majority shareholder is Augustus B. O’Connell, father of Kevin O’Connell.

 

In addition, in June of 2014, we acquired a Ford "BOSS" road racing Mustang race car used in competition in the Grand Am Rolex Series. This model Boss Mustang is a custom built model specially configured for road racing. We intend to use this vehicle in SVRA Vintage racing competition. We acquired the Ford BOSS Mustang for $200,000. The debt of $200,000 was immediately converted into 1,333,333 common shares of the Company at a conversion rate of $0.15 per share pursuant to a debt to equity conversion agreement executed on May 1, 2014. In March of 2017, we sold the Ford BOSS Mustang R back to the original seller and received 833,333 of our shares of common stock back as compensation.

 

Operating Budget

 

Expected management estimates for the cost of operating the business through September 30, 2018 will require additional capital of up to Three Hundred Thousand dollars ($300,000) consisting of: $20,000 for registration and licenses required for entry in sanctioned racing events; $20,000 for travel and lodging; $20,000 for marketing and branding; $30,000 for legal and accounting; $15,000 for engineers and consultants; $15,000 for parts, $90,000 for engine and transmission leases. $50,000 for fuels and tires; $10,000 for racecar transporter travel; $20,000 for debt service of all Company notes payable; and $10,000 in air and rental cars.

 

In future events, we will determine what chassis, car, engine and transmission we intend enter. Our decision will be based upon the characteristics of the race venue and the suitability of the chassis and combination to race at the particular track and expected conditions. The limitations of our operating budget will also be a factor.

 

Our ability to attract advertisers and management clients will be dependent upon the success of our racecars in the races we enter. We believe that if our cars are successful, or finish within the top 10 finishing places in any race, our ability to attract business will be enhanced. Our past record of inconsistent finishing places, has diminished our ability to attract regular business.

 

In addition, we have received revenue for the events in which we qualified to enter for races during the periods of 2008 through 2016. Our losses from inception through the period ended December 31, 2016 was $3,006,457.

 

For the year ended December 31, 2016 we had limited revenue from marketing or sponsorships and had limited purse winnings. We incurred a loss of $226,645 which represented a decrease from a loss of $306,957 for the year ended December 31, 2015. The decrease in loss for 2016 is attributable to a decrease in racing events entered during the year for which the Company incurred race related expenses and a decrease in related party expenses. We had revenue of $15,000 for the year ended December 31, 2016 and $1,000 for the year ended December 31, 2015.

 

Our auditor's report has expressed substantial doubt about our ability to continue as a going concern.

 

 

 

  6  

 

Lines of Credit

 

On October 1, 2009, the Company entered into a line of credit agreement for up to $600,000 with General Pacific Partners, LLC ("GPP") one of our principal shareholders, a related party owned and operated by our CEO and majority shareholder, that also provides motor sports marketing industry consulting services to the Company as needed. Under the agreement, the Company receives operating fund advances and reimbursement for expenses incurred on behalf of the Company. The loan bears interest at eight percent (8%) per annum. On July 3, 2017, $200,000 of the balance due was converted into 2,000,000 shares of stock at a value of $.10 per share. As of September 30, 2017, and December 31, 2016, the Company owed $108,164 and $183,164, respectively, in operating advances from this related party. As of September 30, 2017, and December 31, 2016, the Company had accrued interest on this line of credit in the amounts of $26,816 and $18,354, respectively.

 

On August 5, 2013, the Company entered into a line of credit agreement for up to $500,000 with Devcap Partners, LLC, ("Devcap") a Texas limited liability company that is wholly owned and managed by our CEO and majority shareholder. Under the agreement, the Company receives operating fund advances and reimbursement for expenses incurred on behalf of the Company. On July 3, 2017, $200,000 of the balance due was converted into 2,000,000 shares of stock at a value of $.10 per share. As of September 30, 2017, and December 31, 2016, the Company owed $49,647 and $332,647, respectively, in operating advances to this related party. As of September 30, 2017, and December 31, 2016, the Company had accrued interest on this line of credit in the amounts of $78,707 and $67,040, respectively.

 

On October 15, 2012, the Company entered into a revolving line of credit agreement with TVP Investments, LLC, a Georgia Limited Liability Company in the amount up to $500,000. The line of credit is unsecured, bears interest of 10% and has a maturity date of December 31, 2019. As of September 30, 2017, and December 31, 2016, the balance of the line of credit was $75,000. As of September 30, 2017, and December 31, 2016, the Company had accrued interest on this line of credit in the amounts of $28,043 and $22,418, respectively.

 

The Company has a business line of credit up to $3,000 with Wells Fargo bank. The line of credit is unsecured with a variable interest rate of approximately 18.0%. The balance owed as of September 30, 2017 and December 31, 2016 was zero.

 

Capital Requirements

 

Expected management estimates for the cost of operating the business through September 30, 2018 will require additional capital of up to Three Hundred Thousand dollars ($300,000) consisting of: $20,000 for registration and licenses required for entry in sanctioned racing events; $20,000 for travel and lodging; $20,000 for marketing and branding; $30,000 for legal and accounting; $15,000 for engineers and consultants; $15,000 for parts, $90,000 for engine and transmission leases. $50,000 for fuels and tires; $10,000 for racecar transporter travel; $20,000 for debt service of all Company notes payable; and $10,000 in airfare and rental cars.

 

There can be no assurance that we will be able to raise any or all of the capital required. These factors indicate that we may be unable to continue as a going concern, particularly in the event that we cannot generate sufficient cash flow or raise sufficient capital to conduct our operations. Our financial statements do not include any adjustments to the value of our assets or the classification of our liabilities that might result if we would be unable to continue as a going concern.

 

Meeting our capital requirements will be directly contingent on Mr. O'Connell and his related businesses and his decision to advance us capital in the event that we are not able to raise capital from other sources. 

 

Additionally, our ability to attract lessees for our race cars and clients for our consulting and advertising business will, in part, be dependent upon the success of our lessees in the races in which they compete. The race event finishing positions, especially finishing among the first ten places, will enhance our ability to attract capital and event to offset the cost of competing in racing events. Should our lessees compete in races in which they finish in other than the first ten finishing places, those lessees ability to attract advertisers and advertising and promotion monies may be diminished.

 

Marketing

 

We depend upon our officers for all marketing activities. We intend to hire a marketing and sales person to pursue our offerings of motorsports production services. However, we will not be able to hire such a person until we have the financial resources to do so.

 

Competition

 

We principally compete with other racing teams and advertising companies that are much larger, well known, better established and have greater financial resources than us. We do not consider the Company to be a factor in the overall racing industry. We will also compete for advertising dollars with other sports such as football, baseball, basketball, hockey, tennis and golf and with other live entertainment and popular recreational activities. We also compete with other consultant and management companies that are much larger and have a longer history and are better established for clients in our Consulting and Management business. Depending on our success in funding our operations, we intend on entering between four and ten events on an annual basis. The events attended are dependent on our success in raising capital from sources other than our lines of credit from General Pacific Partners, LLC and TVP Investments LLC.

 

 

 

  7  

 

Relationship with our majority shareholder

 

As of September 30, 2017, Kevin O'Connell is the Managing Member of (a) GPP, (b) Devcap, (c) Revete and (d) Continental. Together, Mr. O'Connell and GPP, Devcap, Revete, and Continental own 79.9% of our outstanding common shares.

 

Since the inception of the company we have borrowed monies from GPP, Devcap, Kevin P. O’Connell and his affiliates.

  

On October 1, 2009, the Company entered into a line of credit agreement for up to $600,000 with General Pacific Partners, LLC ("GPP") one of our principal shareholders, a related party owned and operated by our CEO and majority shareholder, that also provides motor sports marketing industry consulting services to the Company as needed. Under the agreement, the Company receives operating fund advances and reimbursement for expenses incurred on behalf of the Company. The loan bears interest at eight percent (8%) per annum. On July 3, 2017, $200,000 of the balance due was converted into 2,000,000 shares of stock at a value of $.10 per share. As of September 30, 2017, and December 31, 2016, the Company owed $108,164 and $183,164, respectively, in operating advances from this related party. As of September 30, 2017, and December 31, 2016, the Company had accrued interest on this line of credit in the amounts of $26,816 and $18,354, respectively.

 

On August 5, 2013, the Company entered into a line of credit agreement for up to $500,000 with Devcap Partners, LLC, ("Devcap") a Texas limited liability company that is wholly owned and managed by our CEO and majority shareholder. Under the agreement, the Company receives operating fund advances and reimbursement for expenses incurred on behalf of the Company. On July 3, 2017, $200,000 of the balance due was converted into 2,000,000 shares of stock at a value of $.10 per share. As of September 30, 2017, and December 31, 2016, the Company owed $49,647 and $332,647, respectively, in operating advances to this related party. As of September 30, 2017, and December 31, 2016, the Company had accrued interest on this line of credit in the amounts of $78,707 and $67,040, respectively.

 

The Company has recurring losses from operations and our auditor has stated that there is substantial doubt about the Company's ability to continue as a going concern. Further, continued losses could cause the Company to be unable to continue in the racing industry or to meet debt obligations. (see "Risk Factors" starting on Page 9). The Company believes that racing requires significant capital outlays on a continual basis to successfully fund operations, but with adequate funding that profitable operations can be achieved.

 

Without additional funding, the Company could discontinue operations. We have $52,918 in cash as of September 30, 2017 and our monthly expenses are approximately $22,000. We will need to obtain additional funding to maintain continuing operations and there can be no assurance that such funding is, or will become available.

 

Facilities and Maintenance

 

Maintenance and race set up is an ongoing effort in auto racing. Mr. O'Connell manages the staff of independent technicians to maintain a regular schedule updates and changes to back up parts and various pit equipment needed at racing events. Our race cars are managed for racing from a facility in Thomasville, North Carolina owned by Rick Ware Racing, LLC, a non-affiliated party. In January of 2017 we entered into a lease for warehouse space at , 110 Sunrise Center Drive, Thomasville, NC for a three year term for which we agreed to pay 1,200,000 common shares at $.15 per share to Rick Ware Racing, LLC (400,000 shares for each full year of occupancy). As at September 30, 2017 we have issued 400,000 to Rick Ware Racing LLC.

 

There can be no assurance that our vehicles will be competitive or qualify for each, or any sanctioned event entered. If we are not as successful competitively, we could have a more difficult time attracting and maintaining advertisers, drivers and crews which in turn could impact our ability to attract and maintain advertisers. We will compete with well-established teams and there can be no assurance that we will be able to create or maintain a competitive position. In addition, there are relatively low barriers to entry into these markets and we expect to continue to face competition from new entrants into these same markets. There can be no assurance that we will be able to compete successfully in these markets.

 

Employees

 

As of September 30, 2017, we had no full-time employees. Our only employees consist of 2 management personnel, all of whom devote 30% or less of their time to our business affairs. We intend to hire full time employees when and if we have the financial resources to do so. Until such time as we are in a position to hire full time employees, we will hire independent contractors to perform work for us on an as needed basis. None of our employees are represented by a labor union or a collective bargaining agreement. We consider our relations with our Management employees to be good.  

 

 

 

  8  

 

Implications of Being an Emerging Growth Company

 

We are an “Emerging Growth Company,” as defined in Section 2(a) of the Securities Act of 1933, or the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2013, or the JOBS Act. As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. 

 

We could remain an “emerging growth company” for up to five years, or until the earliest of (a) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (b) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (c) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three-year period.

 

We are also considered a "smaller reporting company,"  If we are still considered a "smaller reporting company" at such time as we cease to be an "emerging growth company," we will be subject to increased disclosure requirements. However, the disclosure requirements will still be less than they would be if we were not considered either an "emerging growth company" or a "smaller reporting company."

  

For more information, please see our Risk Factor entitled “ As an “emerging growth company” under the Jumpstart our Business Startups Act (JOBS Act), we are permitted to rely on exemptions from certain disclosure requirements.”

 

USE OF PROCEEDS

 

We will not receive any of the proceeds from the sale of the shares of our common stock being offered for sale by the selling stockholders. We will incur all costs associated with this Post-Effective Amendment to this registration statement and prospectus.

 

RISK FACTORS

 

An investment in these securities involves a high degree of risk and is speculative in nature. In addition to the other information regarding the Company contained in this Prospectus, you should consider many important factors in determining whether to purchase Shares. Following are what we believe are material risks related to the Company and an investment in the Company. Investors are urged to perform their own due diligence, with the help of their investment, accounting, legal and/or other professionals and to make an independent decision regarding an investment in the Shares.

 

A Cautionary Note on Forward-Looking Statements

 

This Prospectus contains forward-looking statements, which relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors,” that may cause our industry’s actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements.

 

While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

 

 

 

  9  

 

We have a limited operating history, with historical losses.

 

We have a short operating history and must be considered to be in the development stage. We have no history of earnings or profits and there is no assurance that we will operate profitably in the future. There is no meaningful historical financial data upon which to base planned operating expenses. As a result of this limited operating history, it is difficult to accurately forecast our potential revenue. We intend to use race cars to market and promote the services of potential clients. We contemplate that we will further develop our racing operations into which we will reinvest all profits, if any, into the Company.

 

We estimate that for the 12 months ending September 30, 2018, the cost of operating the business will require additional capital of a minimum of three hundred thousand dollars ($300,000) and there can be no assurance that any or all of that additional capital will be available to the Company.

 

Our auditors have expressed substantial doubt as to whether our Company can continue as a going concern .

 

We have generated only limited revenues since our inception and have incurred substantial losses. Our business plans estimate that we will need to raise $300,000 in additional capital to fund our operations through September 30, 2018 and there can be no assurance that we will be able to raise any or all of the capital required. These factors indicate that we may be unable to continue as a going concern, particularly in the event that we cannot generate sufficient cash flow or raise sufficient capital to conduct our operations. Our financial statements do not include any adjustments to the value of our assets or the classification of our liabilities that might result if we would be unable to continue as a going concern.

 

Our existing principal stockholders exercise control of our Company.

 

As of September 30, 2017, Kevin O'Connell is the Managing Member of (a) GPP, (b) Devcap, (c) Revete, and (d) Continental. Together, Mr. O'Connell and GPP, Devcap, Revete, and Continental own 79.9% of our outstanding common shares.

 

In addition, GPP and Devcap have established lines of credit of $600,000 and $500,000 respectively. The receipt of funds from these lines of credit are subject to the approval of Mr. O'Connell. At September 30, 2017, there was $491,836 available on the Line of Credit from GPP and $450,353 available on the Line of Credit from Devcap. The terms of the lines of credit contains annualized interest of 8%, quarterly interest payments paid by the Company on outstanding balances and requires a maximum quarterly draw down on the line of $100,000 per quarter. Mr. O'Connell may have a conflict of interest should we determine to draw upon the line of credit. He will have to determine, as the Managing Member of GPP and Devcap, whether it is in the best interest of GPP or Devcap to approve or decline the "draw down" or, as our controlling shareholder, it is in our best interest to approve the draw down.

 

Further, Mr. O’Connell, will be able to determine the election of directors and all other matters subject to stockholder votes. This concentration of ownership may have the effect of delaying or preventing a change in control of the Company, even if this change in control would benefit stockholders.

   

We must enter into and maintain a good working relationship with the NASCAR, IMSA and SVRA as well as other sanctioning bodies relevant to our business.

 

To be successful, we must create and maintain a good working relationship with the sanctioning body of our racing events we participate in with NASCAR, IMSA, and SVRA being of most importance. Without a good relationship with the sanctioning bodies, they may, at their sole discretion, disallow our company and clients from competing in any or all of their sanctioned events for an indefinite period of time. We do not have any continuing contractual relationship with these sanctioning bodies and may not be able to enter into any agreements to participate in racing events on terms acceptable to us.

 

Our racecars are subject to changes in technology and competitiveness.

 

In June of 2014, we acquired 3 vehicles; a Chevrolet Monte Carlo Super Sport fully equipped Stock Car; a Chevrolet Monte Carlo Super Sport "Roller" (a Roller is a Stock Car that is complete with all of the required racing components, but without a competition engine and transmission; and a 2012 Ford BOSS Mustang R (the "Mustang R). These vehicles contain current technologies that may cease to be legal or competitive as the rules, and regulations of NASCAR, IMSA and SVRA are modified and technologies are updated.

 

 

 

  10  

 

In May of 2017 the company acquired a 2003 Laughlin road race NASCAR Busch series car for 166,667 shares of our common stock. The cash price for the acquisition was $25,000 and was converted at .15 per share.

 

In May of 2017 the company acquired a 2006 Hutch Pagan NASCAR Speedway Truck for 166,667 shares of our common stock. The cash price for the acquisition was $25,000 and was converted at .15 per share.

 

Additionally, governing sanctioning bodies are expected to regularly hold discussions with the manufacturers and competitors regarding implementing updated models and technologies that may have an adverse effect on our Company. To the extent that sanctioning bodies may change their rules and regulations so that our racecars do not comply with the changed rules or regulations, our business will be adversely affected.

   

Our racing operations face competition for marketing and advertising dollars.

 

We compete for marketing and advertising dollars with other motorsports teams and with sports such as football, baseball, basketball, hockey, tennis and golf and with other entertainment and recreational activities. In the event that fan interest in motorsports declines motorsports might not be as attractive to the potential clients, which could have an adverse effect on our operations.

 

There can be no assurance that our team will be competitive or qualify for each, or any NASCAR, IMSA or SVRA sanctioned event entered. Qualification, by speed trial racing in NASCAR races, is only required in special events. IMSA sanctioned events are not limited by qualifying, but rather may be limited by the racing venue and the size of the paddocks that would be used to support the race cars and teams before, during and after the racing events. If we are not successful competitively, we could have a more difficult time attracting and maintaining clients, quality drivers and crews which in turn could impact our ability to attract production, marketing and advertising dollars. We compete with well-established teams and there can be no assurance that we will be able to create or maintain a competitive position.

 

We may not be able to lease or obtain certain race cars as needed for specific events.

 

Our ability to compete in race events is contingent upon our ability to configure our owned vehicles, or lease vehicles for specific series when needed. There can be no assurance that our vehicles will be able meet specifications for a race series we would intend to enter or that we would be able to lease a suitable race vehicle when needed or be able to negotiate a lease fee that we deem reasonable.

 

The success of our operations will be dependent upon the success of our racing team.

 

Our ability to fully implement our business plan and the success of our operations will be dependent upon the success of our racing team. If our racing team fails to qualify for races or finishes poorly in races on a regular basis, the success of our operations will be adversely impacted. Racing teams that fail to qualify for events cannot generate any purse revenue and may experience a reduction in fan and advertisers interest. We believe that if we win, or finish within the top 10 finishing places in a race, our ability to attract advertisers will be enhanced. However, our past record of sporadic "Top 20" finishing places has diminished our ability to attract advertisers. There can be no assurance that we will win or compete successfully in any event. 

 

In racing events that we determined to enter, we have always qualified to race. However, we have finished poorly in these events and have not received any purse money if finishing positions fall outside of the top 30 places. A low finishing position for any event may or may not be a direct result of the team’s activities and efforts, and all racing teams in competition face the same uncertain results. There can be no assurance that we will win any purse money and the denomination of such purse money could have any effect upon our ability to fund our operations.

 

We may incur liability for personal injuries.

 

Racing events can be dangerous to participants and to spectators. We maintain insurance policies that provide coverage within limits that in our judgment are sufficient to protect us from material financial loss due to liability for personal injuries sustained by, or death of, our personnel or spectators in the ordinary course of our business. Our insurance may not be adequate or available at all times and in all circumstances. In the event that damages for injuries sustained by our participants or spectators exceed our liability coverage or the insurance company denies coverage, our financial condition, results of operations and cash flows could be adversely affected to the extent claims and associated expenses exceed insurance recoveries.

  

 

 

  11  

 

We do not have total loss insurance for the racecars we own.

 

Due to the high cost of property damage insurance, we have chosen not to carry total loss insurance for the racecars we lease or own. In the event of a loss occurrence, we may lose or be liable for as much as the total value of the racecar which is damaged. The loss could be as much as $250,000, which would be a material loss to us and could cause us to cease operations.

 

We have only recently sought advertising revenue and we may not be able to attract and maintain advertisers as a source of revenues.

 

We have limited advertising revenue since our inception in 2007 and we may not be able to attract and maintain advertisers as a source of revenues. Further, our ability to attract advertising clients will be a significant factor in our success or failure.

 

We will need additional financing, which may not be available.

 

Our future success will depend on our ability to raise additional funds and our ability to raise future advertising money, which includes attracting advertisers or Funded Drivers for our racing teams. No commitments to provide additional funds have been made by management and no agreements with advertisers or funded Drivers have been entered into. Our ability to arrange financing in the future will depend in part upon the prevailing capital market conditions, as well as our business performance. There can be no assurance that we will be successful in our efforts to arrange additional financing on satisfactory terms. If additional financing is raised by the issuance of our shares, control of the Company may change and stockholders may suffer additional dilution. If adequate funds are not available, or are not available on acceptable terms, we may not be able to take advantage of opportunities, or otherwise respond to competitive pressures and remain in business.

 

We are dependent on our key personnel.

 

Our success will depend in large part upon the continued services of Mr. Kevin P. O'Connell, who presently devotes only 30% or less of his time to our business. The death or loss of Mr. O'Connell would have a material adverse effect on our business, financial condition and results of operations. We do not have key man life insurance on Mr. O'Connell.

 

We face significant racing competition.

 

We principally compete for clients and purses with other motorsports teams and advertising and public relations companies. In addition, there are relatively low barriers to entry into these markets and we expect to continue to face competition from new entrants into these same markets. There can be no assurance that we will be able to compete successfully in these markets.

 

We have additional costs for being a small, public reporting company.

 

We are a fully reporting and publicly traded company, and as such, incur additional non-operating costs associated with being a public company. Additionally, we have a management team that is inexperienced in managing publicly traded companies.

 

There is no active trading market for our common stock and if a market for our common stock does not develop, our investors will be unable to sell their shares.

 

There currently is no trading market for our stock. While we have utilized a marker maker to obtain a quotation on the OTC Pink Sheets. We cannot assure you that a public market will ever develop. Furthermore, you will likely not be able to sell your securities if a regular trading market for our securities does not develop and we cannot predict the extent, if any, to which investor interest will lead to the development of a viable trading market in our shares. We expect the initial market for our stock to be limited, if a market develops at all. Even if a limited trading market does develop, there is a risk that the absence of potential buyers will prevent you from selling your shares if you determine to reduce or eliminate your investment. Additionally, the offering price of $.15 share may not reflect the current value of our shares.

  

Because we do not intend to pay any dividends on our common shares, investors seeking dividend income or liquidity should not purchase shares in this offering .

 

We do not currently anticipate declaring and paying dividends to our shareholders in the near future. It is our current intention to apply net earnings, if any, in the foreseeable future to increasing our working capital. Prospective investors seeking or needing dividend income or liquidity should, therefore, not purchase our common stock. There can be no assurance that we will ever have sufficient earnings to declare and pay dividends to the holders of our shares, and in any event, a decision to declare and pay dividends is at the sole discretion of our board of directors, who currently do not intend to pay any dividends on our common shares for the foreseeable future.

 

 

 

  12  

 

 

Sales of a substantial number of shares of our common stock into the public market by the selling stockholders may result in significant downward pressure on the price of our common stock and may affect the ability of our stockholders to realize any trading price of our common stock when and if a trading market develops for our common stock.

 

Sales of a substantial number of shares of our common stock in the public market could cause a reduction in the market price of our common stock, when and if such market develops. When this registration statement is declared effective, the selling stockholders may be reselling up to 30% of the issued and outstanding shares of our common stock. As a result of such registration statement, a substantial number of our shares of common stock which have been issued may be available for immediate resale when and if a market develops for our common stock, which could have an adverse effect on the price of our common stock. As a result of any such decreases in price of our common stock, purchasers who acquire shares from the selling stockholders may lose some or all of their investment.

 

Any significant downward pressure on the price of our common stock as the selling stockholders sell the shares of our common stock could encourage short sales by the selling stockholders or others. Any such short sales could place further downward pressure on the price of our common stock. 

  

Our stock is a penny stock. Trading of our stock may be restricted by the SEC's penny stock regulations which may limit a stockholder's ability to buy and sell our stock.

 

Our stock is a penny stock. The Securities and Exchange Commission has adopted Rule 15g-9 which generally defines "penny stock" to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and "accredited investors". The term "accredited investor" refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.

 

 

Risk Factors Related to the JOBS Act

 

We are an ‘Emerging Growth Company” and we intend to take advantage of reduced disclosure and governance requirements applicable to Emerging Growth Companies, which could result in our stock being less attractive to investors.

 

We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act of 2012, which we refer to as the JOBS Act, and we intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we will rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. We expect to take advantage of these reporting exemptions until we are no longer an emerging growth company, which in certain circumstances could be for up to five years.

  

 

 

  13  

 

The Company’s election to take advantage of the JOBS Act’s extended accounting transition period may not make its financial statements easily comparable to other companies.

 

Pursuant to the JOBS Act of 2012, as an emerging growth company the Company can elect to take advantage of the extended transition period for any new or revised accounting standards that may be issued by the Public Company Accounting Oversight Board ("PCAOB") or the Securities & Exchange Commission ("SEC"). The Company has elected to take advantage of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the standard on the private company timeframe. This may make comparison of the Company's financial statements with any other public company which is not either an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible as possible different or revised standards may be used.

  

The JOBS Act will also allow the Company to postpone the date by which it must comply with certain laws and regulations intended to protect investors and reduce the amount of information provided in reports filed with the SEC.

 

The JOBS Act is intended to reduce the regulatory burden on “emerging growth companies. The Company meets the definition of an emerging growth company and so long as it qualifies as an “emerging growth company,” it will, among other things:

 

be exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that its independent registered public accounting firm provide an attestation report on the effectiveness of its internal control over financial reporting.

 

be exempt from the "say on pay" provisions (requiring a non-binding shareholder vote to approve compensation of certain executive officers) and the "say on golden parachute" provisions (requiring a non-binding shareholder vote to approve golden parachute arrangements for certain executive officers in connection with mergers and certain other business combinations) of the Dodd-Frank Act and certain disclosure requirements of the Dodd-Frank Act relating to compensation of its chief executive officer;

 

be permitted to omit the detailed compensation discussion and analysis from proxy statements and reports filed under the Securities Exchange Act of 1934 and instead provide a reduced level of disclosure concerning executive compensation; and

 

be exempt from any rules that may be adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm rotation or a supplement to the auditor’s report on the financial statements

 

The Company currently intends to take advantage of some or all of the reduced regulatory and reporting requirements that will be available to it so long as it qualifies as an “emerging growth company”.

 

As long as the Company qualifies as an Emerging Growth Company, the Company’s independent registered public accounting firm will not be required to attest to the effectiveness of the company’s internal control over financial reporting.


Because the Company has elected to take advantage of the extended time periods for compliance with new or revised accounting standards provided for under Section 102(b) of the JOBS Act, among other things, this means that the Company's independent registered public accounting firm will not be required to provide an attestation report on the effectiveness of the Company's internal control over financial reporting so long as it qualifies as an emerging growth company, which may increase the risk that weaknesses or deficiencies in the internal control over financial reporting go undetected. Likewise, so long as it qualifies as an emerging growth company, the Company may elect not to provide certain information, including certain financial information and certain information regarding compensation of executive officers that would otherwise have been required to provide in filings with the SEC, which may make it more difficult for investors and securities analysts to evaluate the Company. As a result, investor confidence in the Company and the market price of its common stock may be adversely affected.

