As filed with the Securities and Exchange Commission on December 6, 2012August 27, 2021
Registration No. 333-257632
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 2 TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SAMSARA LUGGAGE, INC.
(Name of registrant as specifiedIssuer in its charter)Its Charter)
| 26-0299456 | ||||||
(Primary Standard Industrial Classification Code Number) | ( of incorporation) | (IRS Employer Identification No.) |
One University Plaza
Suite 505
Hackensack, NJ 07601
(877) 421-1574
(Address including zip code, and telephone number,
Atara Dzikowski
One University Plaza
Suite #200505
Hackensack, NJ 07601
(877) 421-1574
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies To:to:
Jonathan R. Shechter
Aleksander Ablovatskiy
Foley Shechter Ablovatskiy LLP
1001 Avenue of the Americas, 12th Floor
New York, NY 1156310018
Telephone: (516) 887-8200(212) 335-0465
Approximate date of commencement of proposed sale to the public: From time to timeAs soon as practicable after this Registration Statementregistration statement becomes effective.
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, please check the following box: x
If this formForm 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: ¨
If this formForm is a post-effective registration statementamendment filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: ¨
If this formForm is a post-effective registration statementamendment filed pursuant to Rule 462(d) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”filer,” “smaller reporting company,” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act. (check one):
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | ☐ | Smaller reporting company | ☒ |
| Emerging growth company | ☐ |
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 7(a)(2)(B) of the Securities Act. ☐
CALCULATION OF REGISTRATION FEE
| Title of Each Class of Securities to Be Registered | Amount Registered (1) | Proposed Maximum Offering Price Per Security (2) | Proposed Maximum Aggregate Offering Price (2) | Amount of Registration Fee (3) | ||||||||||||
| Shares of Common Stock Issuable upon Conversion of Convertible Notes (4) | 361,596 | $ | 2.98 | $ | 1,077,556 | $ | 117.56 | |||||||||
| Title of Each Class of Securities to be Registered | Amount of Shares to be Registered | Proposed Maximum Offering Price per Share (2) | Proposed Maximum Aggregate Offering Price | Amount of Registration Fee | ||||||||||||
| Common Stock | 2,000,000 | $ | 1.70 | $ | 3,400,000 | $ | 463.76 | |||||||||
| (1) | Pursuant to Rule 416, as amended, there are also being registered such additional securities as may be issued to prevent dilution resulting from stock splits, stock dividends, or similar transactions as a result of the anti-dilution provisions contained in the Convertible Notes. |
| (2) | Estimated solely for the purpose of calculating the registration fee for this offering pursuant to Rule 457(c) under the Securities Act of 1933, as amended (the “Securities Act”), using the closing price on August 23, 2021 of $2.98 as reported on the OTCQB (the “OTCQB”). |
| (3) | To be paid by deduction from the registrant’s account balance with the U.S. Securities and Exchange Commission. |
| (4) | Represents shares of the Registrant’s Common Stock being registered for resale that may be acquired upon the conversion of Convertible Notes issued to the selling stockholder. |
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 OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
The information in this prospectus is not complete and may be changed. WeThese securities may not sell these securitiesbe resold until the registration statement is filed with the Securities and Exchange Commission and becomesis effective. This prospectus is not an offer to sell these securities, and it is not soliciting an offeroffers to buy these securities in any statejurisdiction where the offer or sale is not permitted.
Subject to Completion—Dated August 27, 2021
PROSPECTUS
361,596 Shares of Common Stock
This prospectus relates to the offer and sale, from time to time, of up to 361,596 shares of the common stock of Samsara Luggage, Inc. (the “Company,” “Samsara,” “we,” “us” and “our”) by those stockholders named in the section of this prospectus entitled “Selling Stockholders.” The shares of common stock being offered by the selling stockholders (the “Shares”) may be issued upon the conversion of certain convertible notes (the “Convertible Notes”) (and accrued interest thereon) issued pursuant to a Securities Purchase Agreement that we entered into with the selling stockholder on June 7, 2021 (the “Purchase Agreement’).
We are not selling any shares of common stock in this offering, and we will not receive any proceeds from the sale of shares by the selling stockholder.
Our common stock is quoted on the OTCQB under the symbol “SAML.” On August 23, 2021, the last reported sale price of our common stock on the OTCQB was $2.98 per share, and we had approximately 1,447,955 shares of common stock outstanding.
The selling stockholder may offer all or part of the shares for resale from time to time through public or private transactions, at either prevailing market prices or at privately negotiated prices.
This prospectus provides a general description of the securities being offered. You should carefully read this entire prospectus and the registration statement of which it forms a part before you invest in any securities.
Investing in our securities involves risks. You should review carefully the risks and uncertainties described under the heading “Risk Factors” on page 5.
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 ____, 2012August 27, 2021
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i
This summary together with the entire prospectus, including the more detailedhighlights selected information regarding us and the common stock being sold in this offering and our financial statements and the related notes appearingcontained elsewhere in this prospectus. This summary does not contain all the information that you should consider before investing in the common stock. You should consider carefully among other things,read the matters discussedentire prospectus. In particular, attention should be directed to the sections entitled “Risk Factors,” “Business,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and related notes thereto contained herein before making an investment decision.
Business Overview
Samsara Luggage is a leading travel and lifestyle direct-to-consumer brand that develops smart travel products that are unique to the vast global marketplace. Samsara’s products are designed to create a world where travel isn’t a hassle but rather an effortless experience. The Company’s forward-thinking creative team of engineers and designers analyzed the standard travel experience to understand the solutions they could develop to alleviate many common travel headaches. By combining unmatched quality materials, functional design features and innovative technology, Samsara created a line of travel products that make travel seamless, safer and more convenient.
Samsara’s first-generation Carry-on is equipped with smart features, including IoT technology that provides a layer of convenience for travelers and protects them from theft and hackers that may install malware and ransomware in key public locations in airports, hotels and beyond. As part of its commitment to providing value for its tech-savvy customers and competing in the section entitled “Risk Factors” beginningeverchanging travel landscape, Samsara incorporates the latest technology into its travel products. With the upcoming launch of its Next Generation Carry-on, Samsara is aiming to be the first to market a suitcase with a secure Wi-Fi Hotspot feature travelers can access globally. This new collection is scheduled to launch at the end of the year 2021, pending no further delay due to COVID-19.
To address the new needs of travelers due to the coronavirus pandemic, Samsara Luggage launched the Nano Weekender, a smart travel bag that is treated with bacteriostatic nanotechnology protection that prevents colonies of bacteria from developing on page __.
All of Samsara’s products are compliant with Transportation Security Administration (TSA) and aviation regulations.
Samsara launched Sarah & Sam (sarah-sam.com) a fashion and lifestyle collection in the fourth quarter of the 2020 fiscal year. Sarah& Sam is a part of Samsara Direct, a new business model initiated in response to the travel restrictions enforced due to the coronavirus pandemic. Samsara Direct leverages the company’s established digital assets and manufacturing and fulfillment supply chain capabilities offer additional consumer products that are in demand and relevant to the changing needs of the market.
Corporate Information
Our principal executive offices are located at One University Plaza, Suite 505, Hackensack, NJ 07601 and our telephone number is (877) 421-1574.
The Offering
This prospectus relates to the lawsoffer and sale from time to time of up to 361,596 shares of our common stock, $0.0001 par value per share (the “Common Stock”) by the selling stockholder, that may be issued upon conversion of the State of Nevada. From the dateConvertible Notes.
The selling stockholder under this prospectus is offering for sale up to 361,596 shares of our formation until our website became operational, we did not have any business activity except for the development of our website and locating companies through which we can offer products. We are a development stage company and since our proprietary website was launched in July 2011 we have been offering eco-friendly health and wellness products to the general public via the internet. Current products being offered include air and water filtration systems, organic baby products and eco-friendly beds and linens. We currently have no employees other than our officers, both of whom are also directors. We do not have revenues, have minimal assets and have incurred losses since inception.
Except as described in this prospectus, the selling stockholder is entitled to acquireconvert at its option the outstanding and unpaid amounts of the Convertible Notes into fully paid and nonassessable shares of Common Stock at the lower of the $8.188 or 80% of the lowest Volume Weighted Average Price of our Common Stock. The selling stockholder may not assign or transfer its rights and obligations under the Purchase Agreement without the prior written consent of the Company.