 

 

 

  14  

 

 

THE OFFERING

 

Common stock offered by selling stockholders: 1,674,477
   
Common stock outstanding before the offering: 13,929,581
   
Common stock to be outstanding after the offering: 13,929,581
   
Offering Price Per Share $.25

 

Use of proceeds: We will not receive any proceeds from the sale of any common stock sold by the selling stockholders.
   
OTC Pink Sheets RCCC

  

 

 

DILUTION

 

The common stock to be sold by the selling security holders is common stock that is currently issued and outstanding. Accordingly, there will be no dilution of equity interests to our existing stockholders.

 

PRICE RANGE OF COMMON STOCK

 

Our common stock qualified for quotation on the OTC Pink Sheets marketplace in February 2017, under the symbol “RCCC”. However no trades of our common stock occurred through the facilities of the OTC Pink Sheets marketplace. The Company is currently applying to the Depository Trade Corporation (“DTC”) to have its shares eligible to trade electronically on the DTC system. There currently is no liquid trading market for our common stock. There can be no assurance that a significant active trading market in our common stock will develop, or if such a market develops, that it will be sustained.

  

As soon as practicable, and assuming we satisfy all necessary initial listing requirements, we intend to apply to have our common stock listed for trading on a national securities exchange, although we cannot be certain that our application will be approved.

 

RELIANCE ON INFORMATION ONLY IN THIS PROSPECTUS

 

Please read this prospectus carefully. You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with different information. You should not assume that the information provided by the prospectus is accurate as of any date other than the date on the front of this prospectus.

 

 

 

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DIVIDEND POLICY

 

We do not intend to pay any dividends in the foreseeable future. We intend to retain any future earnings, if any, for use in the operation and expansion of our business. Any future decision to pay dividends on common stock will be at the discretion of our board of directors and will be dependent upon our fiscal condition, results of operations capital requirements and other factors our board of directors may deem relevant.

 

BUSINESS OF THE COMPANY

 

The Company

 

History

 

We were organized in October of 2007 as R-Course Promotions, LLC, a California limited liability company. At the time of our formation, Kevin O'Connell was the managing member of our company and the sole member of General Pacific Partners, LLC ("GPP"), a California limited liability company. At our inception, GPP owned a majority of R-Course Promotions, LLC membership interests. In May of 2009, R-Course Promotions, LLC was merged with RC-1, Inc., a Nevada corporation with no prior operations. The reason for the merger was the potential liquidity for our shareholders. As of May 31, 2016, Kevin O'Connell is the Managing Member of (a) GPP, (b) Devcap, (c) Revete, and (d) Continental. Together, Mr. O'Connell and GPP, Devcap, Revete, and Continental own 63.5% of our outstanding common shares.

 

We are a development stage small motorsports company which was organized to participate in “Road Racing” motorsports events organized by several motorsports sanctioning bodies such as The National Association for Stock Car Auto Racing ("NASCAR"), and The International Motorsports Association ("IMSA") and the Sports Car Vintage Racing Association (SVRA). The Road Racing motorsports events require the use of “Stock Cars” that are professionally modified for Road Racing, and “Sports Cars” that are specifically manufactured for competition Road Racing. From inception through December 31, 2016, we participated in racing events by exclusively leasing vehicles from unaffiliated third parties for each racing event in which we participated. In June of 2014, we acquired 3 vehicles; a Chevrolet Monte Carlo Super Sport fully equipped Stock Car; a Chevrolet Monte Carlo Super Sport "Roller" (a Roller is a Stock Car that is complete with all of the required racing components, but without a competition engine and transmission; and a 2012 Ford BOSS Mustang R (the "Mustang R). In March of 2017, the Ford BOSS Mustang R was sold for 833,333 shares of our common stock, which was returned to the company and subsequently cancelled.

 

In 2012, we commenced offering racing production services to potential clients that wish to participate in motorsports racing. Our production services include producing a full motorsports racing team for clients by providing, a full "turnkey" Racing Team, to enable a client to participate in one or more racing event as a Team Owner, or providing management of, or access to, any part of equipment or human services required to participate in a racing event, including:

 

  · fully prepared racing cars
     
  · decaling the race cars
     
  · driver(s)
     
  · crew chiefs
     
  · car chiefs
     

 

 

 

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  · mechanic crews
     
  · "over the wall" pit crews
     
  · liaison between the client and the sanctioning body (entry fees, equipment specifications and membership)
     
  · pre- and post-race social events

 

Background

 

The National Association for Stock Car Auto Racing (NASCAR) is a family-owned and -operated business that sanctions and governs multiple auto racing sports events. NASCAR is the largest sanctioning body of stock car in the United States. The three largest racing series sanctioned by NASCAR are the Monster NASCAR Cup Series Monster Energy, the NASCAR Xfinity Series and the Camping World Truck Series. NASCAR also oversees the Whelen Modified Tour and the NASCAR Iracing.com Series. NASCAR sanctions over 1500 races at over 100 tracks in 39 US states and Canada. NASCAR has presented exhibition races at the circuits in Japan, Mexico and Australia. NASCAR is a separate and distinct entity from us and we do not have any formal contractual arrangements with NASCAR. We have participated in over twenty five NASCAR sanctioned and embodied road racing events both regionally and nationally to date.

  

The International Motor Sports Association ("IMSA") is an auto racing sanctioning body based in Daytona Beach, Florida, United States. Beginning in 2014, IMSA became the sanctioning body of the WeatherTech SportsCar Championship, the premier road racing series resulting from the merger of the former Grand-Am Road Racing and the American Le Mans Series.

  

The Sports Car Vintage Racing Association ("SVRA") is the largest and one of the oldest Vintage Racing organization in the United States. SVRA now has to over 1,200 members. SVRA conducts Vintage events at legendary race tracks throughout the country The series accepts entries that feature classic MGs, Triumphs, BMWs, Allards, Jaguars, and Lotuses as well as contemporary Camaros, Audis, Porsches and Corvettes among others.

 

The Vintage Auto Racing Association ("VARA") is the largest vintage car racing member organization on the West Coast of the United States. Race fields are made up of production and sports cars through 1979.

 

The "Toyota Southwest Superlates" Series (SWS) is owned by the operators of Willow Springs International Raceway in Rosamond, California. It is presently run only at the Willow Springs International Raceway in Lancaster, California.

 

In addition to motorsports production services, we expect revenue to be derived from the sale of advertising space on each vehicle we enter in race and from winning a share of the “cash purses” that are provided by Sanctioning Organizations, Promoters and Sponsors of the events. In addition, we expect to utilize our race cars to provide marketing and public corporate branding services to clients desiring to use our cars and equipment to market their product or service by having our vehicles promote their brand by carrying their logo. Our ability to attract advertisers will, in part, be dependent upon the success of our racecars in the races we may decide to enter. We believe that if we win, or finish within the top 10 finishing places in a race, our ability to attract advertisers will be enhanced. Further, our past record of sporadic "Top 10" finishing places, has diminished our ability to attract advertisers.

 

Competition Events Attended

 

Since inception, we have participated in various NASCAR, IMSA and SVRA road course events using road racing prepared race cars. For these events, we either entered our own race cars for competition in the event or leased race cars as a part of an overall vendor relationship.

 

 

 

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We participated in limited road racing events 2014, 2015 and 2016. We did have a regular racing schedule with a regional sanctioning body, the Toyota Southwest Superlate Model Series. Below is a list of 2014 and 2015 and 2016 events attended:

 

  Toyota Southwest Superlates  
  2014 Schedule  
Date Location Purse
4/19/2014 Willow Springs Raceway, Rosamond, CA $400
5/31/2014 Willow Springs Raceway, Rosamond, CA $0
6/21/2014 Willow Springs Raceway, Rosamond, CA $600
7/19/2014 Willow Springs Raceway, Rosamond, CA $400
8/30/2014 Willow Springs Raceway, Rosamond, CA $0
9/21/2014 Willow Springs Raceway, Rosamond, CA $1,500
11/9/2014 Willow Springs Raceway, Rosamond, CA $400
12/14/2014 Willow Springs Raceway, Rosamond, CA $5,000

  

  Toyota Southwest Superlates  
  2015 Schedule  
Date Location Purse
5/30/2015 Willow Springs Raceway, Rosamond, CA $0
6/27/2015 Willow Springs Raceway, Rosamond, CA $0
7/18/2015 Willow Springs Raceway, Rosamond, CA $0
8/29/2015 Willow Springs Raceway, Rosamond, CA $0
9/19/2015 Willow Springs Raceway, Rosamond, CA $0
11/7/2015 Willow Springs Raceway, Rosamond, CA $0

 

  NASCAR  
3/13/2015 Phoenix International Raceway $0
5/17/2015 Canadian Tire Motorsports Park $0
8/8/2015 Xfinity Series Watkins Glen, NY $0
8/29/2015 Xfinity Series, Road America Wisconsin $0

 

  SVRA  
  2016 Schedule  
9/17/2016 Coronado Annual Speed Fest $0

 

Sanctioning Bodies

 

Sports Car Vintage Racing Association (SVRA)

 

The Sports Car Vintage Racing Association (SVRA) is the largest and one of the oldest Vintage Racing organization in the United States. SVRA now has over 1,200 members. SVRA conducts Vintage events at legendary race tracks throughout the country The series accepts entries that feature classic MGs, Triumphs, BMWs, Allards, Jaguars, and Lotuses as well as contemporary Camaros, Audis, Porsches and Corvettes among others.

 

NASCAR Monster Energy Cup Series

 

The NASCAR Monster Energy NASCAR Cup Series is the sport's highest level of professional competition. It is consequently the most popular and most profitable NASCAR series. Since 2001, the Monster Energy NASCAR Cup season has consisted of approximately thirty six (36) races over 10 months.

 

NASCAR Xfinity Series

 

The NASCAR Xfinity Series (formerly Nationwide Series) is the second-highest level of professional competition in NASCAR today.

 

 

 

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International Motor Sports Association (IMSA)

 

The International Motorsports Association (IMSA) is an auto racing sanctioning body based in Daytona Beach, Florida, United States. Beginning in 2014, IMSA is the sanctioning body of the WeatherTech Sports Car Championship the premier series resulting from the merger of Grand Am and the American LeMans Series presented by Tequilia Patron.

  

ARCA

 

The ARCA Racing Series powered by Menards is an American stock car series, the premier division of the ARCA. It is considered professional league of stock car racing, perhaps two steps down from the top-level NASCAR Monster Energy Cup & Xfinity Series. Though some events occur the same weekend as NASCAR events, the Series is not affiliated with NASCAR.

 

Revenues

 

We expect to have three revenue streams for our business.

 

PRODUCTION SERVICES

 

In 2012, we commenced offering consulting and management services to potential clients that wish to participate in motorsports racing. Our services include providing, sourcing and managing a full "turnkey" racing car and race team, and all ancillary equipment and services to enable a client to participate in a racing event as a Team Owner, or providing management of, or access to, any part of equipment or human services required to participate in a racing event, including:

 

·   fully prepared racing cars
·   decaling the race cars
·   driver(s)
·   crew chiefs
·   mechanic crews
·   "over the wall" pit crews
·   liaison between the client and the sanctioning body (entry fees, equipment specifications and membership)
·   pre- and post-race social events

 

Our fees for this management ranges from 5% to 10% of the total budget for the event.

 

On January 1, 2014, the Company entered into an event services agreement with Carolina Pro Am Services, Inc., ("Carolina") a company owned and controlled by Richard Ware who is also the owner and controller of a Rick Ware Racing LLC. Rick Ware Racing LLC is the owner of 8.85% of our issued and outstanding common shares. During the years ended December 31, 2016 and 2015 the Company paid $-0- and $125,500 respectively to Carolina.

 

ADVERTISING REVENUE

 

The second potential source of revenue is from direct advertising from companies interested in advertising their product or service on our racing equipment. Though this part of our business, we offer a client access to national television, spectator sports and social media concurrently or individually depending on the racing series and venue. We believe we can attract advertising clients because the client's brand will be displayed on the following outlets:

 

National Television – NASCAR and IMSA races are live broadcasts. With their logos and brands displayed on our race vehicles, our client can expose their products or services to consumers.

 

 

 

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Spectator Sports – In each racing event there are spectators that pay a gate attendance ticket fees to view events in person. With our client’s logos and brands displayed on our race vehicles, the client can expose their products or services to consumers, in this case live spectators.

 

Social Media – Through the proliferation of social media, fans, teams, sanctioning bodies, driver and spectators have access to real time information and a place to share their ideas and messaging. Our clients benefit from these activities as their logo and brand receive additional exposure and real time commentary.

 

In certain cases where a custom solution is required to accommodate the client, we will modify or revenue model and adjust fees accordingly either increased, decreased or with terms.

 

RACE PURSES

 

Revenue is expected to be derived from our winning a share of cash purses that are provided by event advertisers and sanctioning bodies. Purse for the events we participate in can range from $0 to $100,000 for the sanctioning bodies we compete within. The winning purses we have received have been in regional events only.

  

We have had no present commitments from prospective advertisers. There can be no assurance that we will be able to obtain any such sponsor revenue or management clients in the future. We have conducted limited operations to date, and our operations will continue to be limited until such time as we are able to obtain additional funds to carry out our overall business plans.

 

Acquisitions of Competition Equipment

 

In June of 2014, we acquired two (2) NASCAR type stock cars for competition in SVRA vintage racing events. The first race car is considered a “complete roller”. A “complete roller” is a purpose-built race car that is complete with all of the required racing components in place minus a competition engine and transmission. The engine and transmission can be purchased or leased.

 

The second racing vehicle our company acquired is a “turnkey “ NASCAR type road course stock car acquired in with all racing components including a racing engine and transmission.

 

The NASCAR stock cars were acquired from Cassin Farlow, LLC for 1,200,000 common shares on May 1, 2014. Cassin Farlow’s majority shareholder is Augustus B. O’Connell, father of Kevin O’Connell.

 

In addition, in June of 2014, we acquired a Ford "BOSS" road racing Mustang race car used in competition in the Grand Am Rolex Series. This model Boss Mustang is a custom built model specially configured for road racing. We intend to use this vehicle in SVRA Vintage racing competition. We acquired the Ford BOSS Mustang for $200,000. The debt of $200,000 was immediately converted into 1,333,333 common shares of the Company at a conversion rate of $0.15 per share pursuant to a debt to equity conversion agreement executed on May 1, 2014. In March of 2017, we sold the Ford BOSS Mustang R back to the original seller and received 833,333 of our shares of common stock back as compensation.

 

Operating Budget

 

Expected management estimates for the cost of operating the business through September 30, 2018 will require additional capital of up to Three Hundred Thousand dollars ($300,000) consisting of: $20,000 for registration and licenses required for entry in sanctioned racing events; $20,000 for travel and lodging; $20,000 for marketing and branding; $30,000 for legal and accounting; $15,000 for engineers and consultants; $15,000 for parts, $90,000 for engine and transmission leases. $50,000 for fuels and tires; $10,000 for racecar transporter travel; $20,000 for debt service of all Company notes payable; and $10,000 in air and rental cars.

 

In future events, we will determine what chassis, car, engine and transmission we intend enter. Our decision will be based upon the characteristics of the race venue and the suitability of the chassis and combination to race at the particular track and expected conditions. The limitations of our operating budget will also be a factor.

 

Our ability to attract advertisers and management clients will be dependent upon the success of our racecars in the races we enter. We believe that if our cars are successful, or finish within the top 10 finishing places in any race, our ability to attract business will be enhanced. Our past record of inconsistent finishing places, has diminished our ability to attract regular business.

 

 

 

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In addition, we have received revenue for the events in which we qualified to enter for races during the periods of 2008 through 2016. Our losses from inception through the period ended December 31, 2016 was $3,006,457.

 

For the year ended December 31, 2016 we had limited revenue from marketing or sponsorships and had limited purse winnings. We incurred a loss of $226,645 which represented a decrease from a loss of $306,957 for the year ended December 31, 2015. The decrease in loss for 2016 is attributable to a decrease in racing events entered during the year for which the Company incurred race related expenses and a decrease in related party expenses. We had revenue of $15,000 for the year ended December 31, 2016 and $1,000 for the year ended December 31, 2015.

 

Our auditor's report has expressed substantial doubt about our ability to continue as a going concern.

 

Lines of Credit

 

On October 1, 2009, the Company entered into a line of credit agreement for up to $600,000 with General Pacific Partners, LLC ("GPP") one of our principal shareholders, a related party owned and operated by our CEO and majority shareholder, that also provides motor sports marketing industry consulting services to the Company as needed. Under the agreement, the Company receives operating fund advances and reimbursement for expenses incurred on behalf of the Company. The loan bears interest at eight percent (8%) per annum. On July 3, 2017, $200,000 of the balance due was converted into 2,000,000 shares of stock at a value of $.10 per share. As of September 30, 2017, and December 31, 2016, the Company owed $108,164 and $183,164, respectively, in operating advances from this related party. As of September 30, 2017, and December 31, 2016, the Company had accrued interest on this line of credit in the amounts of $26,816 and $18,354, respectively.

 

On August 5, 2013, the Company entered into a line of credit agreement for up to $500,000 with Devcap Partners, LLC, ("Devcap") a Texas limited liability company that is wholly owned and managed by our CEO and majority shareholder. Under the agreement, the Company receives operating fund advances and reimbursement for expenses incurred on behalf of the Company. On July 3, 2017, $200,000 of the balance due was converted into 2,000,000 shares of stock at a value of $.10 per share. As of September 30, 2017, and December 31, 2016, the Company owed $49,647 and $332,647, respectively, in operating advances to this related party. As of September 30, 2017, and December 31, 2016, the Company had accrued interest on this line of credit in the amounts of $78,707 and $67,040, respectively.

 

On October 15, 2012, the Company entered into a revolving line of credit agreement with TVP Investments, LLC, a Georgia Limited Liability Company in the amount up to $500,000. The line of credit is unsecured, bears interest of 10% and has a maturity date of December 31, 2019. As of September 30, 2017, and December 31, 2016, the balance of the line of credit was $75,000. As of September 30, 2017, and December 31, 2016, the Company had accrued interest on this line of credit in the amounts of $28,043 and $22,418, respectively.

 

The Company has a business line of credit up to $3,000 with Wells Fargo bank. The line of credit is unsecured with a variable interest rate of approximately 18.0%. The balance owed as of September 30, 2017 and December 31, 2016 was zero.

 

Capital Requirements

 

Expected management estimates for the cost of operating the business through September 30, 2018 will require additional capital of up to Three Hundred Thousand dollars ($300,000) consisting of: $20,000 for registration and licenses required for entry in sanctioned racing events; $20,000 for travel and lodging; $20,000 for marketing and branding; $30,000 for legal and accounting; $15,000 for engineers and consultants; $15,000 for parts, $90,000 for engine and transmission leases. $50,000 for fuels and tires; $10,000 for racecar transporter travel; $20,000 for debt service of all Company notes payable; and $10,000 in airfare and rental cars.

 

There can be no assurance that we will be able to raise any or all of the capital required. These factors indicate that we may be unable to continue as a going concern, particularly in the event that we cannot generate sufficient cash flow or raise sufficient capital to conduct our operations. Our financial statements do not include any adjustments to the value of our assets or the classification of our liabilities that might result if we would be unable to continue as a going concern.

 

Meeting our capital requirements will be directly contingent on Mr. O'Connell and his related businesses and his decision to advance us capital in the event that we are not able to raise capital from other sources. 

 

Additionally, our ability to attract lessees for our race cars and clients for our consulting and advertising business will, in part, be dependent upon the success of our lessees in the races in which they compete. The race event finishing positions, especially finishing among the first ten places, will enhance our ability to attract capital and event to offset the cost of competing in racing events. Should our lessees compete in races in which they finish in other than the first ten finishing places, those lessees ability to attract advertisers and advertising and promotion monies may be diminished.

 

 

 

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Marketing

 

We depend upon our officers for all marketing activities. We intend to hire a marketing and sales person to pursue our offerings of motorsports production services. However, we will not be able to hire such a person until we have the financial resources to do so.

 

Competition

 

We principally compete with other racing teams and advertising companies that are much larger, well known, better established and have greater financial resources than us. We do not consider the Company to be a factor in the overall racing industry. We will also compete for advertising dollars with other sports such as football, baseball, basketball, hockey, tennis and golf and with other live entertainment and popular recreational activities. We also compete with other consultant and management companies that are much larger and have a longer history and are better established for clients in our Consulting and Management business. Depending on our success in funding our operations, we intend on entering between four and ten events on an annual basis. The events attended are dependent on our success in raising capital from sources other than our lines of credit from General Pacific Partners, LLC and TVP Investments LLC.

 

Relationship with our majority shareholder

 

As of September 30, 2017, Kevin O'Connell is the Managing Member of (a) GPP, (b) Devcap, (c) Revete and (d) Continental. Together, Mr. O'Connell and GPP, Devcap, Revete, and Continental own 79.9% of our outstanding common shares.

 

Since the inception of the company we have borrowed monies from GPP, Devcap, Kevin P. O’Connell and his affiliates.

  

On October 1, 2009, the Company entered into a line of credit agreement for up to $600,000 with General Pacific Partners, LLC ("GPP") one of our principal shareholders, a related party owned and operated by our CEO and majority shareholder, that also provides motor sports marketing industry consulting services to the Company as needed. Under the agreement, the Company receives operating fund advances and reimbursement for expenses incurred on behalf of the Company. The loan bears interest at eight percent (8%) per annum. On July 3, 2017, $200,000 of the balance due was converted into 2,000,000 shares of stock at a value of $.10 per share. As of September 30, 2017, and December 31, 2016, the Company owed $108,164 and $183,164, respectively, in operating advances from this related party. As of September 30, 2017, and December 31, 2016, the Company had accrued interest on this line of credit in the amounts of $26,816 and $18,354, respectively.

 

On August 5, 2013, the Company entered into a line of credit agreement for up to $500,000 with Devcap Partners, LLC, ("Devcap") a Texas limited liability company that is wholly owned and managed by our CEO and majority shareholder. Under the agreement, the Company receives operating fund advances and reimbursement for expenses incurred on behalf of the Company. On July 3, 2017, $200,000 of the balance due was converted into 2,000,000 shares of stock at a value of $.10 per share. As of September 30, 2017, and December 31, 2016, the Company owed $49,647 and $332,647, respectively, in operating advances to this related party. As of September 30, 2017, and December 31, 2016, the Company had accrued interest on this line of credit in the amounts of $78,707 and $67,040, respectively.

 

The Company has recurring losses from operations and our auditor has stated that there is substantial doubt about the Company's ability to continue as a going concern. Further, continued losses could cause the Company to be unable to continue in the racing industry or to meet debt obligations. (see "Risk Factors" starting on Page 9). The Company believes that racing requires significant capital outlays on a continual basis to successfully fund operations, but with adequate funding that profitable operations can be achieved.

 

Without additional funding, the Company could discontinue operations. We have $52,918 in cash as of September 30, 2017 and our monthly expenses are approximately $22,000. We will need to obtain additional funding to maintain continuing operations and there can be no assurance that such funding is, or will become available.

 

Facilities and Maintenance

 

Maintenance and race set up is an ongoing effort in auto racing. Mr. O'Connell manages the staff of independent technicians to maintain a regular schedule updates and changes to back up parts and various pit equipment needed at racing events. Our race cars are managed for racing from a facility in Thomasville, North Carolina owned by Rick Ware Racing, LLC, a non-affiliated party. In January of 2017 we entered into a lease for warehouse space at , 110 Sunrise Center Drive, Thomasville, NC for a three year term for which we agreed to pay 1,200,000 common shares at $.15 per share to Rick Ware Racing, LLC (400,000 shares for each full year of occupancy). As at September 30, 2017 we have issued 400,000 to Rick Ware Racing LLC. for this lease.

 

 

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There can be no assurance that our vehicles will be competitive or qualify for each, or any sanctioned event entered. If we are not as successful competitively, we could have a more difficult time attracting and maintaining advertisers, drivers and crews which in turn could impact our ability to attract and maintain advertisers. We will compete with well-established teams and there can be no assurance that we will be able to create or maintain a competitive position. In addition, there are relatively low barriers to entry into these markets and we expect to continue to face competition from new entrants into these same markets. There can be no assurance that we will be able to compete successfully in these markets.

 

Employees

 

As of September 30, 2017, we had no full-time employees. Our only employees consist of 2 management personnel, all of whom devote 30% or less of their time to our business affairs. We intend to hire full time employees when and if we have the financial resources to do so. Until such time as we are in a position to hire full time employees, we will hire independent contractors to perform work for us on an as needed basis. None of our employees are represented by a labor union or a collective bargaining agreement. We consider our relations with our Management employees to be good.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

 

 

The following discussion and analysis of our results of operations and financial condition for the fiscal years ended December 31, 2016 and 2015 and the 9 month periods ending September 30, 2017 and 2016, should be read in conjunction with our financial statements and the notes to those financial statements that are included elsewhere in this annual report. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the “Risk Factors”, “Cautionary Notice Regarding Forward-Looking Statements” and “Description of Business” sections and elsewhere in this annual report. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” “predict,” and similar expressions to identify forward-looking statements. Although we believe the expectations expressed in these forward-looking statements are based on reasonable assumptions within the bound of our knowledge of our business, our actual results could differ materially from those discussed in these statements. Factors that could contribute to such differences include, but are not limited to, those discussed in the “Risk Factors” section of this report. We undertake no obligation to update publicly any forward-looking statements for any reason even if new information becomes available or other events occur in the future.

 

In addition to historical information, this Annual Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Actual results could differ materially from those projected in the forward-looking statements as a result of a number of factors, risks and uncertainties, including the risk factors set forth in Item 1A. above and the risk factors set forth in this Annual Report. Generally, the words “anticipate”, “expect”, “intend”, “believe” and similar expressions identify forward-looking statements. The forward-looking statements made in this Annual Report are made as of the filing date of this Annual Report with the SEC, and future events or circumstances could cause results that differ significantly from the forward-looking statements included here. Accordingly, we caution readers not to place undue reliance on these statements. We expressly disclaim any obligation to update or alter our forward-looking statements, whether, as a result of new information, future events or otherwise after the date of this document.

 

Overview

 

This section contains forward-looking statements that involve risks and uncertainties. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date that they are made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

 

The following discussion should be read in conjunction with the financial statements and notes thereto included herein.

 

We are a small auto competition and event management business that has participated primarily in NASCAR and IMSA sanctioned events.  We utilize our racecars to provide marketing and branding services to client advertisers desiring to use our racecars to market their product or service by having our vehicles carry their corporate brand. We have conducted limited operations to date.

  

Election under JOBS Act of 2012

 

The Company has chosen to opt-in and make use of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act of 2012. This election is irrevocable. If we choose to adopt any accounting standard on the public company time frame we would be required to adopt all subsequent accounting standards on the public company time frame.

 

Jumpstart Our Business Startups Act

 

In April, 2012, the Jumpstart Our Business Startups Act ("JOBS Act") was enacted into law. The JOBS Act provides, among other things:

 

Exemptions for emerging growth companies from certain financial disclosure and governance requirements for up to five years and provides a new form of financing to small companies;

 

 

 

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Amendments to certain provisions of the federal securities laws to simplify the sale of securities and increase the threshold number of record holders required to trigger the reporting requirements of the Securities Exchange Act of 1934;

 

Relaxation of the general solicitation and general advertising prohibition for Rule 506 offerings; 

 

Adoption of a new exemption for public offerings of securities in amounts not exceeding $50 million; and Exemption from registration by a non-reporting company of offers and sales of securities of up to $1,000,000 that comply with rules to be adopted by the SEC pursuant to Section 4(6) of the Securities Act and exemption of such sales from state law registration, documentation or offering requirements.

 

In general, under the JOBS Act a company is an emerging growth company if its initial public offering ("IPO") of common equity securities was affected after December 8, 2011 and the company had less than $1 billion of total annual gross revenues during its last completed fiscal year. A company will no longer qualify as an emerging growth company after the earliest of

 

(i) The completion of the fiscal year in which the company has total annual gross revenues of $1 billion or more;
   

 

(ii) The completion of the fiscal year of the fifth anniversary of the company's IPO;
   

 

(iii) The company's issuance of more than $1 billion in nonconvertible debt in the prior three-year period; or
   

 

(iv) The company becoming a "larger accelerated filer" as defined under the Securities Exchange Act of 1934.

 

The JOBS Act provides additional new guidelines and exemptions for non-reporting companies and for non-public offerings. Those exemptions that impact the Company are discussed below.

 

Financial Disclosure.  The financial disclosure in a registration statement filed by an emerging growth company pursuant to the Securities Act of 1933 will differ from registration statements filed by other companies as follows:

 

(i) Audited financial statements required for only two fiscal years;

 

(ii) Selected financial data required for only the fiscal years that were audited;

 

(iii) Executive compensation only needs to be presented in the limited format now required for smaller reporting companies. (A smaller reporting company is one with a public float of less than $75 million as of the last day of its most recently completed second fiscal quarter)

 

However, the requirements for financial disclosure provided by Regulation S-K promulgated by the Rules and Regulations of the SEC already provide certain of these exemptions for smaller reporting companies. The Company is a smaller reporting company. Currently a smaller reporting company is not required to file as part of its registration statement selected financial data and only needs audited financial statements for its two most current fiscal years and no tabular disclosure of contractual obligations.

  

The JOBS Act also exempts the Company's independent registered public accounting firm from complying with any rules adopted by the Public Company Accounting Oversight Board ("PCAOB") after the date of the JOBS Act's enactment, except as otherwise required by SEC rule.

 

The JOBS Act also exempts an emerging growth company from any requirement adopted by the PCAOB for mandatory rotation of the Company's accounting firm or for a supplemental auditor report about the audit.

 

Internal Control Attestation.  The JOBS Act also provides an exemption from the requirement of the Company's independent registered public accounting firm to file a report on the Company's internal control over financial reporting, although management of the Company is still required to file its report on the adequacy of the Company's internal control over financial reporting.

 

 

 

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Section 102(a) of the JOBS Act exempts emerging growth companies from the requirements in §14A(e) of the Securities Exchange Act of 1934 for companies with a class of securities registered under the 1934 Act to hold shareholder votes for executive compensation and golden parachutes.

 

Other Items of the JOBS Act.  The JOBS Act also provides that an emerging growth company can communicate with potential investors that are qualified institutional buyers or institutions that are accredited to determine interest in a contemplated offering either prior to or after the date of filing the respective registration statement. The Act also permits research reports by a broker or dealer about an emerging growth company regardless if such report provides sufficient information for an investment decision. In addition the JOBS Act precludes the SEC and FINRA from adopting certain restrictive rules or regulations regarding brokers, dealers and potential investors, communications with management and distribution of a research reports on the emerging growth company IPO. 

 

Section 106 of the JOBS Act permits emerging growth companies to submit 1933 Act registration statements on a confidential basis provided that the registration statement and all amendments are publicly filed at least 21 days before the issuer conducts any road show. This is intended to allow the emerging growth company to explore the IPO option without disclosing to the market the fact that it is seeking to go public or disclosing the information contained in its registration statement until the company is ready to conduct a roadshow.

 

Election to Opt Out of Transition Period.  Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a 1933 Act registration statement declared effective or do not have a class of securities registered under the 1934 Act) are required to comply with the new or revised financial accounting standard.

 

The JOBS Act provides a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of the transition period and will “opt-in” and make use of the transitional period.

 

Off-balance sheet arrangements

 

The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect or change on the Company’s financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term “off-balance sheet arrangement” generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with the Company is a party, under which the Company has (i) any obligation arising under a guarantee contract, derivative instrument or variable interest; or (ii) a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.

 

Significant Accounting Policies

 

Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Note 1 of the Notes to Consolidated Financial Statements describes the significant accounting policies used in the preparation of the consolidated financial statements. Certain of these significant accounting policies are considered to be critical accounting policies, as defined below.

 

A critical accounting policy is defined as one that is both material to the presentation of our financial statements and requires management to make difficult, subjective or complex judgments that could have a material effect on our financial condition and results of operations. Specifically, critical accounting estimates have the following attributes: 1) we are required to make assumptions about matters that are highly uncertain at the time of the estimate; and 2) different estimates we could reasonably have used, or changes in the estimate that are reasonably likely to occur, would have a material effect on our financial condition or results of operations.

  

 

 

  26  

 

Estimates and assumptions about future events and their effects cannot be determined with certainty. We base our estimates on historical experience and on various other assumptions believed to be applicable and reasonable under the circumstances. These estimates may change as new events occur, as additional information is obtained and as our operating environment changes. These changes have historically been minor and have been included in the consolidated financial statements as soon as they became known. Based on a critical assessment of our accounting policies and the underlying judgments and uncertainties affecting the application of those policies, management believes that our consolidated financial statements are fairly stated in accordance with accounting principles generally accepted in the United States, and present a meaningful presentation of our financial condition and results of operations. We believe the following critical accounting policies reflect our more significant estimates and assumptions used in the preparation of our consolidated financial statements:

 

Use of Estimates – These financial statements have been prepared in accordance with accounting principles generally accepted in the United States and, accordingly, require management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Specifically, our management has estimated the expected economic life and value of our licensed technology, our net operating loss for tax purposes and our stock, option and warrant expenses related to compensation to employees and directors, consultants and investment banks. Actual results could differ from those estimates.

 

Cash and Equivalents – We maintain our cash in bank deposit accounts, which at times, may exceed federally insured limits. We have not experienced any losses in such account. 

 

Revenue Recognition – The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company will recognize revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.

 

The majority of revenues are from consulting services provided at events which range from one day to one week in length. The revenues from these events are recognized upon completion of the contracted services. In the event that the Company’s revenues are for services provided under contracts greater than one month in length, the contracts will be billed in total at the onset of the contact period, and to the extent that billings exceed revenue earned, the Company will record such amount as deferred revenue until the revenue is earned. We recognize revenue on these contracts in the period the services are provided under the contract. Expenses associated with providing the services are recognized in the period the services are provided which coincides with when the revenue is earned.

 

Our revenues, to date, has been derived from advertising, and from race purses. Revenue is recognized on an accrual basis as earned under contract terms. The $15,000 earned in related party revenue in 2016 was part of business development and administrative services provided by the company and Mr. O’Connell.

 

Property and equipment Property and equipment are recorded at cost and depreciated under the straight line method over each item's estimated useful life. The Company uses a 5 year life for racecars and equipment, 7 years for furniture and fixtures.

 

Intangible and Long-Lived Assets We follow FASB ASC 360-10-35 which has established a "primary asset" approach to determine the cash flow estimation period for a group of assets and liabilities that represents the unit of accounting for a long lived asset to be held and used. Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell. During the period ended December 31, 2016, no impairment losses were recognized.

 

Stock Based Compensation We recognize expenses for stock-based compensation arrangements in accordance with provisions of Accounting Standards Codification 714. Accordingly, compensation cost is recognized for the excess of the estimated fair value of the stock at the grant date over the exercise price, if any. For equity instruments issued to non-employees, the estimated fair value of the equity instrument is recorded on the earlier of the performance commitment date or the date the services required are completed.

  

 

 

  27  

 

Plan of Operations

 

RC-1, Inc. (the “Company”), was incorporated in the State of Nevada on May 14, 2009. The Company is a motorsports marketing business focused primary in road racing events in North America utilizing NASCAR type competition equipment. The Company is currently considered to be in the development stage, and has generated only limited revenues from its activities in the racing business.

 

We will continue to focus in “Road Racing” motorsports events organized by several motorsports sanctioning bodies such as The National Association for Stock Car Auto Racing ("NASCAR"), and The International Motorsports Association ("IMSA") and the Sports Car Vintage Racing Association (SVRA.

 

In addition, we intend to continue to compete in the Toyota Southwest Superlate Model Series, SVRA and the GAAS series in an effort to promote our business and brand in the western United States.

 

Going Concern

 

As of December 31, 2016, RC-1, Inc. had an accumulated deficit of $3,006,457. Also, during the year ended December 31, 2016, we used net cash of $55,293 for operating activities. These factors raise substantial doubt about our ability to continue as a going concern.

 

Management expects to raise $300,000 in capital through the issuance of debt and equity and believes it will be able to raise sufficient capital over the next twelve months to finance operations. However, there can be no assurances that the Company will be successful in this regard or will be able to eliminate its operating losses. The accompanying financial statements do not contain any adjustments which may be required as a result of this uncertainty.

 

Expected management estimates for the cost of operating the business through September 30, 2018 will require additional capital of up to Three Hundred Thousand dollars ($300,000) consisting of: $20,000 for registration and licenses required for entry in sanctioned racing events; $20,000 for travel and lodging; $20,000 for marketing and branding; $30,000 for legal and accounting; $15,000 for engineers and consultants; $15,000 for parts, $90,000 for engine and transmission leases. $50,000 for fuels and tires; $10,000 for racecar transporter travel; $20,000 for debt service of all Company notes payable; and $10,000 in airfare and rental cars.

 

The Company has no outstanding payments due for the lease of race cars at this time.

 

The Company intends to hold discussions with existing shareholders, new prospective shareholders and various lenders in pursuing the capital we need for the upcoming twelve months of operations. Additionally, the Company may elect to draw down additional proceeds from its line of credit with General Pacific Partners, LLC and TVP Investments, LLC, Inc. There can be no assurance that we will be able to raise any additional equity or debt capital.

 

The Company’s capital requirements consist of general working capital needs, scheduled principal and interest payments on debt when required, obligations, and capital expenditures. The Company’s capital resources consist primarily of cash generated from proceeds through the issuances of common stock. At December 31, 2016, the company had cash of approximately $50,000.

 

Results of Operations for the Years Ended December 31, 2016 and 2015

 

Revenues

 

In the years ended December 31, 2016 and 2015, we had revenues in the amounts of $15,000 and $1,000 respectively, which was an increase of $14,000. The Company earned all of its $1,000 in revenues in 2015 from NASCAR consulting services. In 2016, related party revenue of $15,000 was earned for business development and administrative services rendered. The Company provided consulting services to a race team competing in a NASCAR race event. Services included management of pit crew, communications with driver, and coordinating supplies and equipment rendered to a related party to support a race team.

 

Operating Expenses.

 

Race Expenses

 

For the year ended December 31, 2016, race expenses decreased to $32,305 as compared to $43,118 from the prior year ended December 31, 2015 which was a decrease of $10,813. The decrease was primarily the result of the decrease in race events in 2016.

 

 

 

  28  

 

 

Consulting to related parties

 

For the year ended December 31, 2016, consulting to related parties expense decreased to $60,000 as compared to $168,000 from the prior year ended December 31, 2015 which was a decrease of $108,000. The decrease in services in 2016, which consisted of race event management, was due to a decrease in the number of events to which services were provided in 2016 as compared to 2015.

 

General and Administrative Expense

 

For the year ended December 31, 2016, general and administrative expenses increased to $43,155 as compared to $41,858 from the prior year ended December 31, 2015 which was an increase of $1,297. The increase was primarily due to depreciation expense increase.

 

Professional Fees

 

Professional fees for the year ended December 31, 2016 were $63,613 compared to $15,500 for the period ended December 31, 2015, and increase of $48,113. The increase was primarily due to legal and accounting fees.

 

Interest Expense

 

For the year ended December 31, 2016, interest expense increased to $42,572 as compared to $39,481 for the year ended December 31, 2015, an increase of $3,091. The increase in interest expense was because of slightly higher due to related parties’ loan balances.

 

Net Loss

 

Our net loss from operations decreased to $226,645 for the year ended December 31, 2016, from $306,957 for the year ended December 31, 2015.

 

Liquidity and Capital Resources

 

Liquidity is the ability of a company to generate adequate amounts of cash to meet its needs for cash. The following table provides certain selected balance sheet comparisons between December 31, 2016, and December 31, 2015:

 

    December 31,     December 31,     $     Percent  
    2016     2015     Change     Change  
Working Capital   $ (857,503 )   $ (670,858 )   $ (186,645 )     (22% )
Cash   $ 49,900     $ 49,118     $ 782       2.5%  
Total current assets   $ 64,900     $ 49,118     $ 15,782       2.5%  
Total assets   $ 161,567     $ 185,785     $ (24,218 )     (26% )
Accounts payable and accrued liabilities   $ 27,478     $     $ (27,478 )     (100.0% )
Related party interest payable   $ 35,072     $ 50,322     $ 15,250       30%  
Lines of credit & due to related parties   $ 590,811     $ 534,736     $ 56,075       9.5%  
Total current liabilities   $ 922,403     $ 719,976     $ 202,427       21%  
Total liabilities   $ 906,601     $ 719,976     $ 186,625       21%  

 

Our working capital decreased by $186,645 from December 31, 2015 to December 31, 2016 mainly from additional related party debt and accrued interest on said related party debt. The Company’s assets decreased from $185,785 as of December 31, 2015 to $161,567 as of December 31, 2016 mainly from depreciation on a race vehicle which is used in marketing and operational activities.

 

Operating Activities

 

Net cash used for continuing operating activities during 2016 was $55,293 as compared to $181,788 for fiscal 2015.

 

 

 

  29  

 

Investing Activities

 

There was no cash from investing activities 2015 and 2016.

 

Financing Activities

 

For the year ended December 31, 2016, net cash provided by financing activities was $56,075 which consisted of $246,175 in proceeds and repayments of $190,000 from related party debt. For the year ended December 31, 2015, net cash provided by financing activities was $203,181 which consisted of net payments of $768 from a line of credit, and $275,364 in borrowing and $71,416 in repayments from related party debt.

 

The Company's financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustment relating to recoverability and classification of recorded amounts of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.

 

Three Months Ended September 30, 2017 Compared to Three Months Ended September 30, 2016

 

Revenues

 

The Company had $20,000 in related party revenue during the three months ended September 30, 2017 compared to no revenue for the same period ended September 30, 2016.

 

Operating Expenses

 

For the three months ended September 30, 2017 operating expenses were $82,917 compared to $65,435 for the same period in 2016 for an increase of $17,482. The increase was primarily a result of the increase in race expenses to $39,564 from $15,003 for the same period in 2016.

 

Interest and Financing Costs

 

Interest expense was $2,367 for the three months ended September 30, 2017 compared to $10,888 in the three months ended September 30, 2016. Interest expense was reduced for the quarter due to the reduction of our long term notes payable, which were settled via issuances of our common stock.

 

Net Income (Loss)

 

The Company incurred losses of $65,284 for the three months ended September 30, 2017 compared to $76,323 during the three months ended September 30, 2016 due to the factors discussed above.

 

Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016

 

Revenues

 

The Company realized $155,000 in revenue during the nine months ended September 30, 2017 compared to no revenue for the nine months ended September 30, 2016.

 

Operating Expenses

 

For the nine months ended September 30, 2017 operating expenses were $209,980 compared to $143,475 for the same period in 2016 for an increase of $66,505.  The increase was a result of an increase in race expenses, which increased to $40,178 from $15,003 for an increase of $25,175, consulting to related parties, which increased to $77,250 from $45,000 for an increase of 32,250, and general and administrative, which increased to $59,524 from $33,095 for an increase of $26,429.

 

Interest and Financing Costs

 

Interest expense was $23,142 for the nine months ended September 30, 2017 compared to $31,343 in the nine months ended September 30, 2016. Interest expense was reduced for the quarter due to the reduction of our long-term notes payable, which were settled via issuances of our common stock.

 

 

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Net Income (Loss)

 

The Company incurred losses of $78,122 for the nine months ended September 30, 2017 compared to $174,818 during the nine months ended September 30, 2016 due to the factors discussed above.

 

LIQUIDITY AND CAPITAL RESOURCES

 

The Company's financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustment relating to recoverability and classification of recorded amounts of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.

 

The Company has a minimum cash balance available for payment of ongoing operating expenses and has incurred losses since inception and anticipates future losses in the development of its business raising substantial doubt about the Company’s ability to continue as a going concern. Its continued existence is dependent upon its ability to continue to execute its operating plan and to obtain additional debt or equity financing. There can be no assurance the necessary debt or equity financing will be available, or will be available on terms acceptable to the Company.

 

The Company had $52,918 in cash at September 30, 2017 with availability on our related party lines of credit with General Pacific Partners, LLC and DEVCAP Partners, LLC of $491,836 and $450,353, respectively, and our business line of credit with Wells Fargo Bank of $3,000. We had a working capital deficit of $284,903 at September 30, 2017.

 

Operating activities

 

During the nine months ended September 30, 2017, we used $38,982 in operating activities compared to $44,460 during the nine months ended September 30, 2016, a difference of $5,478. The decrease between the periods was largely due to a lower net loss.

 

Investing activities

 

We neither generated nor used cash flow in investing activities during the nine months ended September 30, 2017 and the same for the period in 2016.

 

Financing activities

 

During the nine months ended September 30, 2017, we generated $42,000 from financing activities compared to $40,800 for the same period ended September 30, 2016, an increase of $1,200.

 

 

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CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

 

We have not had any disagreements with our accountants.

 

Our current principal independent auditor is Daszkal Bolton ("Daszkal Bolton") of Boca Raton, Florida, whom we engaged on December 14, 2016.

 

On December 14, 2016 RC-1, Inc. (the Company) notified Pritchett, Siler and Hardy PC, ("PSH") the Company's former independent accounting firm, that it had elected to change accounting firms and, therefore, was dismissing PSH.

 

Other than for the inclusion of a paragraph describing the uncertainty of the Company’s ability to continue as a going concern (for the years ended December 31, 2016 and December 31, 2015), Daszkal Bolton's and PSH’s reports on the Company’s financial statements for the years ended December 31, 2016 and 2015, respectively, contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles.

 

During the Company’s two most recent fiscal years and the subsequent interim period preceding PSH’s dismissal, there were: (i) no “disagreements” (within the meaning of Item 304(a) of Regulation S-K) with PSH on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of PSH, would have caused it to make reference to the subject matter of the disagreements in its report on the consolidated financial statements of the Company; and (ii) no “reportable events” (as such term is defined in Item 304(a)(1)(v) of Regulation S-K).

 

We have not had any disagreements with our accountants.

 

Changes in Internal Control Over Financial Reporting

 

No changes in our internal control over financial reporting occurred during the year ended December 31, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 

 

 

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MANAGEMENT

 

 

Name Age Position (1)
Kevin P. O’Connell 49 President, and Sole Director (2)
     
Rayna Austin 26 Secretary & Treasurer (3)

 

(1) There are no arrangements or understandings between our director and officers or any other persons pursuant to which she or he was, or is to be, selected as a director or officer.

 

(2) Mr. O'Connell has been the sole director and President of the Company since the inception of the Company in 2007. His term of office as a director and as President, are for one year from the date of the Company's annual meeting of shareholders, and the annual meeting of directors, respectively.

 

(3) Ms. Austin was appointed by the board of directors on December 1, 2014. Her term of office as Secretary and Treasurer is for one year from the date of the Company's annual meeting of directors.

 

Kevin P. O’Connell - Mr. O’Connell has led venture capital investments and asset management (real estate & securities) strategies with particular focus in the general capital markets consisting of private and public financing, mergers and acquisitions, and corporate restructurings. He is the founder and managing partner of General Pacific Partners, LLC, and a Southern California firm providing advisory services, direct investment and capital markets consulting. Mr. O’Connell has been a direct principal investor and active board member having managed the strategic decisions, equity/debt financing and developmental stage efforts of companies engaged in the technology, healthcare and environmental industries. In 2016, Mr. O’Connell formed a new company to pursue collateral based lending exclusively in California. The application was denied on November 7, 2017, based upon a Stipulation of Settlement Agreement that the applicant would be suspended for twelve months from any position of employment, management, or control of any finance lender. This suspension was based upon a 1997 California Real Estate Commissioner order of license revocation with options for conditional ability to reinstate. That company intends to reapply for a Lender’s License in twelve months.

 

In addition, Mr. O'Connell has been a professional race car driver, and racing team management consultant since 2002. Mr. O'Connell has driven race cars in many NASCAR series, IMSA series and VSRA series races, and has been the principal driver of the Company's racecars.  He received a Bachelor of Arts (BA) from California State University, Northridge (CSUN), earned his Masters of Business Administration (MBA) from Pepperdine University and completed the Corporate Governance Program at Harvard Business School (HBS) in Boston, MA. 

 

 

  33  

 

EXECUTIVE COMPENSATION

 

There are no written employment agreements with management. Management compensation will be determined by the board of directors based upon revenues and profits, if any, of the Company.

 

Executive Compensation

 

Our current officers receive no compensation. There are no current employment agreements between the Company and its executive officer or understandings regarding future compensation.

 

The director and principal officers have agreed to work with no remuneration until such time as the Company receives sufficient revenues necessary to provide proper salaries. The officers and directors have the responsibility to determine the timing of remuneration for key personnel.

 

The Company does not intend to pay employee directors a separate fee for their services.

 

The following table summarized our executive compensation for the years ended December 31, 2016 and 2015.

 

Name and

Principal Position

Year Salary ($) Bonus ($)

Other Annual

Compensation ($)

All Other

Compensation ($)

Kevin P. O'Connell

2016

2015

-0-

-0-

-0-

-0-

-0-

-0-

-0-

-0-

           
Rayna Austin

2016

2015

-0-

-0-

-0-

-0-

-0-

-0-

-0-

-0-

           
David M. Jackson

2016

2015

-0-

-0-

-0-

-0-

-0-

-0-

-0-

-0-

__________________

 

Director Independence

 

Our board of directors is currently composed of one member, who does not qualify as an independent director in accordance with the published listing requirements of the NASDAQ Global Market. The NASDAQ independence definition includes a series of objective tests, such as that the director is not, and has not been for at least three years, one of our employees and that neither the director, nor any of his family members has engaged in various types of business dealings with us. In addition, our sole director has made a subjective determination that no relationships exist which, in the opinion of our sole director, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

 

 

 

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 

The following table sets forth certain information regarding the beneficial ownership of the issued and outstanding shares of our common stock as of the date of this Registration Statement by the following persons:

 

1. Each person who is known to be the beneficial owner five percent (5%) or more of our issued and outstanding shares of common stock;
   
2. Each of our Directors and executive Officers; and

 

3. All of our Directors and Officers as a group

  

 

Name  

No. of Shares

Owned

 

% of Stock

Outstanding

Kevin O’Connell (1)   11,130,086   79.9%
Rayna Austin   -0-   -0-
Cassin Farlow, LLC(2)   1,210,000   15.3%
Rick Ware Racing, LLC(3)   1,233,333   8.85%
Directors and Officers as a Group   11,130, 086   79.9

 

(1) Kevin P. O’Connell is the managing member of, and the majority shareholder of:

a. General Pacific Partners, LLC, which owns 6,878,460 shares.

b. Revete Capital Partners, LLC which owns 107,144 shares

c. Continental EC, LLC which owns 64,286 shares

d. Devcap Partners, LLC which owns 4,071,267 shares

 

(2) Gus O'Connell has dispositive and voting power for Cassin Farlow, LLC

 

(3) Richard Ware has dispositive and voting power for Rick Ware Racing, LLC

 

Long Term Incentive Awards

 

Option Grants in Last Fiscal Year

 

We did not award options to our executive officers in 2014, 2015 and 2016 under any incentive plans.

 

Aggregate Option Exercises in Last Fiscal Year and Fiscal Year End Option Values

 

There have been no option exercises by our executive officers from inception to December 31, 2016.

 

Employment Contract and Termination of Employment Agreements

 

We have no employment agreements with any officers or employees.

 

Limitations on liability and indemnification of officers and directors

 

Our certificate of incorporation includes a provision that eliminates the personal liability of our directors for monetary damages for breach of fiduciary duty as a director, to the fullest extent permitted by Nevada Revised Statutes. Our certificate of incorporation also provides that we must indemnify our directors and officers to the fullest extent permitted by Nevada law and advance expenses to our directors and officers in connection with a legal proceeding to the fullest extent permitted by Nevada law, subject to certain exceptions. We are in the process of obtaining directors’ and officers’ insurance for our directors, officers and some employees for specified liabilities.

 

 

 

  35  

 

 

The limitation of liability and indemnification provisions in our certificate of incorporation may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duty. They may also have the effect of reducing the likelihood of derivative litigation against directors and officers, even though an action of this kind, if successful, might otherwise benefit us and our stockholders. Furthermore, a stockholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions. However, we believe that these indemnification provisions are necessary to attract and retain qualified directors and officers.

 

SEC Policy on Indemnification

 

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

 

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, and DIRECTOR INDEPENDENCE

 

On January 1, 2015, the Company extended for three years a previous consulting agreement with GPP, a company owned and operated by Kevin O'Connell, our Chief Executive Officer and Sole Director, to provide consulting services in the motor sports marketing industry. The consulting agreement requires a $5,000 monthly fee and can be terminated by either party pursuant to a 60-day notice. As of September 30, 2017 and 2016, the Company had an accrued payable balance due to this related party of $210,000 and $190,000, respectively.

 

On October 1, 2009, the Company entered into a line of credit agreement for up to $600,000 with General Pacific Partners, LLC ("GPP") one of our principal shareholders, a related party owned and operated by our CEO and majority shareholder, that also provides motor sports marketing industry consulting services to the Company as needed. Under the agreement, the Company receives operating fund advances and reimbursement for expenses incurred on behalf of the Company. The loan bears interest at eight percent (8%) per annum. On July 3, 2017, $200,000 of the balance due was converted into 2,000,000 shares of stock at a value of $.10 per share. As of September 30, 2017, and December 31, 2016, the Company owed $108,164 and $183,164, respectively, in operating advances from this related party. As of September 30, 2017, and December 31, 2016, the Company had accrued interest on this line of credit in the amounts of $26,816 and $18,354, respectively.

 

On August 5, 2013, the Company entered into a line of credit agreement for up to $500,000 with Devcap Partners, LLC, ("Devcap") a Texas limited liability company that is wholly owned and managed by our CEO and majority shareholder. Under the agreement, the Company receives operating fund advances and reimbursement for expenses incurred on behalf of the Company. On July 3, 2017, $200,000 of the balance due was converted into 2,000,000 shares of stock at a value of $.10 per share. As of September 30, 2017, and December 31, 2016, the Company owed $49,647 and $332,647, respectively, in operating advances to this related party. As of September 30, 2017, and December 31, 2016, the Company had accrued interest on this line of credit in the amounts of $78,707 and $67,040, respectively.

 

In April 2017, the Company entered into a sponsorship agreement with a client, a privately owned company. The majority shareholder of the Company is the chairman of the board of directors of the client. The Company recognized $81,000 income in the current period. Of this amount, $6,000 was paid in cash and $75,000 was converted to a note receivable bearing interest at 8% maturing October 2018. The principal balance of the receivable, plus accrued interest, may be converted into shares of common stock of the client at the price of $1.00 per share. The option is exercisable no later than the maturity date of the note. In addition to the note, the Company received warrants to purchase up to 24,999 shares of common stock of the client at $1.00 per share. The warrants expire April 30, 2018.