As of August 23, 2021, there were 1,447,955 shares of our Common Stock outstanding, of which 1,099,063 shares were held by non-affiliates. If the selling stockholder converts the Convertible Notes, the ownership position of the shareholders prior to the conversion would be diluted. If the selling stockholder converts the Convertible Notes into all of the issued and361,596 shares being registered under the registration statement of which this prospectus forms a part, such shares would represent 16.65% of all of our then outstanding shares of common stock in exchange for common stockand 22.89% of the Company.then total number of shares held by non-affiliates (assuming no further issuances). Under the terms of a Registration Rights Agreement entered into with the selling stockholder at the same time as the Purchase Agreement, we must register with the U.S. Securities and Exchange Commission 361,596 shares of Common Stock underlying the Convertible Notes for resale by the selling stockholder under the Purchase Agreement, however, the Convertible Notes may be converted into more than the 361,596 shares of our Common Stock being offered under this prospectus. The closingnumber of shares ultimately offered for resale by the selling stockholder depends upon the number of Convertible Notes we sell to it under the Purchase Agreement, the market price of our Common Stock (subject to a floor and ceiling if we are not in default of the transactions contemplatedConvertible Notes) and the interest accrued on the Convertible Notes at the time of conversion.
Issuances of our Common Stock upon conversion of the Convertible Notes will not affect the rights or privileges of our existing stockholders, except that the economic and voting interests of each of our existing stockholders will be diluted as a result of any such issuance. Although the number of shares of Common Stock that our existing stockholders own will not decrease, the shares owned by the LOI is subjectour existing stockholders will represent a smaller percentage of our total outstanding shares after any such issuance to the completion of the due diligence investigation of both parties, execution and delivery of documentation for the transaction, consents from the respective boards of directors of both companies and any third parties and the delivery of audited financial statements by Real Aesthetic. Subject to the forgoing, it is the intent of the parties that definitive documentation with respect to the transaction be completed on or before January 31, 2013. Real Aesthetic agreed not to solicit, negotiate and/or accept any other offer to acquire any of Real Aesthetic’s assets or securities or any business combination of Real Aesthetic.
361,596 of | |||
| Common Stock outstanding: | 1,447,955 shares as of August 23, 2021 | ||
| Common Stock outstanding after the offering: | 1,809,551, assuming the selling stockholder converts the Convertible Notes (and the full year of accrued interest thereon) into all of the shares being registered in the registration statement of which this prospectus forms a | ||
| Discount: | The Convertible Notes are convertible by the selling stockholder upon issuance. The conversion price will be | ||
The rate of interest on the Convertible Notes will be 10% per | |||
We will | |||
Our Common Stock is listed for quotation on the | |||
| Dividend policy: | We currently intend to retain future earnings, if any, to fund the development and growth of our business. Therefore, we do not | ||
| Risk | An investment in our |
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
We have made statements under the periods indicated and should be read in conjunction with the information contained incaptions “Risk Factors,” “Use of Proceeds,” “Management’s Discussion and Analysis of PlanFinancial Condition and Results of Operations”Operation,” “Business” and our financial statements and related notes appearing elsewhere in this prospectus.
For the Year Ended July 31, 2012 | For the Year Ended July 31, 2011 | For the Quarter Ended October 31, 2012 | For the period May 8, 2007 (Inception) to October 31, 2012 | |||||||||||||
| Statement of Operations | ||||||||||||||||
| Revenues | $ | - | $ | - | $ | - | $ | - | ||||||||
| Loss from operations | $ | (12,612 | ) | $ | (45,721 | ) | $ | (17,323 | ) | (75,656 | ) | |||||
| Net Loss | $ | (13,253 | ) | $ | (45,863 | ) | (17,323 | ) | $ | (76,439 | ) | |||||
| October 31, 2012 | July 31, 2012 | July 31, 2011 | ||||||||||
| Balance Sheet | ||||||||||||
| Total assets | $ | 973 | $ | 746 | $ | 18,327 | ||||||
| Total liabilities | $ | 41,762 | $ | 28,282 | $ | 0 | ||||||
| Stockholders’ Equity (deficiency) | $ | (40,789 | ) | $ | (27,536 | ) | $ | 18,327 | ||||
Forward-looking statements address, among other things:
| ● | the risks and other factors described under the caption “Risk Factors” under Item 1 of this Registration Statement; |
| ● | the COVID-19 outbreak and resulting economic conditions, which had, and is expected to continue to have, a significant impact on our operations, including an unprecedented decline in demand, as well as its current, and uncertain future impact, including but not limited to, its effect on the ability or desire of people to travel due to travel restrictions, and other restrictions and orders, which is expected to continue to impact our results, operations, outlooks, plans, goals, growth, cash flows, liquidity, and stock price; | |
| ● | the significant decline in travel demand because of COVID-19, including the current and any future disruptions in airline passenger traffic. | |
| ● | our future operating results; | |
| ● | our business prospects; | |
| ● | any contractual arrangements and relationships with third parties; | |
| ● | the dependence of our future success on the general economy; | |
| ● | any possible financings; and | |
| ● | the adequacy of our cash resources and working capital. |
We believe it is important to communicate our expectations to our investors. However, there may be events in the future that we are not able to accurately able to predict or which we do not fully control that will cause actual results mayto differ materially from those expressed or implied by suchour forward-looking statements.