 

Conflicts of Interest

 

Each officer and director is, so long as she or he is an officer or director, subject to the restriction that all opportunities contemplated by our plan of operation that come to his attention, either in the performance of his duties or in any other manner, will be considered opportunities of, and be made available to us and the companies that he is affiliated with on an equal basis. A breach of this requirement will be a breach of the fiduciary duties of the officer or director. If we or the companies to which the officer or director is affiliated each desire to take advantage of an opportunity, then the applicable officer or director would abstain from negotiating and voting upon the opportunity. However, the officer or director may still take advantage of opportunities if we should decline to do so. Except as set forth above, we have not adopted any other conflict of interest policy in connection with these types of transactions.

 

Director Independence

 

Our board of directors is currently composed of one member, who does not qualify as independent directors in accordance with the published listing requirements of the NASDAQ Global Market. The NASDAQ independence definition includes a series of objective tests, such as that the director is not, and has not been for at least three years, one of our employees and that neither the director, nor any of his family members has engaged in various types of business dealings with us. In addition, our board of directors has not made a subjective determination as to each director that no relationships exist which, in the opinion of our board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, though such subjective determination is required by the NASDAQ rules. Had our board of directors made these determinations, our board of directors would have reviewed and discussed information provided by the directors and us with regard to each director’s business and personal activities and relationships as they may relate to us and our management.

 

 

 

  36  

 

DESCRIPTION OF SECURITIES

 

Common Stock  

 

We are authorized to issue up to 190,000,000 shares of common stock, par value $0.001. As of the date of this prospectus, there were 13,929,581 shares of common stock outstanding. Holders of the common stock are entitled to one vote per share on all matters to be voted upon by the stockholders. Holders of common stock are entitled to receive ratably such dividends, if any, as may be declared by the Board of Directors out of funds legally available therefore. Upon the liquidation, dissolution, or winding up of our Company, the holders of common stock are entitled to share ratably in all of our assets which are legally available for distribution after payment of all debts and other liabilities and liquidation preference of any outstanding preferred stock. Holders of common stock have no preemptive, subscription, redemption or conversion rights.

 

Our Articles of Incorporation do not provide for cumulative voting rights for the election of directors.

 

Preferred Stock

 

We are authorized to issue up to 10 million shares of preferred stock. We currently have no outstanding shares of preferred stock. The board of directors has the authority, without further action by our stockholders, to issue up to 10 million shares of preferred stock in one or more series and to fix the rights, preferences and privileges thereof, including dividend rates and preferences, conversion rights, voting rights, terms of redemption, redemption prices, liquidation preferences and the number of shares constituting any series or the designation of such series, without further vote or action by the stockholders. Although they presently have no intention to do so, the board of directors, without stockholder approval, could issue preferred stock with voting and conversion rights which could adversely affect the voting power of the holders of common stock. The issuance of preferred stock may also have the effect of delaying or preventing a change of control of us.

 

 

General

 

Our board of directors has the authority, without stockholder approval, to issue up to 10,000,000 shares of preferred stock in one or more series and to determine the rights, privileges and limitations of the preferred stock. The rights, preferences, powers and limitations on different series of preferred stock may differ with respect to dividend rates, amounts payable on liquidation, voting rights, conversion rights, redemption provisions, sinking fund provisions, and purchase funds and other matters. As of the date of this Prospectus, there were no Series of Preferred Stock designated by the board of directors, nor was there any Preferred Stock outstanding.

 

PENNY STOCK

 

The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a "penny stock," for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:

 

  o that a broker or dealer approve a person's account for transactions in penny stocks; and

 

  o the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.

 

In order to approve a person's account for transactions in penny stocks, the broker or dealer must:

 

  o obtain financial information and investment experience objectives of the person; and

 

  o make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

 

 

 

  37  

 

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny stock market, which, in highlight form:

 

  o sets forth the basis on which the broker or dealer made the suitability determination; and

 

  o that the broker or dealer received a signed, written agreement from the investor prior to the transaction.

 

  o disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

 

These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules will discourage investor interest in and limit the marketability of our common stock.

 

 

 

  38  

 

 

SELLING STOCKHOLDERS

 

The table below sets forth information as at September 30, 2017, concerning the resale of the shares of common stock by the Selling Stockholders. All of the Selling Stockholders are "Accredited Investors" as that term is defined under Regulation D of the Securities Act. All of the selling stockholders purchased their shares for cash. The term “Selling Stockholders” includes the persons and entities named below, and their transferees, pledges, donees, or their successors. We will file a supplement to this prospectus to name any successors to the Selling Stockholders who will use this Prospectus to resell their securities. We will not receive any proceeds from the resale of the common stock by the Selling Stockholders. Assuming the Selling Stockholders sell all the shares registered below, none of the Selling Stockholders will continue to own any shares of our common stock.

  

  Total Number of shares owned prior to offering *   Number of Shares being Offered Percentage of shares owned prior to offering Percentage of shares owned after the offering assuming all of the shares are sold
B & K Way Trust(1) 3,253   3,253 .0002 0
Craig Bentham 3,496   3,496 .0002 0
Bernard Rubin Living Trust 1995(2) 1,556   1,556 .0001 0
Greg Olafson TR Blue Sand Holding Trust DT(3) 2,460   2,460 .0002 0
Clark Claydon 2,829   2,829 .0002 0
Alan Cohen 2,499   2,499 .0001 0
Colonial Stock Transfer Company(4) 18,778   18,778 .0013 0
Harrison Figueroa LLC(5) 68   68 .0000 0
Timothy Hodges 2,143   2,143 .0001 0
Rodney Hoffman 3,960   3,960 .0002 0
Barbara H Jenkins 1,259   1,259 .0001 0
Kimball Family Trust(6) 5,633   5,633 .0004 0
William T Klope 1,515   1,515 .0001 0
Michael Kuehne 1,786   1,786 .0001 0
Craig Matesky 1,786   1,786 .0001 0
Michael L. Meyer TR Michael L. Meyer Living TR(7) 4,911   4,911 .0004 0
Philip Roger Millennium Trust Co LLC Cust FBO(8) 2,014   2,014 .0002 0
Chester Montgomery 3,540   3,540 .0002 0
George Mottel 1,981   1,981 .0001 0
Russell Neinast 3,974   3,974 .0002 0
Douglas B. O'Dell 714   714 .0001 0
Rafael Penenuri 4,944   4,944 .0004 0
RJW Investments LLC(9) 2,462   2,462 .0001 0
Robert D Harrison TR (Patro)(10) 3,959   3,959 .002 0
Phillip Rogers 2,381   2,381 .0001 0
Richard Salvato 1,927   1,927 .0001 0
Kerry Shaffer 2,536   2,536 .0001 0
Stradtman Family Trust(11) 499   499 .0001 0
Andrew Stupin 3,571   3,571 .0002 0
Richard Tantimoto 2,450   2,450 .0002 0
Edward Thein 2,927   2,927 .0002 0
USMTL, LLC(12) 10,000   10,000 .001 0
Rick Ware Racing LLC 1,233,333   1,233,333 8.85 0
Jeffry Bash 233,333   233,333 1.67 0
Totals 1,574,477   1,674,477 11.00 0

 

*Except for Colonial Stock Transfer Company ("Colonial") and USMTL, LLC, these shares were purchased between November 2008 and November 2009 at $.15 per share. Colonial received its shares in December of 2014 in payment of $2,817 ($.15 per share) owed to Colonial.

 

 

 

  39  

 

 

USMTL, LLC's 10,000 shares were issued for $.001 per shares as founders shares at the time of incorporation of the Company in 2009

 

(1) Bruce & Kay Way has full investment authority
(2) Bernard Rubin has full investment authority
(3) Greg Olafson has full investment authority
(4) Jason Carter has full investment authority
(5) Robert Harrison has full investment authority
(6) Dr. Steven Kimball has full investment authority
(7) Michael L. Meyer has full investment authority
(8) Philip Rogers has full investment authority
(9) Robert Waltos has full investment authority
(10) Robert Harrison has full investment authority
(11) Martin Stradtman has full investment authority
(12) Roy Montgomery has full investment authority

 

 

* Paid a consideration of $.02 per share in cash for their shares.

** Converted indebtedness of the Company at the rate of $.02 per share.

*** Founders Shares for which $.0001 per share was paid.

 

 

 

 

 

 

 

 

 

 

 

 

  40  

 

PLAN OF DISTRIBUTION

 

The selling stockholders may, from time to time, sell all or a portion of the shares of common stock to permit the selling stockholders to sell their shares from time to time in the public market at a price of $.25 per share. Our common stock is not currently listed on any national exchange or electronic quotation system. To date, no actions have been taken to list our shares on any national exchange or electronic quotation system. Because there is currently no public market for our common stock, the selling stockholders will sell their shares of our common stock at prevailing market prices or privately negotiated prices. The Company’s common stock is currently quoted on the OTC Pink Sheets marketplace. However, there have been no trades of the Company’s common stock through the OTC Pink Sheets marketplace. There can be no assurance that the Company will be approved for listing on the OTC Bulletin Board. The shares of common stock may be sold by the selling stockholders by one or more of the following methods, without limitation:

 

(a) block trades in which the broker or dealer so engaged will attempt to sell the shares of common stock as agent but may position and resell a portion of the block as principal to facilitate the transaction;

 

(b) purchases by broker or dealer as principal and resale by the broker or dealer for its account pursuant to this prospectus;

 

(c) an exchange distribution in accordance with the rules of the exchange or quotation system;

 

(d) ordinary brokerage transactions and transactions in which the broker solicits purchasers;

 

(e) privately negotiated transactions; and

 

(f) a combination of any aforementioned methods of sale.

 

The shares may also be sold in compliance with the Securities and Exchange Commission's Rule 144.

 

In the event of the transfer by any selling stockholder of his or her shares to any pledgee, donee or other transferee, we will amend this prospectus and the registration statement of which this prospectus forms a part by the filing of a post-effective amendment in order to have the pledgee, donee or other transferee in place of the selling stockholder who has transferred his or her shares.

 

In effecting sales, brokers and dealers engaged by the selling stockholders may arrange for other brokers or dealers to participate. Brokers or dealers may receive commissions or discounts from the selling stockholders or, if any of the broker-dealers act as an agent for the purchaser of such shares, from the purchaser in amounts to be negotiated which are not expected to exceed those customary in the types of transactions involved. Broker-dealers may agree with the selling stockholders to sell a specified number of the shares of common stock at a stipulated price per share. Such an agreement may also require the broker-dealer to purchase as principal any unsold shares of common stock at the price required to fulfill the broker-dealer commitment to the selling stockholders if such broker-dealer is unable to sell the shares on behalf of the selling stockholders. Broker-dealers who acquire shares of common stock as principal may thereafter resell the shares of common stock from time to time in transactions which may involve block transactions and sales to and through other broker-dealers, including transactions of the nature described above. Such sales by a broker-dealer could be at prices and on terms then prevailing at the time of sale, at prices related to the then-current market price or in negotiated transactions. In connection with such re-sales, the broker-dealer may pay to or receive from the purchasers of the shares, commissions as described above.

 

No broker dealer received any securities as underwriting compensation.

 

The selling stockholders and any broker-dealers or agents that participate with the selling stockholders in the sale of the shares of common stock may be deemed to be "underwriters" within the meaning of the Securities Act in connection with these sales. In that event, any commissions received by the broker-dealers or agents and any profit on the resale of the shares of common stock purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act.

 

From time to time, the selling stockholders may pledge their shares of common stock pursuant to the margin provisions of their customer agreements with their brokers. Upon a default by a selling stockholder, the broker may offer and sell the pledged shares of common stock from time to time. Upon a sale of the shares of common stock, the selling stockholders intend to comply with the prospectus delivery requirements, under the Securities Act, by delivering a prospectus to each purchaser in the transaction. We intend to file any amendments or other necessary documents in compliance with the Securities Act which may be required in the event any selling stockholder defaults under any customer agreement with brokers.

 

 

 

  41  

 

To the extent required under the Securities Act, a post-effective amendment to this registration statement will be filed, disclosing, the name of any broker-dealers, the number of shares of common stock involved, the price at which the common stock is to be sold, the commissions paid or discounts or concessions allowed to such broker-dealers, where applicable, that such broker-dealers did not conduct any investigation to verify the information set out in this prospectus and other facts material to the transaction. In addition, a post-effective amendment to this Registration Statement will be filed to include any additional or changed material information with respect to the plan of distribution not previously disclosed herein.

 

We, and the selling stockholders, will be subject to applicable provisions of the Exchange Act and the rules and regulations under it, including, without limitation, Rule 10b-5 and, insofar as the selling stockholders are distribution participants and we, under certain circumstances, may be a distribution participant, under Regulation M.

 

The anti-manipulation provisions of Regulation M under the Securities Exchange Act of 1934 will apply to purchases and sales of shares of common stock by the selling stockholders, and there are restrictions on market-making activities by persons engaged in the distribution of the shares. Under Regulation M, a selling stockholder or its agents may not bid for, purchase, or attempt to induce any person to bid for or purchase, shares of our common stock while they are distributing shares covered by this prospectus. Accordingly, the selling stockholder is not permitted to cover short sales by purchasing shares while the distribution it taking place. We will advise the selling stockholders that if a particular offer of common stock is to be made on terms materially different from the information set forth in this Plan of Distribution, then a post-effective amendment to the accompanying registration statement must be filed with the Securities and Exchange Commission. All of the foregoing may affect the marketability of the common stock.

 

All expenses of the registration statement including, but not limited to, legal, accounting, printing and mailing fees are and will be borne by us. Any commissions, discounts or other fees payable to brokers or dealers in connection with any sale of the shares of common stock will be borne by the selling stockholders, the purchasers participating in such transaction, or both.

 

Any shares of common stock covered by this prospectus that qualify for sale pursuant to Rule 144 under the Securities Act, as amended, may be sold under Rule 144 rather than pursuant to this prospectus.

 

LEGAL PROCEEDINGS

 

We are not currently a party to any legal proceedings nor are any contemplated by us at this time.

 

LEGAL MATTERS

 

The validity of the shares of common stock being offered hereby will be passed upon for us by The Bingham Law Group APC., Carlsbad, California.

 

FORWARD-LOOKING STATEMENTS

 

This prospectus, any prospectus supplement and the documents incorporated by reference in this prospectus contain forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events.

 

In some cases, you can identify forward-looking statements by words such as "may," "should," "expect," "plan," "could," "anticipate," "intend," "believe," "estimate," "predict," "potential," "goal," or "continue" or similar terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks outlined under "Risk Factors," that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements.

 

Unless we are required to do so under U.S. federal securities laws or other applicable laws, we do not intend to update or revise any forward-looking statements.

 

 

 

  42  

 

INDEMNIFICATION FOR SECURITIES ACT LIABILITIES

 

Our Articles of Incorporation, as amended, provide to the fullest extent permitted by Nevada law, our directors or officers shall not be personally liable to us or our shareholders for damages for breach of such director's or officer's fiduciary duty. The effect of this provision of our Articles of Incorporation, as amended, is to eliminate our rights and our shareholders (through shareholders' derivative suits on behalf of our Company) to recover damages against a director or officer for breach of the fiduciary duty of care as a director or officer (including breaches resulting from negligent or grossly negligent behavior), except under certain situations defined by statute. We believe that the indemnification provisions in our Articles of Incorporation, as amended, are necessary to attract and retain qualified persons as directors and officers.

 

Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Act" or "Securities Act") may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.

 

EXPERTS 

 

Our current principal independent auditor is Daszkal Bolton ("Daszkal Bolton") of Boca Raton, Florida, whom we engaged on December 14, 2016.

 

On December 14, 2016 RC-1, Inc. (the Company) notified Pritchett, Siler and Hardy PC, ("PSH") the Company's former independent accounting firm, that it had elected to change accounting firms and, therefore, was dismissing PSH.

 

Other than for the inclusion of a paragraph describing the uncertainty of the Company’s ability to continue as a going concern (for the years ended December 31, 2016 and December 31, 2015), Daszkal Bolton's and PSH’s reports on the Company’s financial statements for the years ended December 31, 2016 and 2015, respectively, contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. 

 

During the Company’s two most recent fiscal years and the subsequent interim period preceding PSH’s dismissal, there were: (i) no “disagreements” (within the meaning of Item 304(a) of Regulation S-K) with PSH on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of PSH, would have caused it to make reference to the subject matter of the disagreements in its report on the consolidated financial statements of the Company; and (ii) no “reportable events” (as such term is defined in Item 304(a)(1)(v) of Regulation S-K).

We have not had any disagreements with our accountants.

 

The Bingham Law Group, Carlsbad California has acted as legal counsel for us in connection with this Offering.

 

AVAILABLE INFORMATION

 

We have filed a Post-Effective Amendment to the registration statement on Form S-1 under the Securities Act of 1933, as amended, relating to the shares of common stock being offered by this prospectus, and reference is made to such Post-Effective Amendment to the registration statement. This prospectus constitutes the prospectus of RC-1, Inc., filed as part of the Post-Effective Amendment to the registration statement, and it does not contain all information in the registration statement, as certain portions have been omitted in accordance with the rules and regulations of the Securities and Exchange Commission.

 

Our fiscal year ends on December 31. We plan to furnish our shareholders annual reports containing audited financial statements and other appropriate reports, where applicable. In addition, we intend to become a reporting company and file annual, quarterly and current reports, and other information with the SEC, where applicable. You may read and copy any reports, statements, or other information we file at the SEC's public reference room at 100 F. Street, N.E., Washington D.C. 20549-3561. You can request copies of these documents, upon payment of a duplicating fee by writing to the SEC. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference rooms. Our SEC filings are also available to the public on the SEC's Intern.

 

 

 

 

  43  

 

 

INDEX TO FINANCIAL STATEMENTS

 

  Page
   
Reports of Independent Registered Public Accounting Firms F-2
   
Balance Sheets at December 31, 2016 and 2015 F-4
   
Statements of Operations for the Years Ended December 31, 2016 and 2015 F-5
   
Statements of Changes Stockholders’ Equity (Deficit) for the years ended December 31, 2016 and 2015 F-6
   
Statements of Cash Flows for the Years Ended December 31, 2016 and 2015 F-7
   
Notes to Financial Statements F-8
   
Condensed Balance Sheets (Unaudited) at September 30, 2017 F-13
   
Condensed Statements of Operations (Unaudited) for the Three and Nine Months ended September 30, 2017 and 2016 F-14
   
Condensed Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, 2017 and 2016 F-15
   
Notes to Condensed Financial Statements (Unaudited) F-16

 

 

 

 

 

 

 

 

  F- 1  

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors and

RC-1, Inc.

Thomasville, North Carolina

 

We have audited the accompanying balance sheet of RC-1, Inc. (the "Company") at December 31, 2016, and the related statements of operations, changes in stockholders' equity and cash flows for the year ended December 31, 2016. The Company's management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

 

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

 

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of RC-1, Inc. at December 31, 2016, and the results of its operations and its cash flows for the year ended December 31, 2016, in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 3 to the consolidated financial statements, the Company has sustained recurring losses from operations and has working capital and accumulated deficits that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to this matter.

 

/s/ Daszkal Bolton LLP

 

Fort Lauderdale, Florida

April 5, 2017

 

 

 

 

  F- 2  

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

Board of Directors

RC-1, Inc.

110 Sunrise Center Drive

Thomasville, NC 27360

 

We have audited the accompanying balance sheet of RC-1 Inc. as of December 31, 2015 and the related statements of operations, changes in stockholders' equity and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

 

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of RC-1 as of December 31, 2015 and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has suffered continuing losses and has yet to establish a reliable, consistent and proven source of revenue to meet its operating costs on an ongoing basis and currently does not have sufficient available funding to fully implement its business plan. These factors raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

 

 

Pritchett, Siler and Hardy PC

Farmington Utah

April 27, 2016

 

 

  F- 3  

 

 

RC-1, Inc.

BALANCE SHEETS

 

 

    December 31,     December 31,  
    2016     2015  
ASSETS                
                 
Current assets                
Cash   $ 49,900     $ 49,118  
Accounts receivable - related party     15,000        
Total current assets     64,900       49,118  
                 
Fixed assets - net     96,667       136,667  
                 
Total Assets   $ 161,567     $ 185,785  
                 
                 
LIABILITIES & STOCKHOLDERS' DEFICIT                
                 
Current liabilities                
                 
Accounts payable   $ 27,478     $  
Accrued liabilities - related party     196,302       120,000  
Line of credit     75,000       76,459  
Due to related parties     515,811       458,277  
Accrued interest payable     22,418       14,918  
Accrued interest - related parties     85,394       50,322  
  Total current liabilities     922,403       719,976  
                 
Total Liabilities     922,403       719,976  
                 
Commitments and contingencies                
                 
Stockholders' Deficit                
Preferred stock, $.001 par value; 10,000,000 shares authorized; no shares issued and outstanding            
Common stock, $.0001 par value; 190,000,000 shares authorized; 7,929,581 shares issued and outstanding     792       792  
Additional paid in capital     2,244,829       2,244,829  
Accumulated deficit     (3,006,457 )     (2,779,812 )
Total Stockholders' Deficit     (760,836 )     (534,191 )
                 
Total Liabilities and Stockholders' Deficit   $ 161,567     $ 185,785  

 

The accompanying notes are an integral part of the financial statements.

 

 

  F- 4  

 

 

RC-1, Inc.

STATEMENTS OF OPERATIONS

 

 

    Year Ended     Year Ended  
    December 31,     December 31,  
    2016     2015  
Revenues   $     $ 1,000  
Revenues - related party     15,000        
                 
Cost of revenues            
Gross profit     15,000       1,000  
                 
Race Expenses     32,305       43,118  
Consulting - related parties     60,000       168,000  
General and administrative     43,155       41,858  
Professional fees     63,613       15,500  
      199,073       268,476  
                 
Loss from operations     (184,073 )     (267,476 )
                 
Other expenses:                
Interest expense     (7,500 )     (7,713 )
Interest expense - related parties     (35,072 )     (31,768 )
      (42,572 )     (39,481 )
                 
Loss before income taxes     (226,645 )     (306,957 )
                 
Provision for income tax            
                 
Net loss   $ (226,645 )   $ (306,957 )
                 
Net loss per share                
(Basic and fully diluted)   $ (0.03 )   $ (0.04 )
                 
Weighted average number of common shares outstanding     7,929,581       7,929,581  

 

The accompanying notes are an integral part of the financial statements.

 

  F- 5  

 

 

RC-1, Inc.

STATEMENTS OF STOCKHOLDERS' EQUITY

 

 

    Common Stock                    
          Amount     Additional     Accumulated     Stockholders'  
    Shares     ($.0001Par)     Paid in Capital     Deficit     Deficit  
Balances at December 31, 2014     7,929,581     $ 792     $ 2,244,829     $ (2,472,855 )   $ (227,234 )
                                         
Loss for the year                       (306,957 )     (306,957 )
                                         
Balances at December 31, 2015     7,929,581       792       2,244,829       (2,779,812 )     (534,191 )
                                         
Loss for the year                       (226,645 )     (226,645 )
                                         
Balances at December 31, 2016     7,929,581     $ 792     $ 2,244,829     $ (3,006,457 )   $ (760,836 )

 

The accompanying notes are an integral part of the financial statements.

 

  F- 6  

 

 

RC-1, Inc.

STATEMENTS OF CASH FLOWS

 

 

    Year Ended     Year Ended  
    December 31,     December 31,  
    2016     2015  
Cash Flows From Operating Activities:                
Net loss   $ (226,645 )   $ (306,957 )
                 
Adjustments to reconcile net loss to net cash used in operating activities                
Depreciation     40,000       40,000  
(Increase) in accounts receivable     (15,000 )      
Increase (Decrease) in accounts payable     27,478       (14,050 )
Increase in accrued liabilities - related party     76,302       60,000  
Increase in accrued interest - unrelated parties     7,500       7,452  
Increase in accrued interest - related parties     35,072       31,767  
Net cash used in operating activities     (55,293 )     (181,788 )
                 
Cash Flows From Investing Activities:            
                 
Cash Flows From Financing Activities:                
Line of credit - borrowings           2,366  
Line of credit - payments           (3,134 )
Proceeds from line of credit to related parties     246,175       275,364  
Payments on line of credit to related parties     (190,100 )     (71,416 )
Net cash provided by financing activities     56,075       203,181  
                 
Net Increase in Cash     782       21,393  
                 
Cash At The Beginning of The Year     49,118       27,725  
                 
Cash At The End of The Year   $ 49,900     $ 49,118  
                 
Schedule Of Non-Cash Investing And Financing Activities                
                 
Assumption of debt by related party   $ 1,459     $  
                 
Supplemental Disclosure                
Cash paid for interest   $     $  
Cash paid for income taxes   $     $  

 

The accompanying notes are an integral part of the financial statements.

 

  F- 7  

 

 

RC-1, Inc.

NOTES TO FINANCIAL STATEMENTS

For the Years Ended December 31, 2016 and 2015

 

NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS OPERATIONS

 

RC-1, Inc. (the “Company”), was incorporated in the State of Nevada on May 14, 2009. The Company has generated only limited revenues from its activities in the racing business. R-Course Promotions, LLC was formed in the State of California on October 30, 2007. On June 1, 2009, in a merger classified as a transaction between parties under common control, the sole membership interest owner in R-Course Promotions, LLC exchanged 125,000 membership interests for 1,786 common shares in RC-1, Inc. Subsequent to the consummation of the merger, R-Course Promotions, LLC ceased to exist. The results of operations of RC-1, Inc. and R-Course Promotions, LLC have been combined from October 30, 2007 forward through the date of merger.

 

The Company is a motorsports marketing business focused primary in road racing events in North America utilizing NASCAR type competition equipment.

 

On March 4, 2014, the Company declared a reverse stock split of 1 share for 70 shares outstanding. The authorized number of shares was increased to 200,000,000 and the par value was changed to $.001 per share. All references to the number of shares have been retroactively restated to reflect the split, to all periods presented.

 

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of presentation

 

The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

  

Use of Estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect 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.

 

Cash and cash equivalents

 

The Company considers all highly liquid investments with an original maturity of three months or less as cash equivalents. The Company maintains cash with a commercial bank. The deposits are made with a reputable financial institution and the Company does not anticipate realizing any losses from these deposits.

 

Property and equipment

 

Property and equipment are recorded at cost and depreciated under the straight line method over each item's estimated useful life. The Company uses a 5 year life for racecars and equipment, 7 years for furniture and fixtures.

 

Long-Lived Assets

 

In accordance with FASB ASC 360, “Property, Plant, and Equipment” which establishes the accounting for impairment of long-lived tangible and intangible assets other than goodwill, the Company reviews for impairment when facts or circumstances indicate that the carrying value of long-lived assets to be held and used may not be recoverable. If such facts or circumstances are determined to exist, an estimate of the undiscounted future cash flows produced by the long-lived asset, or the appropriate grouping of assets, is compared to the carrying value to determine whether impairment exists. If an asset is determined to be impaired, the loss is measured based on various valuation techniques, including the discounted value of estimated future cash flows. The Company reports impairment cost as a charge to operations at the time it is identified. During the years ended December 31, 2016 and 2015 the Company determined that there was no impairment of long-lived assets.

 

Financial Instruments

 

The Company measures its financial assets and liabilities in accordance with the requirements of FASB ASC 825 “Financial Instruments”. The carrying values of its accounts payable, note payable (current portion), line of credit, accrued expenses, and other current liabilities approximate fair value due to the short-term maturities of these instruments.

 

 

 

 

  F- 8  

 

 

Revenue recognition

 

The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company will recognize revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.

 

The majority of revenues are from consulting services provided at events which range from one day to one week in length. The Company also earns revenues from entering their race cars into events whereby there is a money purse for finishing positions. The revenues from these events are recognized upon completion of the contracted services. In the event that the Company’s revenues are for services provided under contracts greater than one month in length, the contracts will be billed in total at the onset of the contact period, and to the extent that billings exceed revenue earned, the Company will record such amount as deferred revenue until the revenue is earned. Recognize revenue on these contracts in the period the services are provided under the contract. Expenses associated with providing the services are recognized in the period the services are provided which coincides with when the revenue is earned.

 

Income tax

 

The Company accounts for income taxes pursuant to FASB ASC 740, “Income Taxes”. Under FASB ASC 740 deferred income taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The provision for income taxes represents the tax expense for the period, if any, and the change during the period in deferred tax assets and liabilities. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

 

FASB ASC 740 also provides criteria for the recognition, measurement, presentation and disclosure of uncertain tax positions. Under FASB ASC 740, the impact of an uncertain tax position on the income tax return may only be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. At December 31, 2016 and 2015, there were no unrecognized tax benefits.

 

Net income (loss) per share

 

The Company utilizes FASB ASC 260, “Earnings per Share.” Basic earnings per share is computed by dividing earnings (loss) attributable to common stockholders by the weighted-average number of common shares outstanding during the reporting period. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include additional common share equivalents available upon exercise of stock options and warrants using the treasury stock method. Dilutive common share equivalents include the dilutive effect of in-the-money share equivalents, which are calculated based on the average share price for each period using the treasury stock method, excluding any common share equivalents if their effect would be anti-dilutive For the years ended December 31, 2016 and 2015, there were no potentially dilutive shares.

 

Products and services, geographic areas and major customers

 

The Company earns revenue from race purses, race event consulting and the occasional sale of racecars, but does not separate sales from different activities into operating segments.

 

Concentrations of debt financing

 

The Company has line of credit agreements with companies owned and operated by the Company’s CEO and majority shareholder. Outstanding principal on these lines of credit account for 87.3% of the Company line of credit balances. See Note 7 for further discussion of line of credit terms and relationships.

 

Stock based compensation

 

The Company accounts for employee and non-employee stock awards under FASB ASC 718, “Compensation – Stock Compensation”, whereby equity instruments issued to employees for services are recorded based on the fair value of the instrument issued and those issued to non-employees are recorded based on the fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably measurable.

 

 

 

  F- 9  

 

 

Recent Accounting Pronouncements

 

Management does not believe that any recently issued, but not yet effective, accounting standards, if adopted, will have a material effect on our financial statements.

 

NOTE 3. GOING CONCERN

 

These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company's ability to continue as a going concern is contingent upon its ability to achieve and maintain profitable operations, and the Company’s ability to raise additional capital as required.

  

These conditions raise substantial doubt about the Company's ability to continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.

 

NOTE 4. FIXED ASSETS

 

Fixed asset values recorded at cost are as follows:

 

    December 31, 2016     December 31, 2015  
Equipment   $ 200,000     $ 200,000  
Less: Accumulated depreciation     (103,333 )     (63,333 )
                 
Fixed assets, net   $ 96,667     $ 136,667  

 

Depreciation expense was $40,000 for each of the years the years ended December 31, 2016 and 2015. 

 

NOTE 5. LINES OF CREDIT

  

    December 31, 2016     December 31, 2015  
TVP Investments, LLC   $ 75,000     $ 75,000  
Wells Fargo           1,459  
      75,000       76,459  
Less: current portion     (75,000 )     (76,459 )
Long-term portion   $     $  

 

On October 15, 2012, the Company entered into a revolving line of credit agreement with TVP Investments, LLC, a Georgia Limited Liability Company in the amount up to $500,000. The line of credit is unsecured, bears interest of 10% and has a maturity date of October 15, 2017.

 

The Company has a business line of credit up to $3,000 with Well Fargo bank. The line of credit is unsecured with a variable interest rate of approximately 18.0%.

 

As of December 31, 2016, and 2015, the Company had a line of credit balance of $75,000 and $76,459, respectively. As of December 31, 2016 and 2015, the Company had accrued interest on these lines of credit in the amounts of $22,418 and $14,918, respectively.

 

NOTE 6. STOCKHOLDERS’ EQUITY

 

The Company was incorporated on May 9, 2009 at which time the Company authorized 125,000,000 shares of common stock with $.001 par value. On March 4, 2014, the Company declared a reverse stock split of 1 share for 70 shares outstanding. The authorized number of common shares was increased to 190,000,000 and the par value was changed to $.0001 per share. All references to the number of shares have been restated to reflect the split. There are 10,000,000 shares of preferred stock authorized with a $.001 par value, none of which are outstanding.

 

 

 

 

  F- 10  

 

 

NOTE 7. RELATED PARTY TRANSACTIONS

 

Consulting expense to related parties

 

On January 1, 2012, the Company executed a three (3) year consulting agreement with GPP a company owned and operated by the CEO and majority shareholder to provide consulting services in the motor sports marketing industry. The consulting agreement requires a $5,000 monthly fee and can be terminated by either party pursuant to a 60-day notice. As of December 31, 2016, and 2015, the Company had an accrued payable balance due to this related party of $180,000 and $120,000, respectively. During the years ended December 31, 2016 and 2015, the Company incurred total related party consulting fees of $60,000 and $60,000 respectively.

 

On January 1, 2014, the Company entered into an event services agreement with Carolina Pro Am Drivers, Inc. an event services company that is owned and controlled by an individual who is also the owner and controller of a separate company that became an owner of 16.6% of the Company's issued and outstanding common shares on June 15, 2014. For the year ended December 31, 2016 and 2015 the Company paid $0 and $125,500 in related party consulting services respectively.

 

Accounts payable to related parties

 

During race events, the Company charges various event related expenses to credit cards of the majority shareholder. These expenses are recorded as accounts payable to related parties at the time the charges are made and reimbursed to at the conclusion of the event. As of December 31, 2016, the Company had charged $16,302 of race related expenses which were reimbursed in January 2017.

 

Due to related parties

 

On October 1, 2009, the Company entered into a line of credit agreement for up to $600,000 with a related party owned and operated by the CEO and majority shareholder that also provides motor sports marketing industry consulting services to the Company as needed. Under the agreement, the Company receives operating fund advances and reimbursement for expenses incurred on behalf of the Company. The loan bears interest at eight percent (8%) per annum. Interest for this line of credit has been waived by the lender. As of December 31, 2016, and 2015, the Company owed $183,164 and $155,364 respectively, in operating advances to this related party. As of December 31, 2016, and 2015, the Company had accrued interest on this line of credit in the amounts of $18,354 and $5,532, respectively.

 

On August 5, 2013, the Company entered into a line of credit agreement for up to $300,000 with a related party owned and operated by the CEO and majority shareholder. On January 1, 2016, the line of credit was increased to $500,000. Under the agreement, the Company receives operating fund advances and reimbursement for expenses incurred on behalf of the Company. Starting January 1, 2014, the loan began bearing interest of eight (8%) interest per annum. As of December 31, 2016, and 2015, the Company owed $332,647 and $302,913, respectively, in operating advances to this related party. As of December 31, 2016, and 2015, the Company had accrued interest on this line of credit in the amounts of $67,040 and $44,790, respectively.

 

NOTE 8. INCOME TAXES

 

The following table presents the current and deferred income tax provision (benefit) for federal and state income taxes:

 

    2016     2015  
Current tax provision:                
Federal   $     $  
                 
Deferred tax provision (benefit):                
Federal     (16,541 )     (46,044 )
Change in valuation allowance     16,541       46,044  
                 
Total provision for income tax   $     $  

 

Current income taxes are based upon the year’s income taxable for federal and state tax reporting purposes. Deferred income taxes (benefits) are provided for certain income and expenses, which are recognized in different periods for tax and financial reporting purposes.

 

Deferred tax assets and liabilities are computed for differences between the financial statements and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the period in which the differences are expected to affect taxable income. The Company’s deferred income taxes arise from the temporary differences between financial statement and income tax recognition of net operating losses. These loss carryovers would be limited under the Internal Revenue Code should a significant change in ownership occur within a three-year period. In 2016 and 2015, the Company’s tax losses were reduced by accrued expenses to related parties which are not recognized for tax purposes until paid and differences in depreciation reported on the financial statements and amounts allowed for tax purposes.

 

 

 

  F- 11  

 

 

At December 31, 2016 and 2015, the Company had net operating loss carryforwards of approximately $1,737,545 and $2,780,000, respectively, which begin to expire in 2029. The deferred tax assets arising from the net operating loss carryforwards are approximately $260,632 and $416,972 as of December 31, 2016, and 2015, respectively. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, the projected future taxable income and tax planning strategies in making this assessment. Based on management’s analysis, they concluded not to retain a deferred tax asset since it is uncertain whether the Company can utilize this asset in future periods. Therefore, they have established a full reserve against this asset. The change in the valuation allowance in 2016 and 2015 was approximately $16,541 and $46,044, respectively.

 

A reconciliation of the expected tax computed at the U.S. statutory federal income tax rate to the total benefit for income taxes at December 31, 2016 and 2015 is as follows:

  

    2016     2015  
Expected tax at 15%   $ (16,541 )   $ (46,044 )
Change in valuation allowance     16,541       46,044  
Provision for income taxes   $     $  

 

The Company’s continuing practice is to recognize interest and/or penalties related to income tax matters in income tax expense. As of December 31, 2016, and 2015, the Company had no accrued interest and penalties related to uncertain tax positions.

 

The Company is subject to taxation in the U.S. The state of Nevada does not impose an income tax on corporations. Tax years for 2009 and forward are subject to examination by tax authorities. The Company is not currently under examination by any tax authority.

 

Management has evaluated tax positions in accordance with FASB ASC 740, and has not identified any tax positions, other than those discussed above, that require disclosure.

 

NOTE 9. SUBSEQUENT EVENTS

 

In January 2017, the Company entered into a 36-month warehouse lease with Rick Ware Racing, LLC, payable in 1,200,000 shares of the Company’s common stock.

 

In March of 2017, the Company sold the Ford BOSS Mustang R back to the original seller receiving $125,000 in cash and 833,333 shares of the Company’s common stock which were cancelled.

 

 

 

  F- 12  

 

 

 

RC-1, Inc.

CONDENSED BALANCE SHEETS (Unaudited)

 

    September 30     December 31,  
    2017     2016  
ASSETS            
             
Current assets                
Cash   $ 52,918     $ 49,900  
Accounts receivable     15,000        
Accounts receivable - related party           15,000  
Prepaid rent, current portion     60,000        
Total current assets     127,918       64,900  
                 
Fixed assets - net     46,666       96,667  
                 
Prepaid rent, net of current portion     75,000        
Note receivable - related party     75,000        
Interest receivable - related party     2,612        
      152,612        
                 
Total Assets   $ 327,196     $ 161,567  
                 
                 
LIABILITIES & STOCKHOLDERS' DEFICIT                
                 
Current liabilities                
                 
Accounts payable   $ 30,905     $ 27,478  
Accrued liabilities - related party     15,539       196,302  
Line of credit     75,000       75,000  
Due to related parties     157,811       515,811  
Accrued interest payable - unrelated parties     28,043       22,418  
Accrued interest - related parties     105,523       85,394  
  Total current liabilities     412,821       922,403  
                 
Common stock issuable, net of current portion     120,000        
                 
Total Liabilities     532,821       922,403  
                 
Stockholders' Deficit                
Preferred stock, $.001 par value; 10,000,000 shares authorized; no shares issued and outstanding            
Common stock, $.0001 par value;190,000,000 shares authorized; 13,929,581 (2017) and 7,929,581 (2016) issued and outstanding     1,392       792  
Additional paid in capital     2,877,562       2,244,829  
Accumulated deficit     (3,084,579 )     (3,006,457 )
Total Stockholders' Deficit     (205,625 )     (760,836 )
                 
Total Liabilities and Stockholders' Deficit   $ 327,196     $ 161,567  

 

The accompanying notes are an integral part of the unaudited condensed financial statements.

 

 

 

  F- 13  

 

 

RC-1, Inc.

CONDENSED STATEMENTS OF OPERATIONS (Unaudited)

 

    Three Months Ended     Nine Months Ended  
    September 30,     September 30,     September 30,     September 30,  
    2017     2016     2017     2016  
                         
Revenues                                
Consulting fees   $     $     $ 50,000     $  
Consulting fees - related parties                 4,000        
Sponsorships - related parties     20,000             101,000        
      20,000             155,000        
                                 
Cost of sales                        
Gross margin     20,000             155,000        
                                 
Operating expenses:                                
     Race expenses     39,564       15,003       40,178       15,003  
     Consulting to related parties     16,750       15,000       77,250       45,000  
     General and administrative     18,615       13,030       59,524       33,095  
     Professional fees     7,988       22,402       33,028       50,377  
      82,917       65,435       209,980       143,475  
                                 
Operating loss     (62,917 )     (65,435 )     (54,980 )     (143,475 )
                                 
Other expenses:                                
     Interest expense - unrelated parties     (1,875 )     (1,875 )     (5,625 )     (5,625 )
     Interest expense - related parties     (2,004 )     (9,013 )     (20,129 )     (25,718 )
     Interest income - related parties     1,512             2,612        
      (2,367 )     (10,888 )     (23,142 )     (31,343 )
                                 
Net Loss Before Taxes     (65,284 )     (76,323 )     (78,122 )     (174,818 )
                                 
Income Tax Provision                        
                                 
Net loss   $ (65,284 )   $ (76,323 )   $ (78,122 )   $ (174,818 )
                                 
Net loss per share                                
(Basic and fully diluted)   $ (0.00 )   $ (0.01 )   $ (0.01 )   $ (0.02 )
                                 
Weighted average number of                                
common shares outstanding                                
     (basic and diluted)     13,726,320       7,929,581       9,630,924       7,929,581  

 

The accompanying notes are an integral part of the unaudited condensed financial statements.

 

 

 

  F- 14  

 

 

 

RC-1, Inc.

CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)

 

    Nine Months Ended  
    September 30,     September 30,  
    2017     2016  
             
Cash Flows From Operating Activities:                
Net loss   $ (78,122 )   $ (174,818 )
                 
Adjustments to reconcile net loss to net cash used in operating activities:                
Depreciation     13,334       30,000  
Non-cash rent expense     45,000        
                 
Changes in Operating Assets and Liabilities                
                 
Increase in note receivable - related party     (75,000 )      
Increase in interest receivable     (2,612 )      
Increase in accounts payable     3,427       24,015  
Increase in accounts payable - related parties     29,237       45,000  
Increase in accrued interest     5,625       5,625  
Increase in accrued interest-related parties     20,129       25,718  
                 
Net cash used in operating activities     (38,982 )     (44,460 )
                 
Cash Flows From Investing Activities:            
                 
Cash Flows From Financing Activities:                
Repayments on line of credit           (1,459 )
Proceeds from line of credit from related party     201,500       187,359  
Repayments on line of credit from related party     (159,500 )     (145,100 )
                 
Net cash provided by financing activities     42,000       40,800  
                 
Net  Increase (Decrease) In Cash     3,018       (3,660 )
                 
Cash At The Beginning Of The Period     49,900       49,118  
                 
Cash At The End Of The Period   $ 52,918     $ 45,458  
                 
                 
Schedule of Non-Cash Investing and Financing Activities                
                 
Stock received for sale of assets   $ (86,667 )   $  
Assets acquired for issuance of stock   $ 50,000     $  
Related party debt converted to stock   $ 400,000     $  
Related party accounts payable converted to stock   $ 210,000     $  
                 
Cash paid during the year for:                
Interest   $     $  
Income tax   $     $  

 

The accompanying notes are an integral part of the unaudited condensed financial statements.

 

 

 

 

  F- 15  

 

 

  

RC-1, Inc.

NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited)

For the Three and Nine Months Ended September 30, 2017 and 2016

 

NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS OPERATIONS

 

RC-1, Inc. (the “Company”), was incorporated in the State of Nevada on May 14, 2009. The Company is currently considered to be in the development stage, and has generated only limited revenues from its activities in the racing business. R-Course Promotions, LLC was formed in the State of California on October 30, 2007. On June 1, 2009, in a merger classified as a transaction between parties under common control, the sole membership interest owner in R-Course Promotions, LLC exchanged 125,000 membership interests for 1,786 common shares in RC-1, Inc. Subsequent to the consummation of the merger, R-Course Promotions, LLC ceased to exist. The results of operations of RC-1, Inc. and R-Course Promotions, LLC have been combined from October 30, 2007 forward through the date of merger.

 

The Company is a motorsports marketing business focused primary in road racing events in North America utilizing NASCAR type competition equipment.

 

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of presentation

 

The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

 

Interim Financial Statements

 

The accompanying condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to form 10Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In our opinion the financial statements include all adjustments (consisting of normal recurring accruals) necessary in order to make the financial statements not misleading. Operating results for the nine months ended September 30, 2017 are not necessarily indicative of the final results that may be expected for the year ending December 31, 2017. For more complete financial information, these unaudited financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2016 filed with the SEC.

  

Use of Estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect 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.

 

Cash and cash equivalents

 

The Company considers all highly liquid investments with an original maturity of three months or less as cash equivalents. The Company maintains cash with a commercial bank. The deposits are made with a reputable financial institution and the Company does not anticipate realizing any losses from these deposits.

 

 

 

  F- 16  

 

 

Property and equipment

 

Property and equipment are recorded at cost and depreciated under the straight line method over each item's estimated useful life. The Company uses a 5 year life for racecars and equipment, 7 years for furniture and fixtures.

 

Financial Instruments

 

The Company measures its financial assets and liabilities in accordance with the requirements of FASB ASC 825 “Financial Instruments”. The carrying values of its note receivable, accounts payable, line of credit, accrued expenses, and other current liabilities approximate fair value due to the short-term maturities of these instruments.

 

Revenue recognition

 

The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.

 

The majority of revenues are from consulting services provided at events which range from one day to one week in length. The Company also earns revenues from entering their race cars into events whereby there is a money purse for finishing positions. The revenues from these events are recognized upon completion of the contracted services. In the event that the Company’s revenues are for services provided under contracts greater than one month in length, the contracts will be billed in total at the onset of the contact period, and to the extent that billings exceed revenue earned, the Company will record such amount as deferred revenue until the revenue is earned. The Company recognizes revenue on these contracts in the period the services are provided under the contract. Expenses associated with providing the services are recognized in the period the services are provided which coincides with when the revenue is earned.

 

Net income (loss) per share

 

The Company utilizes FASB ASC 260, “Earnings per Share.” Basic earnings per share is computed by dividing earnings (loss) attributable to common stockholders by the weighted-average number of common shares outstanding during the reporting period. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include additional common share equivalents available upon exercise of stock options and warrants using the treasury stock method. Dilutive common share equivalents include the dilutive effect of in-the-money share equivalents, which are calculated based on the average share price for each period using the treasury stock method, excluding any common share equivalents if their effect would be anti-dilutive. For the three and nine months ended September 30, 2017 and 2016 there were no potentially dilutive shares.

 

Products and services, geographic areas and major customers

 

The Company earns revenue from race purses, race event consulting and the occasional sale of racecars, but does not separate sales from different activities into operating segments.

   

Concentrations of debt financing

 

The Company has line of credit agreements with companies owned and operated by the Company’s CEO and majority shareholder. Outstanding principal on these lines of credit account for 67.8% and 87.3% of the Company line of credit balances at September 30, 2017 and December 31, 2016, respectively. See Note 6 for further discussion of line of credit terms and relationships.

 

Stock based compensation

 

The Company accounts for employee and non-employee stock awards under FASB ASC 718, “Compensation – Stock Compensation”, whereby equity instruments issued to employees for services are recorded based on the fair value of the instrument issued and those issued to non-employees are recorded based on the fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably measurable.

 

 

 

 

  F- 17  

 

 

Recent Accounting Pronouncements

 

Management does not believe that any recently issued, but not yet effective, accounting standards, if adopted, will have a material effect on our financial statements.

 

NOTE 3. GOING CONCERN

 

These unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company's ability to continue as a going concern is contingent upon its ability to achieve and maintain profitable operations, and the Company’s ability to raise additional capital as required.

  

These conditions raise substantial doubt about the Company's ability to continue as a going concern. These unaudited condensed financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.

 

NOTE 4. LINES OF CREDIT

 

On October 15, 2012, the Company entered into a revolving line of credit agreement with TVP Investments, LLC, a Georgia Limited Liability Company in the amount up to $500,000. The line of credit is unsecured, bears interest of 10% and has a maturity date of December 31, 2019. As of September 30, 2017, and December 31, 2016, the balance of the line of credit was $75,000. As of September 30, 2017, and December 31, 2016, the Company had accrued interest on this line of credit in the amounts of $28,043 and $22,418, respectively.

 

The Company has a business line of credit up to $3,000 with Wells Fargo bank. The line of credit is unsecured with a variable interest rate of approximately 18.0%. The balance owed as of September 30, 2017 and December 31, 2016 was zero.

 

NOTE 5. STOCKHOLDERS’ EQUITY

 

There are 10,000,000 shares of preferred stock authorized with a $.001 par value, none of which are outstanding.

 

There are 190,000,000 shares of common stock authorized with a par value of $.0001 per share.

 

There were no issuances of preferred or common stock during the three months ended March 31, 2017.

 

During January 2017, the Company entered into a 36-month warehouse lease with Rick Ware Leasing, LLC, payable in 1,200,000 shares of the Company’s common stock (400,000 shares annually), 400,000 of which were issued in July, 2017. See Note 6 for equity transactions with related parties.

  

NOTE 6. RELATED PARTY TRANSACTIONS

 

Consulting expense to related parties

 

On January 1, 2015, the Company extended for three years a previous consulting agreement with a company owned and operated by the CEO and majority shareholder to provide consulting services in the motor sports marketing industry. The consulting agreement requires a $5,000 monthly fee and can be terminated by either party pursuant to a 60 day notice. On July 3, 2017, $210,000 of the accrued fees were converted into 2,100,000 shares of stock at a value of $.10 per share. As of September 30, 2017, and December 31, 2016, the Company had an accrued payable balance due to this related party of $15,000 and $180,000, respectively. During the three and nine months ended September 30, 2017 and 2016, the Company incurred related party consulting expense of $15,000 and $45,000 respectively.

 

 

 

 

  F- 18  

 

 

Due to related parties

 

On October 1, 2009, the Company entered into a line of credit agreement for up to $600,000 with a related party owned and operated by the CEO and majority shareholder that also provides motor sports marketing industry consulting services to the Company as needed. Under the agreement, the Company receives operating fund advances and reimbursement for expenses incurred on behalf of the Company. The loan bears interest at eight percent (8%) per annum. On July 3, 2017, $200,000 of the balance due was converted into 2,000,000 shares of stock at a value of $.10 per share. As of September 30, 2017, and December 31, 2016, the Company owed $108,164 and $183,164, respectively, in operating advances from this related party. As of September 30, 2017, and December 31, 2016, the Company had accrued interest on this line of credit in the amounts of $26,816 and $18,354, respectively.

   

On August 5, 2013, the Company entered into a line of credit agreement for up to $500,000 with a related party owned and operated by the CEO and majority shareholder. Under the agreement, the Company receives operating fund advances and reimbursement for expenses incurred on behalf of the Company. On July 3, 2017, $200,000 of the balance due was converted into 2,000,000 shares of stock at a value of $.10 per share. As of September 30, 2017, and December 31, 2016, the Company owed $49,647 and $332,647, respectively, in operating advances to this related party. As of September 30, 2017, and December 31, 2016, the Company had accrued interest on this line of credit in the amounts of $78,707 and $67,040, respectively.

 

Due from related parties

 

In April 2017, the Company entered into a sponsorship agreement with a client, a privately owned company. The majority shareholder of the Company is the chairman of the board of directors of the client. The Company recognized $81,000 income in the current period. Of this amount, $6,000 was paid in cash and $75,000 was converted to a note receivable bearing interest at 8% maturing October 2018. The principal balance of the receivable, plus accrued interest, may be converted into shares of common stock of the client at the price of $1.00 per share. The option is exercisable no later than the maturity date of the note. In addition to the note, the Company received warrants to purchase up to 24,999 shares of common stock of the client at $1.00 per share. The warrants expire April 30, 2018.

 

Other related party transactions

 

On March 25, 2017, the Company transferred a Ford Mustang to the shareholder from whom it was purchased in exchange for 833,333 shares of common stock, which were cancelled.

 

On May 25, 2017, the Company purchased two racecars from the same shareholder in exchange for 333,333 shares of common stock. The racecars were valued at $50,000.

 

 

 

 

 

 

  F- 19  

 

 

INFORMATION NOT REQUIRED IN PROSPECTUS

 

 

ITEM 13. EXPENSES OF ISSUANCE AND DISTRIBUTION

 

The following table sets forth our expenses in connection with this registration statement. All of these expenses are estimates, other than the fees and expenses of legal counsel and filing fees payable to the Securities and Exchange Commission. All expenses of this offering are being paid by the Company.

 

Expense or Fee    

Amount

to Be Paid

 
SEC Registration Fee   $ 21  
Printing and Edgarizing Expenses   $ 3,500  
Legal Fees and Expenses   $ 5,000  
Accounting Fees and Expenses   $ 3,000  
Transfer Agent   $ 2,500  
Miscellaneous   $ 1,500  
TOTAL   $ 15,521  

 

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

 

ARTICLE VI of our Bylaws states that to the extent and in the manner permitted by the laws of the State of Nevada, and specifically as is permitted under the Nevada Revised Statutes pertaining to Corporations, the corporation shall indemnify any person who was or is a party or is threatened to be  made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative,  other than an action by or in the right of the corporation, by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses, including attorneys' fees, judgments, fines and amounts paid in settlement.

 

We have been advised that in the opinion of the Securities and Exchange Commission, insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Act") may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, such indemnification is against public policy as expressed in the Act and is therefore unenforceable. In the event a claim for indemnification against such liabilities (other than our payment of expenses incurred or paid by our director, officer or controlling person in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

 

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

 

The following sets forth information regarding all sales of our unregistered securities during the past three years. All of these shares were exempt from registration under the Securities Act by reason of Section 4(2) of the Securities Act, or Regulation D promulgated thereunder, as transactions by an issuer not involving a public offering. The recipients of securities in each of these transactions represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution of the securities, and appropriate legends were affixed to the share certificates and warrants issued in such transactions. All recipients had adequate access, through their relationships with us or otherwise, to information about us. Unless otherwise indicated, the issuances of the securities described below were affected without the involvement of underwriters .

 

On December 19, 2014, the Company issued 18,608 for transfer agent services rendered by its transfer agent totaling $2,791.

 

All of the above offerings and sales were deemed to be exempt under rule 506 of Regulation D and Section 4(2) of the Securities Act of 1933, as amended. No advertising or general solicitation was employed in offering the securities. The offerings and sales were made to a limited number of persons, all of whom were accredited investors, business associates of the Company or executive officers of the Company, and transfer was restricted by the Company in accordance with the requirements of the Securities Act of 1933. In addition to representations by the above-referenced persons, we have made independent determinations that all of the above-referenced persons were accredited or sophisticated investors, and that they were capable of analyzing the merits and risks of their investment, and that they understood the speculative nature of their investment.

 

 

  II- 1  
 

ITEM 16. EXHIBITS.

 

The following exhibits are included as part of this Form S-1. References to “the Company” in this Exhibit List mean RC-1, Inc., a Nevada corporation.