Although we believe that our expectations reflected in the forward-looking statements speak onlyare reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Our forward-looking statements are made as of the date on which they are made. We undertakeof this prospectus, and we assume no obligationduty to update such statementsthem or to reflect events that occurexplain why actual results may differ.
Except as otherwise indicated by the context, references in this Registration Statement to “Company,” “Samsara,” “we,” “us” and “our” are references to SAMSARA LUGGAGE, INC. All references to “USD” or circumstances that exist afterUnited States Dollar refer to the date on which they are made, except as required by federal securities and any other applicable law.legal currency of the United States of America.
RISK FACTORS
Investing in our common stocksecurities involves a high degree of risk. risk. You should carefully consider and evaluate all of the risks described belowinformation included and the other informationincorporated by reference or deemed to be incorporated by reference in this prospectus and ourprospectus. Our business, results of operations or financial statements and related notes before investing in our common stock. Ifcondition could be adversely affected by any of the followingthese risks actually occur,or by additional risks and uncertainties not currently known to us or that we currently consider immaterial.
Risks Related to COVID-19
The COVID-19 pandemic has significantly affected our business and is expected to continue to materially affect our business, financial condition, results of operations and/or cash flows for an extended period. Governmental authorities have taken and prospectscontinue to take measures to address the outbreak, including restrictions on travel and other orders, including partial shelter-in-place orders. The pandemic is a highly fluid and rapidly evolving situation and we cannot anticipate with any certainty the length, scope or severity of such restrictions in the jurisdiction that we operate.
The full impact that COVID-19 will have on our business cannot be predicted at this time due to numerous uncertainties, including the duration and severity of the outbreak, future mutations in the virus that causes COVID-19, increases or spikes in the number of cases, the availability of vaccines and effectiveness of actions taken to contain the disease, the length of time it takes for growthrental volume and pricing to return and normal economic and operating conditions to resume, and other factors. This impact could include, but is not limited to, those discussed below:
| ● | Changes in our revenues and customer demand: Our revenues and profitability were materially impacted during 2020 compared to prior years, and we expect they will continue to be adversely affected. Although we believe that travel will increase due to wider vaccine usage and availability, we cannot predict whether and when volumes will increase to historic levels. Our business is highly dependent on travel and both for commercial and leisure purposes. |
| ● | Our workforce: The COVID-19 outbreak has caused us to reduce production of our luggage line as we seek to keep our costs in line with demand. |
| ● | The adequacy of our cash flow and earnings and other conditions may affect our liquidity: We have taken a number of actions as a result of COVID-19 that have increased our long-term debt. As we manage through the effects of the pandemic, our level of indebtedness may further increase. There is no guarantee that debt financings will be available in the future to fund our obligations or will be available on terms consistent with our expectations. |
Risks Related to our Company
Samsara has a limited operating history, has incurred significant operating losses since its inception and expects to incur significant losses for the foreseeable future. Samsara may never generate significant revenue or become profitable or, if Samsara achieves profitability, it may not be able to sustain it.
Samsara has a limited operating history and has generated limited revenues to date. Samsara is dependent upon additional capital resources for the continuation of its planned principal operations, which are subject to significant risks and uncertainties, including failing to secure funding to expand commercialization of its products or failing to profitably operate the business.