  

Exhibit #   Description
3(i) *   Articles of Incorporation of RC-1, Inc., as amended
3(ii) *   Corporate Bylaws for RC-1, Inc.
5.1 *   Legal opinion and consent of The Bingham Law Group, APC
10.1*   Line of Credit Agreement with General Pacific Partners, LLC on October 1, 2009
10.2 *   Consulting Agreement with General Pacific Partners, LLC on January 1, 2012
10.3 *   Line of Credit Agreement with TVP Investments, LLC on October 15, 2012
10.4*  

Management Service Agreement with Carolina Pro AM Drivers, Inc. dated January 1, 2014

10.5*   Line of Credit Agreement with Devcap Partners, LLC dated August 1, 2013
10.6   Convertible Note, Warrant Certificate, and Invoice for Services to Related Party dated April 25, 2017
23.1 *   Consent of the Bingham Law Group, APC. (included with Exhibit 5.1)
23.2   Consent of Pritchett, Siler & Hardy, P.C.
23.3   Consent of Daszcal Bolton LLP

 

 

101.INS   XBRL Instances Document
101.SCH   XBRL Taxonomy Extension Schema Document
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF   XBRL Taxonomy Extension Definition Linkbase Document
101.LAB   XBRL Taxonomy Extension Label Linkbase Document
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document

 

__________________

* Previously filed

 

ITEM 17. UNDERTAKINGS

 

(A) The undersigned Registrant hereby undertakes:

 

(1)    To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

 

i.     To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;

 

ii.     To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement.

 

iii.     To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

 

Provided, however , that paragraphs (A)(1)(i) and (A)(1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in this registration statement.

 

(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial  bona fide  offering thereof.

 

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

 

(B) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial  bona fide  offering thereof.

 

(C) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Company pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Company of expenses incurred or paid by a director, officer or controlling person of the Company in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Company will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

 

  II- 2  
 

 

SIGNATURES

 

 

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of New port Beach, State of California, on December 28, 2017.

 

  RC-1, Inc.  
       
  By:  /s/ Kevin P. O'Connell  
    Chief Executive Officer  

 

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

 

  RC-1, Inc.  
       
Date: December 28, 2017 By:  /s/ Kevin P. O'Connell  
    President and Chief Executive Officer  

 

  RC-1, Inc.  
       
Date: December 28, 2017 By:  /s/ Rayna Austin  
   

Director and Chief Financial and Accounting Officer

 

 

 

 

 

 

  II- 3  
 

EXHIBIT INDEX

 

Exhibit #   Description
3(i) *   Articles of Incorporation of RC-1, Inc., as amended
3(ii) *   Corporate Bylaws for RC-1, Inc.
5.1 *   Legal opinion and consent of The Bingham Law Group, APC
10.1*   Line of Credit Agreement with General Pacific Partners, LLC on October 1, 2009
10.2 *   Consulting Agreement with General Pacific Partners, LLC on January 1, 2012
10.3 *   Line of Credit Agreement with TVP Investments, LLC on October 15, 2012
10.4*  

Management Service Agreement with Carolina Pro AM Drivers, Inc. dated January 1, 2014

10.5*   Line of Credit Agreement with Devcap Partners, LLC dated August 1, 2013
10.6   Convertible Note, Warrant Certificate and Invoice for Services to Related Party dated April 25, 2017
23.1 *   Consent of the Bingham Law Group, APC. (included with Exhibit 5.1)
23.2   Consent of Pritchett, Siler & Hardy, P.C.
23.3   Consent of Daszcal Bolton LLP

 

101.INS   XBRL Instances Document
101.SCH   XBRL Taxonomy Extension Schema Document
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF   XBRL Taxonomy Extension Definition Linkbase Document
101.LAB   XBRL Taxonomy Extension Label Linkbase Document
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document

 

__________________

* Previously filed

 

 

 

 

 

 

 

  II- 4  

Exhibit 10.6

 

RC-1, Inc, Invoice Date: April 2, 2017 Invoice # 04022017 Ship To Dashub, LLC. 171C Milbar Blvd Farmingdale, NY 11735 Monster Energy Nascar Cup Series -- Las Vegas Event with Rick Ware Racing$81,000

 

     

 

 

DASHUB, INC.

How to Subscribe:

 

If an Accredited Investor (as defined below) desires to subscribe for Convertible Promissory Units of Dashub, Inc., a Delaware Corporation, (the “Company”), he, she, or an entity, should deliver the following to the Company:

 

a)    An executed copy of the Purchase Agreement and Questionnaire attached hereto; and

 

b)    A check payable to Dashub, Inc., in the amount determined by multiplying $25,000 by the number of Units to be purchased, with a minimum subscription of $25,000.

 

If your subscription is accepted, a countersigned copy of the Purchase Agreement will be sent to you.

 

The subscription documents should be returned to :

Attention: Max Kane, President

Dashub, Inc.

6800 Jericho Tpk, Suite 201W

Syosset, New York 11791

 

 

 

 

     

 

THIS PRIVATE PLACEMENT CONVERTIBLE NOTE PURCHASE AGREEMENT (THE “AGREEMENT”) RELATES TO AN OFFERING OF PROMISSORY NOTES AND WARRANTS RELYING UPON ONE OR MORE EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE FEDERAL SECURITIES LAWS PURSUANT TO SECTION 4(2) AND/OR RULE 506 OF REGULATION D (“REGULATION D”) AS PROMULGATED BY THE U.S. SECURITIES AND EXCHANGE COMMISSION (THE “SEC”) UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). NONE OF THE NOTES OR WARRANTS OR THE SHARES INTO WHICH THE NOTES MAY BE CONVERTED OR PURCHASED UPON THE EXERCISE OF THE WARRANTS, TO WHICH THIS PURCHASE AGREEMENT RELATES HAVE BEEN REGISTERED UNDER THE SECURITIES ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED NONE MAY BE OFFERED OR SOLD, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SHARES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.

 

PURCHASE AGREEMENT

 

THIS PURCHASE AGREEMENT (this “Agreement”), dated this 25th day of April, 2017, is executed by and between DASHUB, Inc., a Delaware corporation (the “Company”), and each Purchaser tendering to the Company an executed signature page to this Agreement (each a “Purchaser”), with reference to the following facts:

 

A. The Company is conducting a “Best Efforts” offering (the “Offering”) of nine hundred and fifty thousand dollars ($950,000) of Units, (the “Units”) each Unit consisting of a three year $25,000 Convertible Promissory Notes (the “Notes”), convertible into 25,000 common shares (par value $.001) of the Company (the “Shares”) and a one year warrant (the “Warrant”) to purchase 8,333 Shares at an exercise price of $1.00 per Share. The Units, Shares, and Warrants are together sometimes referred to herein as the “Securities.”

 

In connection with such offering:

 

(i)      The Company will accept investment proceeds of up to $ 950,000.

 

(ii)    The Units are being offered in denominations of $25,000 per Unit, provided, however, that subscriptions in lesser amounts may be accepted by the Company in the Company's absolute discretion. A copy of the Convertible Note is attached hereto as Exhibit “A”, and a copy of the Warrant is attached hereto as Exhibit “B.”

 

(iii) The Units are being offered on a “Best Efforts” basis. There is no minimum amount of Units which must be sold prior to release of funds to the Company. Accordingly, the Company may sell less than the maximum amount of Units in this offering. This offering will terminate on February 28, 2017 (unless extended by the Company for an additional 90 days.)

 

 

  1  

 

 

B.         Each Purchaser has agreed to purchase the number of Units, indicated on the signature page tendered by the Purchaser to the Company at a $25,000 per Note (with each Purchaser's aggregate purchase price being herein referred to as the “Purchase Price”).

 

C.         The Company and each Purchaser are entering into this Agreement to reflect the terms and conditions with respect to the Purchaser's investment in the Company represented by the Units.

 

D.        As to each Purchaser, this Agreement shall become effective and binding upon the Company only when (i) this Agreement is accepted by the Company (as indicated by the Company's execution of this Agreement and countersignature of the Purchaser's signature page to this Agreement, with such action being herein referred to as the “Acceptance”) and (ii) delivery is made by Purchaser to the Company of the Payment (defined below).

 

NOW, THEREFORE, in respect of the foregoing premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1. PURCHASE .

 

a.                   Each Purchaser hereby agrees to subscribe for and to purchase the number of Units set forth on such Purchaser's signature page hereto (the “Purchase”) in exchange for the Purchase Price (which shall be paid in United States dollars).

 

b.                   With respect to each Purchaser, following (i) the Company's Acceptance and (ii) the Company's receipt of immediately available funds representing the Purchaser's Purchase Price (the “Payment”), the Company shall issue to such Purchaser the appropriate number of Notes and Warrants, executed by the Company, representing the Units purchased hereby.

 

2. CONVERSION OF THE NOTES .

 

a.        Method of Conversion by the Purchaser .

 

(i)       The Purchaser may at any time prior to the Maturity Date, convert the outstanding Principal Amount of the Note, into fully paid Shares of the Company in accordance with the following formula: For each $25,000 in principal amount converted, the Purchaser shall receive 25,000 Shares for a conversion price of $1.00 per Share (the “Conversion Price”) and the interest due and owing at such time of conversion shall be converted into Shares at the same Conversion Price. Such conversion shall be deemed to have been effected as of the close of business on the date on which the Purchaser delivers the Notice of Conversion (the “Conversion Date”). Upon the Conversion Date, the rights of the Purchaser with respect to the principal and interest amount of the Note converted shall cease and the person(s) or entity in whose name(s) any certificate(s) for Shares are to be issued upon such conversion shall be deemed to have become the holder or holders of record of the Shares represented by such certificate(s). In each case of conversion of the Notes in part only, the Company shall receive and hold the Note as a fiduciary agent of the Purchaser, shall endorse on the Note the date and amount of the Note so converted, and such amount shall be deemed no longer outstanding. Upon such endorsement, the Company shall promptly return the Note to the Purchaser.

 

 

 

  2  

 

 

(ii)        Mechanics of Conversion by the Purchaser . In the event that the Purchaser elects to convert the Note, the Purchaser shall deliver a fully completed Notice of Conversion (a copy of which is attached hereto as Exhibit “C”) to the Company. Upon receipt of the Notice, the Company shall, within a reasonable time, not exceeding five (5) Business Days after the Conversion Date, issue and deliver to the Purchaser, the number of Shares to which the Purchaser shall be entitled upon such conversion, and shall deliver or cause to be delivered to the Purchaser the certificates representing such Shares. All Shares issued or delivered upon any conversion hereunder shall, when issued or delivered, be duly authorized, validly issued, fully paid and non-assessable. Upon the issuance of Shares by the Company, the Note shall be deemed cancelled.

 

b.          Method of Conversion by the Company . The Company may at any time prior to the Maturity Date, convert the outstanding Principal Amount of the Note, into fully paid Shares of the Company. In the event that the Company determines to convert the Note, the Company shall notify the Purchaser of the Company's determination to convert the Note, and the Company shall, within five (5) Business Days thereafter (the “Company Conversion Date”), issue and deliver to the Purchaser a number of common shares as follows: For each $25,000 in principal amount converted, the Purchaser shall receive 25,000 Shares for a conversion price of $1.00 per Share and the interest due and owing at such time of conversion shall be converted into Shares at $1.00 per share and the Company shall deliver or cause to be delivered to the Purchaser the certificates representing such Shares. All Shares issued or delivered upon any conversion hereunder shall, when issued or delivered, be duly authorized, validly issued, fully paid, and non-assessable. In each case of conversion of the Notes in part only, the Company shall not deliver any Shares to the Purchaser until such time as the Purchaser returns the Purchaser's duly endorsed Note in accordance with the Company's Notice of Conversion (a copy of which is attached hereto as Exhibit “D”). Upon receipt of the duly endorsed Note, the Company will issue the Shares as set forth in the Company's Notice of Conversion, and issue and deliver a new Note to the Purchaser for the unconverted balance of the Note. Upon the issuance of Shares by the Company, the Note shall be deemed cancelled.

 

c.          Taxes on Conversion . The issuance of certificates for Shares upon the conversion of the Note shall be made without charge by the Company to the Purchaser for any tax in respect of the issuance of such certificates and such certificates shall be issued in the name of, or in such names as may be directed by, the Purchaser; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance or delivery of any such certificate in a name other than that of the Purchaser, and the Company shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance thereof shall have paid to the Company the amount of any such tax or shall have established to the satisfaction of the Company that any such tax has been paid; and further provided, that the Company shall not be required to pay any income tax to which the Purchaser may be subject in respect of the issuance of the Note or the Shares issued upon conversion hereof.

 

 

 

  3  

 

d.        Adjustment of Number of Shares .

 

(i)                Distributions or Subdivisions . In the event that, at any time and from time to time from and after the date of the Note, the Company shall issue Shares (or securities convertible into Shares) in a distribution or subdivision paid with respect to Shares, or declare any distribution payable in additional Shares (or securities convertible into Shares) or effect a subdivision of the outstanding Shares, then, concurrently with the effectiveness of such distribution or subdivision, the then-effective Conversion Price shall be proportionately decreased, and the number of Shares issuable upon conversion of the Note shall thus be proportionately increased.

 

(ii)              Combinations or Consolidations . In the event that, at any time and from time to time from and after the date of the Note, the outstanding Shares shall be combined or consolidated, by reclassification or otherwise, into a lesser number of Shares, then, concurrently with the effectiveness of such combination or consolidation, the then-effective Conversion Price shall be proportionately increased, and the number of Shares issuable upon conversion of the Note shall thus be proportionately decreased.

 

(iii)            Other Dividends or Distributions . If the Company, at any time or from time to time after the issuance of the Note, makes a distribution to the holders of Shares which is payable in securities of the Company, then, in each such event, provision shall be made so that the Purchaser shall receive upon conversion of the Note, in addition to the number of Shares, the amount of such securities of the Company which would have been received if the portion of the Note so converted had been exercised for Shares on the date of such event, subject to adjustments subsequent to the date of such event with respect to such distributed securities which shall be on terms as nearly equivalent as practicable to the adjustments provided in this Section 3(d)(iii) and all other adjustments under this Section 3(e). Nothing contained in this Section 3(d)(iii) shall be deemed to permit the payment of any distribution in violation of the Purchase Agreement.

 

(iv)             Merger, Consolidation or Exchange . If, at any time or from time to time after the date of the Note, there occurs any merger, consolidation, arrangement or statutory Share exchange of the Company with or into any other person or entity, then, in each such event, provision shall be made so that the Purchaser shall receive upon conversion of the Note the kind and amount of Shares and other securities and property (including cash) which would have been received upon such merger, consolidation, arrangement or statutory interest exchange by the Purchaser, if the Note was converted immediately prior to such merger, consolidation, arrangement or statutory Interest exchange, subject to adjustments for events subsequent to the effective date of such merger, consolidation, arrangement or statutory Interest exchange with respect to such Shares and other securities which shall he on terms as nearly equivalent as practicable to the adjustments provided in this Section 3(e)(iv) and all other adjustments under this Section 3(e).

 

(v)              Recapitalization or Reclassification . If, at any time or from time to time after the date of the Note, the Shares issuable upon conversion of the Note are changed into the same or a different number of securities of any class of the Company, whether by recapitalization, reclassification or otherwise (other than a merger, consolidation, arrangement or statutory Interest exchange provided for elsewhere in this Section 3(e)(iv), then, in each such event, provision shall be made so that the Purchaser shall receive upon conversion of the Note the kind and amount of securities or other property which would have been received in connection with such recapitalization, reclassification or other change by the Purchaser if the portion of the Note so converted had been converted immediately prior to such recapitalization, reclassification or change, subject to adjustments for events subsequent to the effective date of such recapitalization, reclassification or other change with respect to such securities which shall be on terms as nearly equivalent as practicable to the adjustments provided in this Section 3(c)(v) and all other adjustments under this Section 3(e).

 

 

 

  4  

 

 

(vi)           Extraordinary Dividends or Distributions . If, at any time or from time to time after the date of the Note, the Company shall declare any extraordinary distribution upon the Shares payable otherwise than out of current earnings, retained earnings or earned surplus and otherwise than in Shares, then the Conversion Price in effect immediately prior to such declaration shall be reduced by an amount equal, in the case of a distribution in cash, to the amount thereof payable per Share or, in the case of any distribution, to the value thereof per Interest sat the time such distribution was declared, as determined by the Managers of the Company in good faith. Such reductions shall take effect as of the date on which a record is taken for the purposes of the subject distribution, or, if a record is not taken, the date as of which the holders of record of Shares entitled to such distribution are to be determined. Nothing contained in this Section 3(e)(vi) shall be deemed to permit the payment of any distribution in violation of the Secured Note Purchase Agreement.

 

(vii)          Certificate of Adjustment . Whenever the Conversion Price and/or the number of Shares receivable upon conversion of the Note is adjusted, the Company shall promptly deliver to the Purchaser a certificate of adjustment, setting forth the Conversion Price and/or Shares issuable after adjustment, a brief statement of the facts requiring the adjustment and the computation by which the adjustment was made. The certificate of adjustment shall be prima facie evidence of the correctness of the adjustment.

 

(viii)        Successive Application . The provisions of this Section 3(e) shall be applicable successively to each event described herein which may occur subsequent to the date of the Note and prior to the conversion in full of the Note.

 

3. TERMS of the WARRANT .

 

a.               Exercise Price and Term of Warrants. Each Warrant, when and if issued, shall entitle the Purchaser to purchase up to 8,333 Shares at a price of $1.00 per share (the “Exercise Price”) for a period of 12 months from the date that the Purchase Price is accepted by the Purchaser.

 

b.               Other Terms. The Warrants shall have such other terms as are contained in the Warrant Certificate, a copy of which is attached hereto as Exhibit “B.”

 

4. REPRESENTATIONS AND WARRANTIES of PURCHASER .

 

Each Purchaser hereby represents and warrants to the Company as follows:

 

 

 

 

  5  

 

a.       General.

 

(i)                  If the Purchaser is a natural person, the Purchaser is 21 years of age or older and a U.S. citizen.

 

(ii)                If the Purchaser is a corporation, trust, partnership, limited liability company or other entity, it is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization or formation, it has the power and authority to own its property and carry on its business as presently conducted, and it is duly qualified to do business and is in good standing in each of the jurisdictions in which the nature of its business so requires.

 

(iii)               The Purchaser has the hill right, power and authority to execute and deliver this Purchaser Agreement and attached Questionnaire, and to perform all of the Purchaser's obligations hereunder and thereunder, and if' the Purchaser is a corporation, trust, partnership, limited liability company or other entity, the execution, delivery and performance by the Purchaser of this Agreement have been duly authorized by all necessary organizational action.

 

b.       The Purchaser has 10 capacity, power and authority to execute and deliver this Agreement. Without limiting the terms of the investment representations set forth below, the Purchaser represents that the Purchaser:

 

(i)             Has received and has had an opportunity to review the Company's (DECK), ask questions and receive answers from the Company and its officers and directors regarding matters relevant to the Company and an investment therein (E . ,&„ as represented by the Purchase) including, without limitation, (1) the terms and conditions of the Purchase, (2) the Company's intended business plan, (3) the Company's capitalization and charter documents, (4) the status and nature of the Company's assets, (5) the status and nature of the Company's liabilities (including amounts and other obligations owed to third parties), (6) the Company's current third party arrangements, (7) the early-stage nature of the Company's business, (8) the business prospects and financial affairs of the Company, (9) the competitive environment which the Company and its proposed products and services face, (10) the status of the Company's intellectual property rights, and, (1 1) the Company's imminent need for substantial amounts of additional financing;

 

(ii)            has had the opportunity to obtain any and all information which the Purchaser deemed necessary, including reviewing a copy of the Company's DECK, to evaluate the Company and the investment represented by the Subscription as well as to verify the accuracy of information otherwise provided to the Purchaser.

 

(iii)           is experienced in making investments in the unregistered and restricted securities of early and development stage companies and understands that such investments (including the Subscription) involve a high degree of speculation and risk.

 

(iv)           has such knowledge and experience in financial and business matters that the Purchaser is capable of evaluating the merits and risks of the investment in the Company represented by the Subscription and, by reason of the Purchaser's financial and business experience, the Purchaser has the capacity to protect the Purchaser's interest in connection with the Subscription.

 

 

 

  6  

 

 

(v)                 is financially able to bear the economic risk of the investment represented by the Subscription, including a total loss of such investment.

 

(vi)               has (A) a preexisting personal or business relationship with the Company or one or more of its officers, directors or control persons or (B) by reason of the Purchaser's business or financial experience, the Purchaser is capable of evaluating the risks and merits of the investment represented by the Subscription and of protecting the Purchaser's own interests in connection with such investment; or,

 

(vii)              The Purchaser is representing and warranting that the Purchaser is (i) an “Accredited Investor”, as the term is defined in Rule 501(a) of the Securities Act, as more completely set forth on the Accredited Questionnaire attached as Schedule A hereto, which is incorporated by reference as if more fully set forth herein. The Purchaser shall submit to the Company such further assurances of accredited or sophisticated status as may reasonably be requested by the Company.

 

c.                   If the Purchaser is an entity, the Purchaser has not been formed for the purpose of effecting the Subscription or otherwise making an investment in the Company.

 

d.                   The Units are being acquired by the Purchaser (i) solely for investment purposes, (ii) for the Purchaser's own account only and (iii) not for sale, transfer or with a view to any distribution of all or any part of such Units. No other person will have any direct or indirect beneficial interest in the Units.

 

e.                   The Purchaser understands that no public market now exists for Units, Notes, Warrants or Shares or any other securities of the Company and that the Company has made no assurances or representations whatsoever that a public market will ever exist for any of the Company's securities.

 

f.                    The Purchaser has not engaged any brokers, finders or agents and has not incurred, and will not incur, directly or indirectly, any liability for brokerage or finder's fees or agents' commissions, or any similar charges in connection with this Agreement and the transactions contemplated hereby.

 

g.                   Representations and Warranties by Purchaser under the United States Patriot Act.

 

The Purchaser represents that the funds to be paid by the Purchaser to the Company were not and are not directly or indirectly derived from activities that may contravene federal, state or international laws and regulations, including anti-money laundering laws and regulations. Federal regulations and Executive Orders administered by the U.S. 'Treasury Department's Office of Foreign Assets Control (“OFAC”) prohibit, among other things, the engagement in transactions with, and the provision of services to, certain foreign countries, territories, entities and individuals) The lists of OFAC prohibited countries, territories, persons and entities can be found on the OFAC website at <http://www.treas.gov/ofac>. In addition, the programs administered by OFAC (“OFAC Programs”) prohibit dealing with individuals or entities in certain countries regardless of whether such individuals or entities appear on the OFAC lists.

 

 

 

  7  

 

(ii)              The Purchaser hereby represents and warrants that, to the best of the Purchaser's knowledge: (A) the Purchaser; (B) any person controlling or controlled by the Purchaser; (C) if the Purchaser is a privately held entity, any person having a beneficial interest in the Purchaser; or (D) any person for whom the Purchaser is acting as agent or nominee in connection with this investment is not a country, territory, individual or entity named on an OFAC list or a person or entity prohibited under the OFAC Programs.

 

(iii)            The Purchaser represents and warrants that, to the best of the Purchaser's knowledge, (A) the Purchaser; (B) any person controlling or controlled by the Purchaser; (C) if the Purchaser is a privately held entity, any person having a beneficial interest in the Purchaser; or (D) any person for whom the Purchaser is acting as agent or nominee in connection with this investment is not a senior foreign political figure, any immediate family member or close associate of a senior foreign political figure as such terms arc defined as follows:

 

1.     These individuals include specially designated nationals, specially designated narcotics traffickers and other parties subject to OFAC sanctions and embargo programs.

 

2.     A “senior foreign political figure” is defined as a senior official in the executive, legislative, administrative, military or judicial branches of a non-U.S. government (whether elected or not), a senior official of a major non-U.S. political party, or a senior executive of a non-U.S. government-owned corporation. In addition, a “senior foreign political figure” includes any corporation, business or other entity that has been formed by, or for the benefit of, a senior foreign political figure.

 

3.     “Immediate family” of a senior foreign political figure typically includes the figure's parents, siblings, spouse, children and in-laws.

 

4.     A “close associate” of a senior foreign political figure is a person who is widely and publicly known to maintain an unusually close relationship with the senior foreign political figure, and includes a person who is in a position to conduct substantial U.S. and non-U.S. financial transactions on behalf of the senior foreign political figure.

 

5. REPRESENTATIONS AND WARRANTIES of the COMPANY .

 

a.               Organization and Standing: Articles and Bylaws. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business as now conducted.

 

b.              Corporate Power. The Company has all requisite legal and corporate power to enter into, execute and deliver this Agreement, the Notes and the Warrant. This Agreement, and upon issuance, the Notes and the Warrant will be valid and binding obligations of Company, enforceable in accordance with their terms, except as the same may be limited by bankruptcy, insolvency, moratorium, and other laws of general application affecting the enforcement of creditors’ rights.

 

 

 

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c.       Authorization.

 

(i)              Corporate Action. All corporate and legal action on the part of Company, its officers, directors and shareholders necessary for the execution and delivery of this Agreement, the Note and the Warrant, the sale and issuance of the Note, the Warrant and the shares issuable upon conversion of the Notes and exercise of the Warrant and the performance of Company's obligations hereunder and under the Note and the Warrant have been taken.

 

(ii)            Valid Issuance. The Note and the Warrant, and Shares, when issued in compliance with the provisions of this Agreement, will be validly issued and will be free of any liens or encumbrances, provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein, and as may be required by future changes in such laws.

 

d.       Authorized and Outstanding Shares of the Company.

 

(i)       The authorized capital stock of the Company consists of two hundred twenty million one hundred thousand (220,100,000) shares of Company Common Stock, of which 9,000,000 shares are issued and outstanding; 100,000 shares of Super Voting Series A Preferred Stock (“SV Preferred”) issued to Max Kane, each share of SV Preferred entitled to 100 votes at any meeting of shareholders; and twenty million (20,000,000) unissued shares of preferred stock, $.001 par value per share (“ Preferred Stock ”), none of which are issued and outstanding. All outstanding shares of Company Common Stock and SV Preferred are duly authorized, validly issued, fully paid and non-assessable, and none of such shares have been issued in violation of the preemptive rights of any natural person, corporation, business trust, association, limited liability company, partnership, joint venture, other entity, government, agency or political subdivision (each, a “ Person ”). The offer, issuance and sale of such Company Common Stock and preferred stock was (a) exempt from the registration and prospectus delivery requirements of the Securities Act of 1933, as amended (the “ Securities Act ”), and (b) accomplished in conformity with all other applicable securities laws. None of the shares of outstanding Company Common Stock are subject to a right of withdrawal or a right of rescission under any federal or state securities or “Blue Sky” law. Except for twelve (12) warrants to purchase 1,083,334 shares of the Company, the Company has no outstanding options, rights or commitments to issue Company Common Stock or other Equity Securities (as defined below) of the Company, and there are no outstanding securities convertible or exercisable into or exchangeable for Company Common Stock or other Equity Securities of the Company, except that the Company has reserved 900,000 Shares for issuance pursuant to the Company's Stock Option Plan. For purposes of this Agreement, “Equity Security” shall mean any stock or similar security of an issuer or any security (whether stock or Indebtedness for Borrowed Money (as defined below)) convertible, with or without consideration, into any stock or other equity security, or any security (whether stock or Indebtedness for Borrowed Money) carrying any warrant or right to subscribe to or purchase any stock or similar security, or any such warrant or right.

 

 

 

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6. UNDERSTANDINGS AND ACKNOWLEDGEMENTS .

 

a.                   Each Purchaser acknowledges that the Securities have not been registered under the Act or qualified under the (put in States where Purchasers reside), as amended, or any other applicable blue sky laws in reliance, in part, on the representations and warranties herein.

 

b.                   Each Purchaser understands that (i) the Securities are “restricted securities” under the Federal Securities laws (e.g., the Act), insofar as the Securities will be acquired from the Company in a transaction not involving a public offering, (ii) under such laws and applicable regulations, the Securities may be resold without registration under the Act only in certain limited circumstances and (iii) in the absence of registration under the Act (which is not presently contemplated and with respect to which the Company has no obligation) the Securities must be held indefinitely. Each Purchaser understands the resale limitations imposed by the Act and is familiar with Rule 144 under the Act, as presently in effect, and the conditions which must be met in order for Rule 144 to be available with respect to the resale of “restricted securities”. Each Purchaser understands that the Company does not presently meet conditions for the availability of Rule 144 under certain circumstances (e.g., the provision of current “public company” information) and that the Company has no present plans to do so.

 

c.                   Each Purchaser understands that any certificates evidencing the Securities will bear one or all of the following legends:

 

(i)                   “THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL OR OTHER EVIDENCE SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.”

 

(ii)                  Any legend required by applicable state securities laws.

 

(iii)                Any legend required by any applicable shareholders' agreement.

 

7. COVENANTS .

 

a.       Without in any way limiting the representations set forth above, each Purchaser further agrees not to make any disposition of all or any portion of the Securities purchased hereunder unless and until:

 

(i)       There is then in effect a registration statement under the Act covering such proposed disposition and such disposition is made in accordance with such registration statement and any applicable requirements of state securities laws; or,

 

 

 

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(ii)       Such Purchaser shall have:

 

A.         notified the Company of the proposed disposition,

 

B.        furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, and,

 

C.         furnished the Company with a written opinion of counsel, reasonably satisfactory to the Company, that such disposition will not require registration of any securities under the Act or the consent of (or a permit from) any authority under any applicable state securities laws.

 

b.                   In the case of any disposition of any Securities pursuant to Rule 144 under the Act, then in addition to the matters set forth in paragraph 4(a)(ii) above, the Purchaser at issue shall promptly forward to the Company a copy of any Form 144 filed with the Securities and Exchange Commission (the “SEC”) with respect to such disposition and a letter from the executing broker satisfactory to the Company evidencing compliance with Rule 144. If Rule 144 is amended or if the SEC's interpretations thereof in effect at the time of any such disposition by the Purchaser have changed from the SEC's present interpretations thereof, the Purchaser at issue shall provide the Company with such additional documents as the Company may reasonably require.

 

c.                   In the event of an initial public offering relating to the Company's securities, each Purchaser shall enter into a lock-up agreement upon such terms as shall be requested by the managing underwriter for such offering.

 

d.                   To the extent that any Purchaser pays the purchase price for any of the Units with funds from the Purchaser's self-directed Individual Retirement Account (an “IRA”), each such Purchaser hereby represents, warrants and covenants as follows: (i) the purchase of the Units will not constitute a “prohibited transaction” for purposes of any law or regulation applicable to the IRA, and such Purchaser has confirmed this fact with independent legal counsel; (ii) no prohibition exists with respect to the use of funds from the IRA to effect the purchase of such Units (or any other transaction contemplated by this Agreement); (iii) such Purchaser is the sole person with any authority over investments made with respect to funds from the IRA, and such Purchaser is the sole owner of beneficial interests in the IRA; and, (iv) such Purchaser will protect, indemnify and hold the Company and its officers, directors, affiliates, shareholders, successors and assigns harmless from and against any and all claims, fees, penalties, taxes, interest, liabilities, obligations, damages, costs, losses and expenses (including, without limitation, attorneys’ fees and expenses) arising out of the use of funds from the IRA to purchase such securities.

 

8. NOTICES .

 

All notices, payments, requests, information and demands which either party hereto may desire, or may be required to give or make to the other party shall be given or made to such party by hand delivery or through deposit in the United States mail, postage prepaid, or by facsimile, email or overnight courier addressed to the address set forth below or to such other address as may be specified from time to time in writing by either party to the other:

 

 

 

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To: The Purchaser

 

At the Mail Address, email address, facsimile number or telephone number set forth on the Signature Page below

 

To: The Company

Dashub, Inc.

6800 Jericho Turnpike

Suite 201W

Syosset, NY 11791

 

Attention: Max Kane

 

Telephone No. 516-695-4251
Email: ink@dashub.com

 

9. MISCELLANEOUS .

 

a.               This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware (without regard to the conflicts of law principles thereof). All legal actions arising under this Agreement shall be instituted in, the County Nassau, State of New York and both Company and Purchaser consent to such jurisdiction and venue.

 

b.              This Agreement embodies the entire understanding between the parties and supersedes any prior understandings, agreements and arrangements between the parties respecting the subject matter hereof. There are no representations, warranties, agreements, arrangements or understandings, oral or written, between the parties hereto relating to the subject matter of this Agreement which are not fully expressed herein.

 

c.               This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. The execution and delivery of signatures for this Agreement may occur via telecopy, and such telecopied signature pages shall have the force and effect of original signature pages.

 

d.              If any legal action or proceeding arising out of or relating to this Agreement is brought by either party, the prevailing party shall be entitled to receive from the other party, in addition to any other relief that may be granted, the reasonable attorneys' fees, costs (including without limitation expert witnesses' fees), and expenses incurred in the action or proceeding by the prevailing party.

 

e.               The Purchaser and the Company hereby expressly and voluntarily waive any and all rights, to demand a trial by jury in any action, matter, claim or cause of action whatsoever arising out of or in any way related to this Agreement or any other agreement, document or transaction contemplated hereby.

 

 

 

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f.              Neither the failure nor delay by either party in exercising any right hereunder or under any document, instrument or agreement mentioned herein shall operate as a waiver thereof, nor shall any single or partial exercise of any right hereunder or under any document, instrument or agreement mentioned herein preclude other or further exercise thereof or the exercise of any other right; nor shall any waiver of any right or default hereunder or under any document, instrument or agreement mentioned herein constitute a waiver of any other right or default or constitute a waiver of any other default of the same or any other term or provision.

 

g.              Controlling Agreement. To the extent that any of the terms or provisions contained in this Agreement are inconsistent with those contained in any other document, instrument or agreement executed pursuant hereto, the terms and provisions contained herein shall control. Otherwise, such provisions shall be considered cumulative.

 

h.              This Agreement shall be binding upon and inure to the benefit of the Purchaser and the Company and their respective successors and assigns, except that the Purchaser shall not have the rights to assign its rights hereunder or any interest herein without the Company's prior written consent.

 

i.               The headings set forth herein are solely for the purpose of identification and have no legal significance.

 

j.               Legal Expenses. Each party shall bear and pay all of the legal and other expenses incurred by it in connection with the transactions contemplated by this Agreement.

 

k.              Each party to this Agreement and its legal counsel have reviewed and revised this Agreement. The rule of construction that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or of any amendments or exhibits to this Agreement.

 

l.       If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith, in order to maintain the economic position enjoyed by each party as close as possible to that under the provision rendered unenforceable. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of the Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of the Agreement shall be enforceable in accordance with its terms.

 

m.       Amendments. Any term of this Agreement may be amended or waived only with the written consent of Dashub and the Borrower. Any amendment or waiver effected in accordance with this Section shall be binding upon the Borrower.

 

The undersigned hereby executes and delivers this Agreement to which this Signature Page is attached, which Agreement and Signature Page, together with all counterparts of such Agreement and Signature Pages of the other parties with respect to such Agreement, shall constitute one and the same document in accordance with the terms of such Agreement.

 

Signature on Following Page

 

 

 

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Dated: April 25 ,2017

 

Number of Units: THREE

 

Purchase Price: $ 75,000 .00 (No. of Units x $25,000)

 

SIGNATURE: /s/ KevinO’Connell - President

 

Print Purchaser's Name: RC-I, INC .

 

Address: 110 SUNRISE CENTER DRIVE

 

                   THOMASVILLE, NC 27360

 

Phone: 949-721-1725

 

Email Address: Kevin.gpp@sbcglobal.net

 

Social Security/EIN # 26-1449268

 

Acknowledged and Accepted:

 

Date; April,     2017

 

DASHU , Inc. a Delaware

 

By: /s/ Max W. Kane, CEO

        Max W Kane, President & CEO

 

 

 

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ACCREDITED INVESTOR QUESTIONNAIRE

 

The undersigned acknowledges and understands that DAshub, Inc. (the “Company”) will rely on the information provided by the undersigned contained herein for purposes of determining compliance with and the availability of exemptions, provided under Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Regulation I) promulgated thereunder (“Regulation D”), from the registration requirements of the Securities Act and (ii) the issuance of such securities will not be registered under the Securities Act in reliance upon such exemptions.

 

All information provided by the undersigned is furnished for the sole use of the Company for the purposes described above and will be held in confidence by the Company, except that this Accredited Investor Questionnaire or the information provided herein or both may be furnished to such other parties as the Company, or each of their respective counsel or other authorized representatives, deem necessary or desirable to establish compliance with federal or state securities laws.

 

In accordance with the foregoing, the undersigned makes the following representations and warranties:

 

PART ONE

 

INVESTMENT EXPERIENCE AND PURPOSE TO BE COMPLETED BY EVERY

INVESTOR

 

1. Investment Experience . his item is presented in alternative form: Please initial, in the space provided below, the alternative that applies to you.

 

☒   ALTERNATIVE ONE : The undersigned has such knowledge and experience in financial and business matters so as to be capable of evaluating the relative merits and risks of an investment in the Securities; the undersigned is not. using a Purchaser Representative (as defined below) in connection with such evaluation. The undersigned offers as evidence of knowledge and experience in these matters the information requested in this Accredited Investor Questionnaire.

 

☐   ALTERNATIVE TWO* : The undersigned will use a purchaser representative who satisfies all of the affiliation, financial experience, acknowledgment and disclosure conditions set forth under Rule 501(h) of Regulation D promulgated under the Securities Act of 1933, as amended (“Purchaser Representative”) acceptable to the Company in connection with evaluating a potential investment in the Securities. The undersigned acknowledges that the following person will be acting as Purchaser Representative in connection with evaluating the merits and risks of an investment in the Securities.

 

Name of Purchaser Representative: N/a

 

The undersigned represents and warrants that tile above-named Purchaser Representative has furnished the undersigned with a Purchaser Representative questionnaire and that the undersigned and the above-named Purchaser Representative together have such knowledge and experience in financial and business matters that they are capable of evaluating the merits and risks of an investment in the Securities.

 

 

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(*IF YOU HAVE INITIALED ALTERNATIVE TWO, THIS CONFIDENTIAL INVESTOR QUESTIONNAIRE MUST BE ACCOMPANIED BY A COMPLETED AND SIGNED PURCHASER REPRESENTATIVE QUESTIONNAIRE.)

 

2.         Purpose of Investment . Except as indicated below, any purchase of the Securities will be solely for the account of the undersigned, and not for the account of any other person or with a view to any resale, division or distribution thereof. EXCEPTIONS (If exceptions provide details and attach additional pages if necessary)

 

 

 

 

 

 

PART TWO

 

GENERAL INFORMATION TO BE COMPLETED BY EVERY INVESTOR

3.   Name: RC-1, Inc.          

(exact name as it should appear in the records of the Company)

 

4. If the prospective investor is a natural Person, identify the nature of ownership of the proposed investment.

 

☒ Single Ownership

☐ Tenancy by the entirety (Spouses only)

☐ Community property

☐ Joint tenancy with right of survivorship

 

5. Marital status (if applicable): N/A

 

6. Address of record: 110 Sunrise Center Drive

                                      Thomasville, NC 27360

 

7. Telephone number: 949-721-1725     Fax:: __________________________________

 

8. Email: Kevin.gpp@sbcglobal.net

 

9. Social Security or Taxpayer ID number: 26-1449268

 

10. Describe any preexisting business or personal relationship between the prospective investor and any director or officer of the company

 

Kevin O’Connell is Chairman of the board of Dashub, and is president of RC-1, Inc .

 

 

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PART THREE INDIVIDUAL INVESTOR

 

TO BE COMPLETED ONLY BY INVESTORS
WHO ARE INDIVIDUALS

 

11.    This item is presented in alternative form. Please initial, in the space provided below, the alternative that applies to you:

 

☒       My individual net worth, or joint net worth with my spouse, excluding the value of my/our primary residence, exceeds $1,000,000.

 

☐       My individual income (without my spouse) was in excess of $200,000 in each of the two most recent years or joint income with my spouse was in excess of $300,000 in each of those years, and I reasonably expect an income reaching the same income level in the current year. For purposes of this Accredited Investor Questionnaire, individual income means adjusted gross income, as reported for federal income tax purposes, less any income attributable to a spouse or to property owned by 'a spouse, increased by the following amounts (but not including any amounts attributable to a spouse or to property owned by a spouse):

(i) the amount of any tax exempt interest income received,

 

(ii) the amount of losses claimed as a limited partner in a limited partnership,

(iii) any deduction claimed for depletion,

(iv) deductions for alimony paid,

(v) amounts contributed to an IRA or Keogh retirement plan, and

(vi) any amount by which income from long-term capital gains has been reduced in arriving at adjusted gross income pursuant to the provisions of Section 1202 of the Internal Revenue Code.

 

12.    Educational background of prospective investor:

 

13.    Professional licenses or registrations, including bar admissions, accounting certification, real estate brokerage licenses, and SEC or state broker-dealer registrations:

 

14.    The prospective investor has previously purchased securities sold in reliance on the exemption from registration under the Securities Act provided by Regulation D.

 

(  ) Yes (  ) No

 

15.    Investor's investment objectives:

 

 

______ Income      Other, please state: ______________________________

__X__ Appreciation

 

 

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16. Prior private placement investments made by prospective investor which evidence prospective investor's investing experience in transactions similar to this offering:

 

(X) Yes (  ) No

 

 

 

If yes, please explain: Multiple Investments

PART FOUR CORPORATE INVESTOR

 

TO BE COMPLETED BY INVESTORS WHO ARE CORPORATIONS (AND OTHER

ENTITIES)

 

17.        Type of organization (partnership, corporation, etc.):

 

18.        Date and State of organization:

 

19.        Select the representation provided below that applies:

 

a.                     (  ) a bank as defined in Section 3(a)(2) of the Securities Act, or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act acting in either an individual or fiduciary capacity;

 

b.                     (  ) a broker or dealer registered pursuant to Section 15 of the Exchange Act of 1934, as amended (the “ Exchange Act ”);

 

c.                     (  ) a Small Business Investment Company licensed by the U. S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958, as amended;

 

d.                     (  ) an investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of that Act; or

 

e.                     (  ) an insurance company as defined in Section 2(13) of the Securities Act;

 

f.                      (  ) a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940, as amended;

 

 

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g.                     (X ) a corporation, partnership, limited liability company, Massachusetts or similar business trust, or a charitable organization described in Section 501(c)(3) of the Internal Revenue Code, not formed for the specific purpose of acquiring the securities offered with total assets in excess of $5,000,000;

 

h.                     (  ) any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a "sophisticated person" as such term is described in Rule 506(b)(2)(ii) of Regulation D;

 

i.                      (  ) an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 with investment decisions made by a plan fiduciary, as defined in Section 3(21) of such act, which is a bank, an insurance company, a savings and loan association, or a registered investment advisor;

 

j.                    (  ) an employee benefit plan with total assets in excess of $5,000,000; or

 

k.                   (  ) an employee benefit plan that is a self-directed plan (such as a self-directed individual retirement account, Keogh or SEP plan) with investment decisions made solely by persons that are "accredited investors" as such term is defined in Rule 501(a) of Regulation D and amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act; or

 

1.                    (  ) an entity in which all of the equity owners are "accredited investors" as such term is defined in Rule 501(a) of Regulation D and amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act. Note: prospective investor must submit an individual Accredited Investor Questionnaire for each equity owner.

 

 

List all equity owners of the entity:

 

Kevin P. O’Connell/ Majority Control

_______________________________

 

 

 

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PART FIVE

 

REPRESENTATIONS AND WARRANTIES TO BE
COMPLETED BY EVERY INVESTOR

 

20. The undersigned understands and acknowledges that the Company will be relying on the accuracy and completeness of the information provided by the prospective investor in this Accredited Investor Questionnaire and the undersigned represents and warrants to the Company as follows:

 

The information is complete and correct and may be relied upon by the Company in determining whether the offer and sale of Securities in this offering in which the undersigned proposes to participate is exempt from the registration requirements of the Securities Act;

 

The undersigned will notify the Company immediately of any material change in any information provided by the prospective investor in this Accredited Investor Questionnaire occurring prior to the completion of the offering of the Securities; and

 

The undersigned has adequate means of providing for the undersigned's current needs and personal contingencies, has no need for liquidity in its investment in the Securities, and is able to bear the economic risk of an investment in the Securities of the size contemplated by the prospective investor. In making this statement, the undersigned represents that at the present time the undersigned has sufficient means to provide for its needs in the event of a complete loss of such investment.

 

IN WITNESS WHEREOF the undersigned prospective investor has executed this Accredited Investor Questionnaire this 10 th day of March 2017.

 

 

 

INDIVIDUALS: ENTITIES:
   
Kevin P. O’Connell RCV-1, Inc .
Print Name Print Name of Entity
   
/s/Kevin P. O’Connell Kevin P. O’Connell
Signature Print Name of Authorized Signatory
   

 

 

Print name of joint investor or

Signature of Authorized Signatory or other

Person whose signature is required

 

/s/Kevin O’Connell

Signature

 

 

 

 

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EXHIBIT A

 

This Note and the Shares issuable upon conversion hereof (until such time, if any, as such Shares are registered with the Securities and Exchange Commission pursuant to an effective registration statement) have not been registered under the Securities Act of 1933, as amended (the "Act"), or any state securities laws, and may not be sold, offered for sale of otherwise transferred unless registered or qualified under the Act and applicable state securities laws or unless the Maker receives an opinion, in form and from counsel reasonably acceptable to the Maker, that registration, qualification or other such actions are not required under any such laws.

 

CONVERTIBLE TERM NOTE

 

Principal Amount: $75,000.00 April 25th, 2017                     

 

FOR VALUE RECEIVED (Ref. March 2017 Nascar Race Team Sponsorship, Las Vegas), Dashub, Inc, a Delaware corporation (the "Company" or the "Maker"), hereby promises to pay to RC-1, Inc., (the "Lender"), or registered assigns (the "Holder"), the sum of Seventy Five Thousand and 00/100 ($75,000.00) Dollars (the "Principal Amount"), with interest thereon, on the terms and conditions set forth herein and in the Convertible Note Purchase Agreement (the "Purchase Agreement") of even date herewith, by and between the Maker and the Holder (as same may be amended, modified, supplemented and/or restated from time to time, the "Purchase Agreement"). Terms defined in the Purchase Agreement and not otherwise defined herein shall have the meanings assigned thereto in the Purchase Agreement. Payments of principal of, interest on and any other amounts with respect to this Convertible Promissory Note (this "Note") are to be made in lawful money of the United States of America. This Note, as provided in Section 3 below, may or shall be converted into Shares.

1.        Payments .

 

a.               Interest . This Note shall bear interest ("Interest") on Principal amounts outstanding from time to time from the date hereof at the rate of eight (8%) percent per• annum; provided, however, that during the continuance of any Event of Default, the Interest rate hereunder shall be increased to the Default Rate. All Interest shall be computed based on a three hundred sixty (360) day year, and shall he payable on the Maturity Date, as hereafter defined.

 

b.               Principal . The Principal Amount of this Note shall be payable eighteen (18) months after the date of issuance (the "Maturity Date").

 

c.               Non-Business Day . if any scheduled payment date as aforesaid is not a business day in the State of New York, then the payment to be made on such scheduled payment date shall be due and payable on the next succeeding business day, with additional interest on any Principal Amount so delayed for the period of such delay.

 

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2.        Conversion

 

a.        Method of Conversion by the Purchaser .

 

(i)                The Purchaser may at any time prior to the Maturity Date, convert the outstanding Principal Amount of the Note, into fully paid Shares of the Company in accordance with the following formula: For each $25,000 in principal amount converted, the Purchaser shall receive 25,000 Shares for a conversion price of $1.00 per Share (the "Conversion Price") and the interest due and owing at such time of conversion shall be converted into Shares at the same Conversion Price. Such conversion shall be deemed to have been effected as of the close of business on the date on which the Purchaser delivers the Notice of Conversion (the "Conversion Date"). Upon the Conversion Date, the rights of the Purchaser with respect to the principal and interest amount of the Note converted shall cease and the person(s) or entity in whose name(s) any certificate(s) for Shares are to be issued upon such conversion shall be deemed to have become the holder or holders of record of the Shares represented by such certificate(s). In each case of conversion of the Notes in part only, the Company shall receive and hold the Note as a fiduciary agent of the Purchaser, shall endorse on the Note the date and amount of the Note so converted, and such amount shall be deemed no longer outstanding. Upon such endorsement, the Company shall promptly return the Note to the Purchaser.

 

(ii)              Mechanics of Conversion by the Purchaser . In the event that the Purchaser elects to convert the Note, the Purchaser shall deliver a fully completed Notice of Conversion (a copy of which is attached hereto as Exhibit "C") (the "Notice") to the Company. Upon receipt of the Notice, the Company shall, within a reasonable time, not exceeding five (5) Business Days after the Conversion Date, issue and deliver to the Purchaser, the number of Shares to which the Purchaser shall be entitled upon such conversion, and shall deliver or cause to be delivered to the Purchaser the certificates representing such Shares. All Shares issued or delivered upon any conversion hereunder shall, when issued or delivered, be duly authorized, validly issued, fully paid and non-assessable. Upon the issuance of Shares by the Company, the Note shall be deemed cancelled.

 

b.        Method of Conversion by the Company . The Company may at any time prior to the Maturity Date, convert the outstanding Principal Amount of the Note, into fully paid Shares of the Company. In the event that the Company determines to convert the Note, the Company shall notify the Purchaser of the Company's determination to convert the Note, and the Company shall, within five (5) Business Days thereafter (the "Company Conversion Date"), issue and deliver to the Purchaser a number of common shares as follows: For each $25,000 in principal amount converted, the Purchaser shall receive 25,000 Shares for a conversion price of $1.00 per Share and the interest due and owing at such time of conversion shall be converted into Shares at $1.00 per share and the Company shall deliver or cause to he delivered to the Purchaser the certificates representing such Shares. All Shares issued or delivered upon any conversion hereunder shall, when issued or delivered, be duly authorized, validly issued, fully paid, and non-assessable. In each case of conversion of the Notes in part only, the Company shall not deliver any Shares to the Purchaser until such time as the Purchaser returns the Purchaser's duly endorsed Note in accordance with the Company's Notice of Conversion. Upon receipt of the duly endorsed Note, the Company will issue the Shares as set forth in the Company's Notice of Conversion (a copy of which is attached hereto as Exhibit "D"), and issue and deliver a new Note to the Purchaser for the unconverted balance of the Note. Upon the issuance of Shares by the Company, the Note shall be deemed cancelled.

 

 

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c.                   Taxes on Conversion . The issuance of certificates for Shares upon the conversion of the Note shall be made without charge by the Company to the Purchaser for any tax in respect of the issuance of such certificates and such certificates shall be issued in the name of, or in such names as may be directed by, the Purchaser; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance or delivery of any such certificate in a name other than that of the Purchaser, and the Company shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance thereof' shall have paid to the Company the amount of any such tax or shall have established to the satisfaction of the Company that any such tax has been paid; and further provided, that the Company shall not be required to pay any income tax to which the Purchaser may be subject in respect of the issuance of the Note or the Shares issued upon conversion hereof.

 

d.                   Adjustment of Number of Shares .

 

(i) Distributions or Subdivisions . In the event that, at any time and from time to time from and after the date of the Note, the company shall issue Shares (or securities convertible into Shares) in a distribution or subdivision paid with respect to Shares, or declare any distribution payable in additional Shares (or securities convertible into Shares), or effect a subdivision of the outstanding Shares,then,concurrently with the effectiveness of such distribution or subdivision, the then effective Conversion Price shall be proportionately decreased, and the number of shares issuable upon conversion of the Note shall thus be proportionately increased.

 

(ii) Combinations or Consolidations . In the event that, at any time and from time to time from and after the date of the Note, the outstanding Shares shall be combined or consolidated, by reclassification or otherwise, into a lesser number of Shares, then, concurrently with the effectiveness of such combination or consolidation,the then-effective Conversion Price shall be proportionately increased, and the number of Shares issuable upon conversion of the Note shall thus be proportionately decreased.

 

(iii) Other Dividends or Distributions . If the Company, at any time or from time to time after the issuance of the Note, makes a distribution to the holders of Shares which is payable in securities of the Company, then, in each such event, provision shall be made so that the Purchaser shall receive upon conversion of the Note, in addition to the number of Shares, the amount of such securities of the Company which would have been received if the portion of the Note so converted had been exercised for Shares on the date of such event, subject to adjustments subsequent to the date of such event with respect to such distributed securities which shall be on terms as nearly equivalent as practicable to the adjustments provided in this Section 3(d) (iii) and all other adjustments under this Section 3(c). Nothing contained in this Section 3(d)(iii) shall be deemed to permit the payment of any distribution in violation of the Purchase Agreement.

 

(iv) Merger, Consolidation or Exchange. If, at any time or from time to time after the date of the Note, there occurs any merger, consolidation, arrangement or statutory Share exchange of the Company with or into any other person or entity, then, in each such event, provision shall be made so that the Purchaser shall receive upon conversion of the Note the kind and amount of Shares and other securities and property (including cash) which would have been received upon such merger, consolidation, arrangement or statutory interest exchange by the Purchaser, if the Note was converted immediately prior to such merger,consolidation, arrangement or statutory interest exchange, subject to adjustments for events subsequent to the effective date of such merger,consolidation, arrangement or statutory interest exchange with respect to such Shares and other securities which shall be on terms as nearly equivalent as practicable to the adjustments provided in this Section 3(c)(iv) and all other adjustments under this Section 3(c).

 

 

 

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(v)              Recapitalization or Reclassification . If, at any time or from time to time after the date of the Note, the Shares issuable upon conversion of the Note are changed into the same or a different number of securities of any class of the Company, whether by recapitalization, reclassification or otherwise (other than a merger, consolidation, arrangement or statutory Interest exchange provided for elsewhere in this Section 3(e)(iv), then, in each such event, provision shall be made so that the Purchaser shall receive upon conversion of the Note the kind and amount of securities or other property which would have been received in connection with such recapitalization, reclassification or other change by the Purchaser if the portion of the Note so converted had been converted immediately prior to such recapitalization, reclassification or change, subject to adjustments for events subsequent to the effective date of such recapitalization, reclassification or other change with respect to such securities which shall be on terms as nearly equivalent as practicable to the adjustments provided in this Section 3(e)(v) and all other adjustments under this Section 3(c).

 

(vi)             Extraordinary Dividends or Distributions . If, at any time or from time to time after the date of the Note, the Company shall declare any extraordinary distribution upon the Shares payable otherwise than out of current earnings, retained earnings or earned surplus and otherwise than in Shares, then the Conversion Price in effect immediately prior to such declaration shall be reduced by an amount equal, in the case of a distribution in cash, to the amount thereof payable per Share or, in the case of any distribution, to the value thereof per Interest sat the time such distribution was declared, as determined by the Managers of the Company in good faith. Such reductions shall take effect as of the date on which a record is taken for the purposes of the subject distribution, or, if a record is not taken, the date as of which the holders of record of Shares entitled to such distribution are to be determined. Nothing contained in this Section 3(e)(vi) shall be deemed to permit the payment of any distribution in violation of the Secured Note Purchase Agreement.