Samsara has incurred significant operating losses since its inception. Samsara’s net losses were $1,140,000 and $3,142,000 for the years ended December 31, 2020, and December 31, 2019, respectively. As of December 31, 2020, Samsara had an accumulated deficit of $6,376,000. Substantially all of Samsara’s losses have resulted from expenses incurred in connection with its research and development programs and from general and administrative costs associated with Samsara’s operations. Samsara expects to continue to incur losses for the foreseeable future and anticipates these losses will increase substantially as Samsara continues to develop and commercialize its products.
To become and remain profitable, Samsara must succeed in developing and commercializing products that generate significant revenue. This will require Samsara to be successful in a range of challenging activities, including manufacturing, and marketing and selling products. Samsara may never succeed in these activities and, even if it does, may never generate revenues that are significant enough to achieve profitability. In addition, Samsara has not yet demonstrated an ability to successfully overcome many of the risks and uncertainties frequently encountered by companies in new and rapidly evolving fields. Because of the numerous risks and uncertainties associated with smart luggage product development, Samsara is unable to accurately predict the timing or amount of increased expenses or when, or if, Samsara will be able to achieve profitability. Even if Samsara does achieve profitability, it may not be able to sustain or increase profitability on a quarterly or annual basis. Samsara’s failure to become and remain profitable would likely suffer. As a result, youdepress the value of Samsara and could impair its ability to raise capital, expand its business, maintain its research and development efforts, diversify its product candidates or even continue its operations. A decline in the value of Samsara could also cause stockholders to lose all or part of yourtheir investment.
The report of Samsara’s independent registered public accounting firm expresses substantial doubt about the ability of Samsara to our company
Samsara’s independent registered public accounting firm indicated in its report on Samsara’s financial statements for the period May 8, 2007 (inception)ended December 31, 2020, that conditions exist that raise substantial doubt about Samsara’s ability to October 31, 2012. In addition, the Company hascontinue as a working capital and stockholders’ deficiency of $40,789 at October 31, 2012.. Our auditors issued a“going concern.” A going concern opinionparagraph included in theirSamsara’s independent registered public accounting firm’s report for our fiscal year ended July 31, 2012 regarding concerns about ouron its consolidated financial statements could impair investor perceptions and Samsara’s ability to finance its operations through the sale of equity, incurring debt, or other financing alternatives. Samsara’s ability to continue as a going concern. There can be no assurance that sufficient funds required during the next year or thereafterconcern will be generated from operations or that funds will be available from external sources such as debt or equity financings or other potential sources. The lack of additional capital resulting from the inability to generate cash flow from operations or to raise capital from external sources would force us to substantially curtail or cease operations and would, therefore, have a material adverse effect on our business. Furthermore, there can be no assurance that any such required funds, if available, will be available on attractive terms or that they will not have a significant dilutive effect on our existing stockholders.
Samsara will require substantial additional financing to achieve its goals, and a failure to obtain market share.this necessary capital when needed and on acceptable terms, or at all, could force Samsara to delay, limit, reduce or terminate its product development programs, commercialization efforts or other operations.
Samsara expects its expenses to increase in connection with its ongoing activities. Samsara also expects to incur significant commercialization expenses related to product manufacturing, marketing, sales and distribution. Samsara cannot reasonably estimate the actual amounts necessary to successfully complete the development and commercialization of its products. Furthermore, following the completion of the Merger, Samsara will incur the additional costs associated with operating as a public company. Accordingly, Samsara will need to obtain substantial additional funding in connection with its continuing operations. If Samsara is unable to raise capital when needed or on attractive terms, Samsara could be forced to delay, reduce or eliminate its research and development programs or any future commercialization efforts.
Samsara has based its estimates on assumptions that may prove to be wrong, and Samsara could use its capital resources sooner than it currently expects. Samsara’s operating plans and other demands on its cash resources may change as a result of many factors currently unknown to Samsara, and Samsara may need to seek additional funds sooner than planned, through public or private equity or debt financings or other capital sources, including potentially government funding, collaborations, licenses and other similar arrangements. In addition, Samsara may seek additional capital due to favorable market conditions or strategic considerations even if Samsara believes it has sufficient funds for its current or future operating plans. Attempting to secure additional financing may divert Samsara’s management from its day-to-day activities, which may adversely affect Samsara’s ability to develop its product.