 

(vii)           Certificate of Adjustment . Whenever the Conversion Price and/or the number of Shares receivable upon conversion of the Note is adjusted, the Company shall promptly deliver to the Purchaser a certificate of adjustment, setting forth the Conversion Price and/or Shares issuable after adjustment, a brief statement of the facts requiring the adjustment and the computation by which the adjustment was made. The certificate of adjustment shall be prima facie evidence of the correctness of the adjustment.

 

(viii)         Successive Application . The provisions of this Section 3(e) shall be applicable successively to each event described herein which may occur subsequent to the date of the Note and prior to the conversion in full of the Note.

 

f. Restricted Securities . The Shares that are issuable to the Holder upon conversion hereunder, will not have been registered under any federal or state securities laws, and will constitute “restricted securities” within the meaning of federal and state securities laws. By its receipt of Shares, the Holder will be deemed to acknowledge and confirm that it is receiving such Shares for its own account for investment, and not with a view to the resale or distribution thereof in violation of any federal or state securities laws.

 

 

 

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4.      Loan Documents . This Note is the Convertible Promissory Note issued pursuant to the terms of Purchase. This Note is entitled to all of the benefits of the Purchase Agreement which Purchase Agreement is hereby incorporated by reference herein and made a part hereof. The occurrence and continuance of an Event of Default under the Purchase Agreement shall constitute a default under this Note and shall entitle the Holder to accelerate the entire indebtedness hereunder and take such other action as may be provided for in the Purchase Agreement and/or in any and all other instruments evidencing and/or securing the indebtedness under this Note,or as may be provided under the law.

 

5.        Communications and Notices . Except as otherwise specifically provided herein, all communications and notices provided for in this Note shall be sent by reputable overnight courier or facsimile to the Holder at the Holder's address as set forth below or, as provided to the Secretary of the Maker from time to time and, if to the Maker, at the address set forth in the Purchase Agreement. Any notice sent by overnight courier shall be deemed given on the third (3rd) Business Day after being deposited with the courier with all charges prepaid or billed to the account of the sender. Any notice sent by facsimile shall be deemed received on the date on which such notice is sent if such notice is sent during normal business hours at the point of receipt (or otherwise on the next succeeding Business Day). The Maker and the Holder may from time to time change their respective addresses or fax numbers, for purposes of this Section 5, by written notice to the other parties; provided, ho ever, that notice of such change shall he effective only upon receipt.

 

7.        Governing Law and Jurisdiction . This Note, and all matters arising directly or indirectly herefrom, shall be governed by and construed in accordance with the laws of the Delaware, notwithstanding the choice of law or conflicts of law principles thereof. Holder hereby (i) irrevocably consents and submits to the sole exclusive jurisdiction of the Supreme Court of the State of New York located in the County of Nassau,or the United States District Court for the Southern District of New York (and of the appropriate appellate courts), in connection with any suit, action or other proceeding arising out of or relating to this note, (ii) irrevocable waives, to the fullest extent permitted by law, any objection that it may not or hereafter have to the laying of the venue of any such suit, action or proceeding any any such cost or that any such suit, action or proceeding which is brought in any such court has been brought in any inconvenient forum, and (iii) agrees that service of any summons, complaint, notice or other process relating to such suit, action or other proceeding may be effected in the manner provided by Section 5.

 

8.       Assignment . The Holder may only assign its rights under this Agreement with the prior written consent of the Holder, upon written notice to the Company, and such assignee shall agree in writing to be bound by the terms of the this Note.

 

9.      Waiver and Amendment. No waiver of a right in any instance shall constitute a continuing waiver of successive rights, and any one waiver shall govern only the particular matters waived. Neither any provision of this Note nor any performance hereunder may be amended or waived except pursuant to an agreement in writing signed by the party against whom enforcement thereof is sought.

 

 

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10.         Usury Savings Clause . All agreements between the Maker and the Holder are hereby expressly limited to provide that in no contingency or event whatsoever, whether by reason of acceleration of maturity of the indebtedness evidenced hereby or otherwise, shall the amount paid or agreed to be paid to the Holder for the use, forbearance or detention of the indebtedness evidenced hereby exceed the maximum amount whit the Holder is permitted to receive under applicable law. If, from any circumstances whatsoever, fulfillment of any provision hereof or of the Purchase Agreement, at the time performance of such provision shall be due, shall involve transcending the limit of validity prescribed by law, then, ipso facto , the obligation to be fulfilled shall automatically be reduced to the limit of such validity, and if from any circumstance the Holder shall ever receive as interest an amount which would exceed the highest lawful rate, such amount which would be excessive interest shall be applied to the reduction of the principal balance of any of the Maker's Obligations (as such term is defined in the Purchase Agreement) to the Holder, and not to the payment of interest hereunder. To the extent permitted by applicable law, all sums paid or agreed to be paid for the use, forbearance or detention of the indebtedness evidenced by this Note shall be amortized, prorated, allocated and spread throughout the full term of such indebtedness until payment in full, to the end that the rate or amount of interest on account of such indebtedness does not exceed any applicable usury ceiling. As used herein, the term "applicable law" shall mean the law in effect as of the date hereof, provided, however, that in the event there is a change in the law which results in a higher permissible rate of interest, then this Note shall be governed by such new law as of its effective date. This provision shall control every other provision of all agreements between the Maker and the Holder.

 

11.         Collection Costs . In the event that the Holder shall place this Note in the hands of an attorney for collection during the continuance of any Event of Default, the Maker shall further be liable to the Holder for all costs and expenses (including reasonable attorneys' fees) which may be incurred by the Holder in enforcing this Note, all of which costs and expenses shall be obligations under• and part of this Note; and the Holder may take judgment for all such amounts in addition to all other sums due hereunder.

 

IN WITNESS WHEREOF, the Maker has executed this Note on the date first above written.

 

Dashub, Inc.

 

By: / s/ Max Kane, CEO

          Max Kane, President and CEO

 

 

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EXHIBIT B

 

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR UNDER THE SECURITIES LAWS OF ANY STATE OR JURISDICTION AND MAY NOT BE SOLD, OFFERED FOR SALE OR OTHERWISE TRANSFERRED UNLEESS REGISTERED OR QUALIFIED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS THE COMPANY RECEIVES AN OPINION, IN REASONABLY FORM AND SCOPE, OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY, THAT REGISTRATION, QUALIFICATION OR OTHER SUCH ACTIONS ARE NOT REQUIRED UNDER ANY SUCH LAWS.

 

DASHUB, LLC

 

WARRANT TO PURCHASE COMMON SHARES
(Expires April 30, 2018)

Warrant No. N-500 

 

FOR VALUE RECEIVED, subject to the provisions set forth below, the undersigned, DASHUB Inc., a Delaware corporation (the “ Company ”), hereby certifies that holder of this Warrant, or its registered assigns (the “Holder”), is entitled to purchase from the Company up to 24,999 shares of fully paid and non-assessable shares of common stock (par value $.001 per share (“Shares”) of the Company, for a cash price of $1.00 per share at any time and from time to time from and after the date hereof and until 5:00 p.m. (Eastern time) on April 30, 2018 (the “Expiration Date”) upon surrender to the Company at its principal office (or at such other location as the Company may advise the Holder in Writing) of this Warrant properly endorsed with the Notice of Exercise attached hereto duly filled in and signed and, if applicable, upon payment in cash or by check of the aggregate Exercise Price for the number of Shares for which this Warrant is being exercised determined in accordance with the provisions hereof. The Exercise Price and the number of Shares purchasable hereunder are subject to adjustment as provided in Section 3 of this Warrant.

 

1.       Exercise of Warrant.

 

1.1.       Exercise. This Warrant shall be exercisable at any time and from time to time from the date hereof until the Expiration Date, arid this Warrant shall expire on the Expiration Date. Upon exercise of this Warrant, the Exercise Price shall be payable in cash or by check. This Warrant may be exercised in whole or in part, provided that this Warrant shall not be exercisable in portions for less than .5% of the Company. If exercised in part, the Company shall deliver to the Molder a new Warrant, identical in form to this Warrant, in the name of the Holder, evidencing the right to purchase the number of Shares as to which this Warrant has not been exercised, which new Warrant shall be signed by an appropriate officer of the Company. The term “Warrant” as used herein shall include any subsequent Warrant issued as provided herein.

 

 

 

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1.2.       Exercise Procedures; Delivery of Certificate. Upon surrender of this Warrant with a duly executed Notice of Exercise in the Form of Annex A attached hereto, together with payment of the Exercise Price for the Shares purchased, at the Company's principal executive offices (the “ Designated Office ”), the Holder shall be entitled to receive a certificate or certificates for the Shares so purchased. The Company agrees that the Shares shall be deemed to have been issued to the holder as of the close of business on the date on which this Warrant shall have been surrendered together with the Notice of Exercise and payment for such Shares.

 

2.       Transfer; Issuance of Shares Certificates; Restrictive Legends.

 

2.1.       Transfer. Notwithstanding the foregoing, the Holder may only assign its transfer its rights under this Warrant provided that the assignee of this Warrant shall agree, in writing, to be bound by the terms of the this Warrant. Each transfer of this Warrant and all rights hereunder, in whole or in part, shall be subject to and effected in compliance with any and all applicable securities laws, and shall be registered on the books of the Company to be maintained for such purpose, upon surrender of this Warrant at the Designated Office, together with a written assignment of this Warrant in the form of Annex B attached hereto duly executed by the Holder or its agent or attorney. Upon such surrender and delivery, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, if any. A Warrant may be exercised by the new Holder for the purchase of Shares without having a new Warrant issued. Prior to due presentment for registration of transfer thereof, the Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof (notwithstanding any notations of ownership or writing thereon made by anyone other than a duly authorized officer of the Company) for all purposes and shall not be affected by any notice to the contrary. All Warrants issued upon any assignment of Warrants shall be the valid obligations of the Company, evidencing the same rights and entitled to the same benefits as the Warrants surrendered upon such registration of transfer or exchange.

 

2.2.       Share Certificates. Certificates for the Shares shall be delivered to the Holder within five (5) Business Days alter the rights represented by this Warrant shall have been exercised pursuant to Section 1, and a new Warrant representing the right to purchase the Shares, if any, with respect to which this Warrant shall not then have been exercised shall also be issued to the Holder within such time. The issuance of certificates for Shares upon the exercise of this Warrant shall be made without charge to the Holder hereof including, without limitation, any documentary, stamp or similar tax that may be payable in respect thereof; provided, however , that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance or delivery of any such certificate in a name other than that of the Holder, and the Company shall not be required to issue or deliver such certificate unless or until the person or persons requesting the issuance thereof shall have paid to the Company the amount of any such tax or shall have established to the satisfaction of the Company that any such tax has been paid; and further provided , that the Company shall not be required to pay any income tax to which the Holder hereof may be subject in connection with the issuance of this Warrant or the Shares.

 

 

 

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2.3 Restrictive Legend. Except as otherwise provided in this Section 2, each certificate for Shares initially issued upon the exercise of this Warrant and each certificate for Shares issued to any subsequent transferee of any such certificate, shall be stamped or otherwise imprinted with a legend in substantially the following form:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO,OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.”

 

 

Notwithstanding the foregoing, the legend requirements of this Section 2.3 shall terminate as to any particular Shares when (i) such Shares are transferred pursuant to an effective resale registration statement under the Securities Act of 1933 the (“Securities Act”), or (ii) the Company shall have received from the Holder thereof an opinion of counsel in form and substance reasonably acceptable to the Company that such legend is not required in order to ensure compliance with the Securities Act. Whenever the restrictions imposed by this Section 2.3 shall terminate, the Holder or subsequent transferee, as the case may be, shall be entitled to receive from the Company without cost so such Holder or transferee a certificate for the Shares without such restrictive legend.

 

3.    Adjustment of Number of Shares; Exercise Price; Nature of Securities Issuable Upon Exercise of Warrants.

 

3.1 Exercise Price; Adjustment of Number of Shares. The Exercise Price and the number of Shares purchasable hereunder shall be subject to adjustment from time to time as hereinafter provided.

 

3.2 Adjustments Upon Distribution, Subdivision or Combination. If the Company, at any time or from time to time after the issuance of this Warrant, shall (a) make a dividend or distribution on its Shares payable in Shares, (b) subdivide or reclassify the outstanding Shares into a greater number of Shares, or (c) combine or reclassify the outstanding Shares into a smaller number of Shares, the Exercise Price in effect at that time and the number of Shares into which the Warrant is exercisable at that time shall be proportionately adjusted effective as of the record date for the distribution or the effective date of the subdivision, combination or reclassification.

 

3.3 Adjustment Upon Other Distributions. If the Company, at any time or from time to time after the issuance of this Warrant, makes a distribution to the holders of Shares which is payable in securities of the Company other than Shares, then, in each such event, provision shall be made so that the Holder shall receive upon exercise of this Warrant, in addition to the number of Shares, the amount of such securities of the Company which would have been received if the portion of the Warrant so exercised had been exercised for Shares on the date of such event, subject to adjustments subsequent to the date of such event with respect to such distributed securities which shall be on terms as nearly equivalent as practicable to the adjustments provided in this Section 3 and all other adjustments under this Section 3.

 

 

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3.4. Adjustment Upon Merger, Co nsolidation or Exchange. If at any time or from time to time after the issuance of this Warrant there occurs any merger, consolidation, arrangement or statutory share exchange of the Company with or into any other person or company, then, in each such event, provision shall be made so that the Holder shall receive upon exercise of this Warrant the kind and amount of hares and other securities and property (including cash) which would have been received upon such merger, consolidation, arrangement or statutory share exchange by the Holder if the portion of this Warrant so exercised had been exercised for Shares immediately prior to such merger, consolidation, arrangement or statutory share exchange, subject to adjustments for events subsequent to the effective date of such merger, consolidation, arrangement or statutory share exchange with respect to such Shares and other securities which shall be on terms as nearly equivalent as practicable to the adjustments provided in this Section 3 and all other adjustments under this Section 3.

 

3.5. Adjustments for Recapitalization or Reclassification. If, at any time or from time to time after the issuance of this Warrant, the Shares issuable upon exercise of this Warrant are changed into the same or a different number of' securities of any class of the Company, whether by recapitalization, reclassification or otherwise (other than a merger, consolidation, arrangement or statutory share exchange provided for elsewhere in this Section 3), then, in each such event, provision shall be made so that the Holder shall receive upon exercise of this Warrant the kind and amount of securities or other property which would have been received in connection with such recapitalization, reclassification or other change by the Holder if the portion of' this Warrant so exercised had been exercised immediately prior to such recapitalization, reclassification or change, subject to adjustments for events subsequent to the effective date of such recapitalization, reclassification or other change with respect to such securities which shall be on terms as nearly equivalent as practicable to the adjustments provided in this Section 3 and all other adjustments under this Section 3.

 

3.6. Extraordinary Dividends or Distributions. If, at any time or from time to time after the issuance of this Warrant, the Company shall declare an extraordinary dividend or any other distribution upon the Shares payable other vise than out of current earnings, retained earnings or earned surplus and otherwise than in Shares, then the Exercise Price in effect immediately prior to such declaration shall be reduced by an amount equal, in the case of a distribution in cash, to the amount thereof payable per hare or, in the case of any other dividend or distribution, to the value thereof per Share at the time such distribution was declared, as determined by the board of directors of the Company in good faith. Such reductions shall take effect as of the date on which a record is taken for the purposes of the subject dividend or distribution, or, if a record is not taken, the date as of which the holders of record of Shares entitled to such dividend or distribution arc to be determined.

 

3.7. Certificate of Adjustment. Whenever the Exercise Price and/or the number of Shares receivable upon exercise of this Warrant is adjusted, the Company shall promptly deliver to the Holder a certificate of adjustment, setting forth the Exercise Price and/or Shares issuable after adjustment, a brief statement of the facts requiring the adjustment and the computation by which the adjustment was made. The certificate of adjustment shall be prima facie evidence of the correctness of the adjustment.

 

 

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3.8.       Successive Adjustments. The provisions of this Section 3 shall be applicable successively to each event described herein which may occur subsequent to the issuance of this Warrant and prior to the exercise in full of this Warrant.

 

4. Exchange and Replacement of Warrant; Reservation of Shares. The Company shall keep at the Designated Office a register in which the Company shall provide for the registration, transfer and exchange of this Warrant. The Company shall not at any time, except upon the dissolution, liquidation or winding-up of the Company, close such register so as to result in preventing or delaying the exercise or transfer of this Warrant.

 

The Company may deem and treat the person in whose name this Warrant is registered as the Holder and owner hereof for all purposes and shall not be affected by any notice to the contrary, until presentation of this Warrant for registration or transfer as provided in this Section 4.

 

Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant and (in case of loss, theft or destruction) of the Holder's indemnity in form satisfactory to the Company, and (in the case of mutilation) upon surrender and cancellation of this Warrant, the Company will (in the absence of notice to the Company that the Warrant has been acquired by a bona fide purchaser) make and deliver a new Warrant of like tenor in lieu of this Warrant, without requiring the posting of any bond or the giving of any security.

 

The Company shall at all times reserve and keep available out of its authorized Shares, solely for the purpose of issuance upon the exercise of this Warrant, such number of Shares as shall be issuable upon the exercise hereof. The Company covenants and agrees that, upon exercise of this Warrant and payment of the Exercise Price therefor, if applicable, all Shares issuable upon such exercise shall be duly and validly authorized and issued, fully paid and non-assessable.

 

5. Investment Representations. The Holder, by accepting this Warrant, covenants and agrees that, at the time of exercise of this Warrant, if the Shares shall not then be the subject of an effective registration statement under the Act, the securities acquired by the Holder upon exercise hereof arc for the account of the Holder or are being acquired for its own account for investment and are not acquired with a view to, or for sale in connection with, any distribution thereof (or any portion thereof) and with no present intention (at such time) of offering and distributing such securities (or any portion thereof), except in compliance with applicable federal and state securities laws.

 

6. Warrant Holders Not Deemed Holders of Shares. No Holder of this Warrant shall, as such, be entitled to vote or to receive distributions (except to the extent provided in Section 3.2 above) or be deemed the holder of Shares that may at any time be issuable upon exercise of this Warrant, nor shall anything contained herein be construed to confer upon the Holder of this Warrant, as such, any of the rights of a Shareholder of the Company or any right to vote for the election of directors or upon any matter submitted to Shareholders at any meeting thereof, or to give or withhold consent to any Company action (whether upon any recapitalization,issue or reclassification of Shares,consolidation,merger or conveyance or otherwise),or to receive notice of meetings,or subscription rights, until such Holder shall have exercised this Warrant and been issued Shares or deemed to have been issued Shares in accordance with the provisions hereof. No provision hereof, in the absence of affirmative action by the Holder to purchase Shares or other securities hereunder, and no mere enumeration herein of the rights or privileges of the Holder hereunder, shall give rise to any liability of such Holder for the Exercise Price or as a Shareholder of the Company,whether such liability is asserted by the Company or by any creditors of the Company.

 

 

 

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7. Notices. Any notice which is required to be given by this Warrant must be in writing, and shall be sent, unless otherwise expressly provided herein, by reputable overnight courier or facsimile to the party being notified at its address or fax number stated below. Any notice sent by overnight courier shall be deemed given on the third (3rd) Business Day after being deposited with the courier with all charges prepaid or billed to the account of the sender; and any notice sent by facsimile shall be deemed received on the date sent if sent during normal business hours at the point of receipt (or otherwise on the next succeeding Business Day). For the purposes of notice, the addresses and fax numbers of the parties for the receipt of notice hereunder are:

 

  If to the Company: Dashub,Inc.
    6800 Jericho Turnpike
    Suite 201W
    Syosset, NY 11791
     
  If to the Holder: Name and address at the Address
    Set forth below on the Signature Page
     

 

Any party shall have the right from time to time, and at any time, to change its address for the receipt of notice by giving at least five (5) day prior written notice of the change of its address to the other parties in the manner specified here in.

 

8. Successors. All the covenants, agreements, representations and warranties contained in this Warrant shall bind the parties hereto and their respective heirs, executors, administrators, distributees, successors, assigns and transferees.

 

9. Governing Law; Jurisdiction. This Warrant, and all matters arising directly or indirectly herefrom, shall be governed by and construed in accordance with the laws of the Delaware, notwithstanding the choice of law or conflicts of law principles thereof. Each of the parties hereto hereby (i) irrevocably consent to the jurisdiction of the courts of the State of New York, County of Nassau,with respect to any dispute or proceeding arising in connection with this Agreement, (and of the appropriate appellate courts) in connection with any suit, action or other proceeding arising out of or relating to this Warrant, (ii) irrevocably waivers,to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying to the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought in any such court has been brought in an inconvenient forum, and (iii) agrees that service of any summons, complaint,notice or other process relating to such suit, action or other proceeding may be effected in the manner provided by Section 7.

 

 

 

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10.            Entire Agreement; Amendments and Waivers. This Warrant, together with the Registration Rights Agreement, sets forth the entire understanding of the parties with respect to the subject matter hereof. The failure of any party to seek redress for the violation or to insist upon the strict performance of any term of this Warrant shall not constitute a waiver of such term and such party shall be entitled to enforce such term without regard to such forbearance. This Warrant may be amended, and any breach of or compliance with any covenant, agreement, warranty or representation may be waived, only if the Company has obtained the written consent or written waiver of the Holder, and then such consent or waiver shall be effective only in the specific instance and for the specific purpose for which given.

 

11.            Severability; Headings. If any term of this Warrant as applied to any person or to any circumstance is prohibited, void, invalid or unenforceable in any jurisdiction, such term shall, as to such jurisdiction, he ineffective to the extent of such prohibition or invalidity without in any way affecting any other term of this Warrant or affecting the validity or enforceability of this Warrant or of such provision in any other jurisdiction. The Section headings in this Warrant have been inserted for purposes of convenience only and shall have no substantive effect.

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed as of the 23rd day of April 2017.

 

 

  Dashub, Inc., a Delaware corporation
   
  By: /s/ Max W.Kane, CEO
            Name: Max W. Kane
            Title: President and CEO

 

 

 


Name and Address of Warrant Holder

RC-1, Inc.

110 Sunrise Center Drive

Thomasville, NC 27360

 

 

 

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ANNEX A

 

NOTICE OF EXERCISE

 

(To be executed upon partial or full

exercise of the within Warrant)

 

 

The undersigned hereby irrevocably elects to exercise the right to purchase __________ Shares of Dashub Inc. set forth within Warrant No. N-500 according to the conditions thereof and herewith makes payment of the Exercise Price of such Shares in full in the amount of $______________.

 

 

  By: __________________________
           (Signature of Registered Holder)
   
   

Dated: _____________________

 

Name of Warrant Holder

or transferee: ________________________________________________________

 

Address: ___________________________________________________________

 

Signature: __________________________________________________________

 

NOTICE: The signature on this form must correspond with the name as written upon the face of this Warrant in every particular, without alteration or enlargement or any change whatsoever.

 

 

 

 

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ANNEX B

 

ASSIGNMENT FORM

 

 

FOR VALUE RECEIVED the undersigned registered owner of this Warrant hereby sells, assigns and transfers unto the Assignee named below all of the rights of the undersigned under this Warrant, with respect to the number of Shares set forth below:

 

Name and Address of Assignee                                                   No. of Shares

 

 

 

 

and does hereby irrevocably constitute and appoint ____________________ attorney-in-fact to register such transfer onto the books of Dashub, Inc. maintained for the purpose, with full power of substitution in the premises.

 

Dated: ____________________________ Print Name: _____________________________
   
  Signature: ______________________________
   
  Witness: _______________________________

 

 

 

NOTICE: The signature on this assignment correspond with the name as written upon the face of this Warrant in every particular, without alteration or enlargement or any change whatsoever.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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EXHIBIT C

 

CONVERTIBLE NOTE CONVERSION NOTICE

 

TO: Dashub, Inc.

 

 

The undersigned owner of this Convertible Note due _____________, 20__ (the “ Note ”) issued by Dashub, Inc. (the “ Company ”) hereby irrevocably exercises its option to convert $__________ Principal Amount of the Note into shares of Common Stock in accordance with the terms of the Note. The undersigned hereby instructs the Company to convert the portion of the Note specified above into shares of Common Stock Issued at Conversion in accordance with the provisions of Article 3 of the Note. The undersigned directs that the Common Stock and certificates therefor deliverable upon conversion, the Note reissued in the Principal Amount not being surrendered for conversion hereby, together with any check in payment for fractional Common Stock, be registered in the name of and/or delivered to the undersigned unless a different name has been indicated below. All capitalized terms used and not defined herein have the respective meanings assigned to them in the Convertible Note Purchase Agreement and the Note. The conversion pursuant hereto shall be deemed to have been effected at the date and time specified below, and at such time the rights of the undersigned as a Holder of the Note set forth above shall cease and the Person or Persons in whose name or names the Common Stock Issued at Conversion shall be registered shall be deemed to have become the holder or holders of record of the Common Shaers represented thereby and all voting and other rights associated with the beneficial ownership of such Common Shares shall at such time vest with such Person or Persons.

 

Date and time: ________________

 

Note Holder:

 

___________________________

Print Name

 

___________________________

Authorized Signature

 

Address where Shares Should be delivered

 

__________________________

 

__________________________

 

Telephone Number: _________________

Email address ______________________

 

 

 

 

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EXHIBIT D

 

NOTICE OF CONVERSION

 

Date:

 

(Name and Address of Holder)

 

Dear Noteholder:

 

Please be advised that on _____________ __, 20__, the Board of Directors of Dashub, Inc. elected to convert the Convertible Promissory Note issued to you on _____________, 2017 (the “Note”) into common shares of Dashub, Inc. The balance due to you on the Note as of ___________ __, 20__, is $_________ ($_______ in principal and $______ in interest). In accordance with Paragraph 2(b) of the Note, the Note has been converted into the right to receive __________ shares of Dashub, Inc. common stock.

 

We will forward your share certificate for _________ shares of common stock to you at the address you had previously provided. In the event you wish to have the shares delivered to an address other than as previously provided, please advise us immediately of the change of address.

 

 

Very truly yours,

 

Dashub, Inc.

 

By: ____________________

      Max Kane, President

 

 

 

 

 

 

 

 

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Exhibit 23.2

 

PRITCHETT, SILER & HARDY, P.C.

CERTIFIED PUBLIC ACCOUNTANTS

A PROFESSIONAL CORPORATION

515 South 400 East, Suite 100

Salt Lake City, UT 84111

_______________

 

Consent of Independent Registered Public Accounting Firm

 

We consent to the incorporation by reference in the Post effective Amendment No. 3 (File No. 333-210960) to Form S-1 of RC-1, Inc. of our report dated April 27, 2016, relating to our audit of the financial statements of RC-1, Inc., as of December 31, 2015 and for the year ended December 31, 2015. Our report dated April 27, 2016, relating to the financial statements includes an emphasis paragraph relating to an uncertainty as to the Company's ability to continue as a going concern. We also consent to the reference to us under the heading “experts” in such Registration Statement.

 

 

 

Pritchett, Siler & Hardy, P.C.

Salt Lake City, Utah

December 27, 2017

Exhibit 23.3

 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

RC-1, Inc.

Thomasville, NC

 

We hereby consent to the use in this Amendment No. 3 to Post-Effective Amendment No. 1 the Registration Statement on Form S-1 (File No. 333-210960) of our report dated April 5, 2017, relating to the financial statements of RC-1, Inc. at and for the year ended December 31, 2016. Our report contains an explanatory paragraph regarding the Company’s ability to continue as a going concern.

 

We also consent to the reference to us under the caption “Experts” in the Prospectus.

 

 

/s/ Daszkal Bolton LLP

 

Fort Lauderdale, Florida

December 26, 2017