Samsara’s future capital requirements will depend on many factors, including:
| ● | the costs and timing of manufacturing for Samsara’s products, including commercial manufacturing of its products; |
| ● | the costs of obtaining, maintaining and enforcing Samsara’s intellectual property rights; |
| ● | Samsara’s efforts to enhance operational systems and hire additional personnel to satisfy its obligations as a public company, including enhanced internal controls over financial reporting; |
| ● | the costs associated with hiring additional personnel and consultants as Samsara’s research and development activities increase; |
| ● | the timing and amount of the milestone or other payments Samsara must make to the licensors and other third parties from whom Samsara have licensed or acquired technology; |
| ● | the costs and timing of establishing or securing sales and marketing capabilities for its products; |
| ● | Samsara’s ability to achieve market acceptance and adequate market share and revenue for its products; and |
| ● | the terms and timing of establishing and maintaining collaborations, licenses and other similar arrangements. |
In addition, Samsara’s products may not achieve commercial success.
Accordingly, Samsara will need to continue to rely on additional financing to achieve its business objectives. Adequate additional financing may not be available to Samsara on acceptable terms, or at all. In addition, Samsara may seek additional capital due to favorable market conditions or strategic considerations, even if Samsara believes it has sufficient funds for its current or future operating plans.
Raising additional capital may cause dilution to Samsara’s stockholders, restrict Samsara’s operations or require Samsara to relinquish rights to its technologies or product candidates.
Until such time, if ever, as Samsara can generate substantial product revenues, Samsara expects to finance its cash needs through equity offerings, debt financings or other capital sources, including potentially government funding, collaborations, licenses and other similar arrangements. To the extent that Samsara raises additional capital through the sale of equity or convertible debt securities, existing stockholders’ ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect stockholders’ rights as a common stockholder. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting Samsara’s ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.
If Samsara raises funds through future collaborations, licenses and other similar arrangements, Samsara may have to relinquish valuable rights to its future revenue streams or products or grant licenses on terms that may not be favorable to Samsara and/or that may reduce the value of Samsara’s Common Stock.
Risks Relating to Samsara’s Strategy and Industry
Samsara’s success depends on independent contractors to manufacture and supply Samsara with its smart luggage products, and to label, package, and ship these products.
Samsara has retained third party manufacturers to manufacture and supply Samsara with its smart luggage products. Samsara relies on independent contractors for the supply of its smart luggage products and for the labeling, packaging, and shipping of these products. Samsara may not be successful in developing relationships with these independent contractors. In addition, these third-party contractors may not dedicate sufficient resources or give sufficient priority to satisfying Samsara’s requirements or needs. There is limited history upon which to base any assumption as to the likelihood that Samsara will prove successful in selecting qualified third-party independent contractors or in negotiating any agreements with them. If Samsara is unsuccessful in addressing these risks, its results of operations could be adversely affected.
Samsara does not have long term commitments from suppliers and other independent contractors.
Samsara may experience shortages of supplies and inventory because Samsara orders goods and services via purchase orders and has not signed long-term contracts with its suppliers. Samsara currently utilizes the services of two manufacturers in China, one for the manufacture of the suitcase and the other for the manufacture of the smart unit. In addition, Samsara utilizes the services of two contractors, one in China and one in the United States, for the provision of order fulfillment services. Samsara’s success is dependent on Samsara’s ability to timely provide its customers with Samsara’s smart luggage products. Although Samsara directly markets these products, Samsara is dependent on its suppliers and other independent contractors for the manufacture and supply of Samsara’s smart luggage products and for the labeling, packaging, and shipment of these products. No assurance can be given that Samsara will enter into agreements with other suppliers for the supply of its smart luggage products at acceptable levels of quality and price, or with other independent contractors who will provide Samsara with order fulfillment services at acceptable levels of quality and price. While Samsara currently has and anticipates continuing to have good relationships with its suppliers and other independent contractors, if Samsara is unable to secure additional sources of supply or order fulfillment services from one or more independent contractors on a timely basis and on acceptable terms, Samsara’s results of operations could be adversely affected.
The selling of smart luggage products is subject to current governmental regulations.
Several aspects of Samsara’s smart luggage products, including its battery, locks and LED lights, are subject to the requirements of federal law relating to aviation and homeland security, as well as international regulation of electronic devices. Part 15 of the FCC Rules requires operation of electronic equipment not to cause harmful interference and to accept any interference received, including interference that may cause undesired operation. The Transportation Security Administration (TSA) recommends that only TSA approved locks be used on luggage, to avoid risk of TSA agents breaking the lock for inspection. The European Union requires all electronic devices to comply with the Restriction of Hazardous Substances (ROHS) regulations which restricts the use of specific hazardous materials found in electrical and electronic products. BS EN 62471 gives universal best-practice recommendations for the photobiological safety of electric lamps and lighting systems, including LED lights. This standard specifies exposure limits, measurement techniques and classification systems to control photobiological and light hazards. The EU radio equipment directive establishes a regulatory framework for placing radio equipment on the market, setting requirements for safety and health, electromagnetic compatibility, and the efficient use of the radio spectrum.
Additionally, smart luggage products are subject to airline regulations applicable to manufacturing materials, size and weight. While Samsara believes that it is and will be in substantial compliance with the laws and regulations which regulate its business, the failure to comply with any of these laws or regulations, or the imposition of new laws or regulations could negatively impact Samsara’s proposed business.
Samsara faces intense competition and many of its competitors have substantially greater resources than Samsara has.
Samsara operates in a highly competitive environment. In addition, the competition in the market for smart luggage products may intensify. There are numerous well-established companies based in which we compete could prevent us from generating any revenue and prevent us from achieving profitability.
Samsara depends on market acceptance of one such competitor of ours is Greenandmore.com,its smart luggage products. If these products do not gain market acceptance, Samsara’s ability to compete will be adversely affected.
Samsara’s success depends in large part on Samsara’s ability to successfully market its smart luggage products. No assurances can be given that Samsara will be able to successfully market its smart luggage products or achieve consumer acceptance. Moreover, failure to successfully commercialize its smart luggage products on a private company that has been an online retainer for healthy home products since 1999.
Failure to meet customers’ expectations or deliver expected performance could result in losses and negative publicity, which would harm Samsara’s business.
If the smart luggage products which Samsara sells fail to perform in the manner expected by its customers, then Samsara’s revenues may be competitive, we must invest resources in research and development, sales and marketing, anddelayed or lost due to adverse customer support. We may not have sufficient resources to make these investments or to make the technological advances necessary to be competitive, which in turn will cause our business to suffer and restrict our profitability potential.reaction. In addition, large, established merchandise companies may devote substantial resources to provide their own internet platform which may render our services obsolete.
Samsara needs to retain key personnel.
The marketing and sale of Samsara’s smart luggage products will also dependcontinue to place a great extentsignificant strain on ourSamsara’s limited personnel, management, and other resources. Samsara’s future success depends upon the continued services of its executive officers and the hiring of key employees and contractors who have critical industry experience and relationships that Samara will need to rely on to implement its business plan. The loss of the services of any of Samsara’s officers or the lack of availability of other skilled personnel would negatively impact Samsara’s ability to attract new key personnel with relevant experiencemarket and retain existing key personnel insell its smart luggage products, which could adversely affect Samsara’s financial results and impair Samsara’s growth.
If Samsara cannot build and maintain strong brand loyalty to its products, its business may suffer.
Samsara believes that the future. Theimportance of brand recognition will increase as more companies produce smart luggage products. Development and awareness of Samsara’s brand will depend largely on Samsara’s ability to successfully advertise and market for qualified personnelits products. If Samsara is extremely competitive. Ourunsuccessful, its products may not be able to gain widespread acceptance among consumers. A failure to attract additional qualified employeesdevelop Samsara’s smart luggage products sufficiently could have a material adverse effect on our prospects for long-term growth.
Samsara may inhibit the growth of the internet and commercial online services, especiallyincur losses as a meansresult of conducting commercial transactions. Moreover, although we have developed systems and processesclaims that may be brought against Samsara due to defective products or as a result of product recalls.
While Samsara is not aware of any claims having been brought in connection with Samsara’s smart luggage products, Samsara may be liable if the use of Samsara’s products causes injury, illness, or death. Samsara also may be required to withdraw or recall some of its products if they are designed to protect consumer information and prevent fraudulent credit card transactions and other security breaches, failure to mitigate such frauddamaged or breachesdefective. A significant product liability judgment against Samsara or a widespread product withdrawal or recall could have a material adverse effect on ourSamsara’s business prospects,and financial condition.
If a third party asserts that Samsara’s infringes upon its proprietary rights, Samsara could be required to redesign its products, change suppliers, pay significant royalties, or enter into license agreements.
Although presently Samsara is not aware of any such claims, a third party may assert that Samsara’s smart luggage products violate its intellectual property rights. As the number of smart luggage products increases, infringement claims may become more common. Any claims against Samsara, regardless of their merit, could:
| ● | Be expensive and time-consuming to defend; |
| ● | Result in negative publicity; |
| ● | Force Samsara to stop selling its products; |
| ● | Divert management’s attention and Samsara’s other resources; and |
| ● | Require Samsara to enter into royalty or licensing agreements in order to obtain the right to sell its products, which right may not be available on terms acceptable to Samsara, if at all. |
In addition, Samsara’s believes that any successful challenge to its use of a trademark or domain name could substantially diminish Samsara’s ability to conduct business in a particular market or jurisdiction and thus could decrease Samsara’s revenues and/or result in losses to Samsara’s business.
Samsara relies on third parties to conduct many of its activities. Any failure by a third-party to conduct these activities and other requirements and in a timely manner may delay or prevent Samsara’s ability to commercialize its products.
Samsara is dependent on third parties to perform certain activities. Specifically, Samsara has used and relied on, these third parties for the manufacture of its luggage products, and for order fulfillment services. While Samsara has signed purchase orders governing the activities of its third-party contractors, Samsara has limited influence over their actual performance. There is no guarantee that any such third parties will devote adequate time and resources to such activities or perform as contractually required. If any of these third parties fail to meet expected deadlines, adhere to Samsara’s requirements, or otherwise performs in a substandard manner, Samsara’s ability to fulfill customer orders for products may be undermined. In addition, many of the third parties with whom Samsara contracts may also have relationships with other commercial entities, including Samsara’s competitors, for whom they may also be conducting development activities that could harm Samsara’s competitive position.
If any of Samsara’s relationships with these third parties terminate, Samsara may not be able to enter into arrangements with alternative third parties or do so on commercially reasonable terms.
In addition, Samsara may be unable to establish any agreements with third-party manufacturers or to do so on acceptable terms. Even if Samsara is able to establish agreements with third-party manufacturers, reliance on third-party manufacturers entails additional risks, including:
| ● | failure of third-party manufacturers to comply with regulatory requirements and maintain quality assurance; |
| ● | breach of the manufacturing agreement by the third-party; |
| ● | failure to manufacture Samsara’s product according to Samsara’s specifications; |
| ● | failure to manufacture Samsara’s product according to Samsara’s schedule, or at all; |
| ● | misappropriation of Samsara’s proprietary information, including Samsara’s trade secrets and know-how; and |
| ● | termination or nonrenewal of the agreement by the third-party at a time that is costly or inconvenient for Samsara. |
Any performance failure on the part of Samsara’s existing or future manufacturers could delay product development, and any related remedial measures may be costly or time consuming to implement. Samsara does not currently have arrangements in place for redundant supply or a second source for all required raw materials used in the manufacture of Samsara’s products. If Samsara’s current third-party manufacturers cannot perform as agreed, Samsara may be required to replace such manufacturers and Samsara may be unable to replace them on a timely basis or at all. Samsara’s current and anticipated future dependence upon others for the manufacture of Samsara’s products may adversely affect Samsara’s future profit margins and Samsara’s ability to commercialize any products on a timely and competitive basis.
Samsara’s reliance on third parties requires Samsara to share its trade secrets, which increases the possibility that Samsara’s trade secrets will be misappropriated or disclosed.
Because Samsara currently relies on third parties to manufacture its products, Samsara must, at times, share its proprietary technology and confidential information, including trade secrets, with them. Samsara seeks to protect its proprietary technology, in part, by entering into confidentiality agreements, consulting agreements or other similar agreements with its advisors, employees, consultants and contractors prior to beginning research or disclosing proprietary information. These agreements typically limit the rights of the third parties to use or disclose Samsara’s confidential information. Despite the contractual provisions employed when working with third parties, the need to share trade secrets and other confidential information increases the risk that such trade secrets may become known by Samsara’s competitors, are intentionally or inadvertently incorporated into the technology of others or are disclosed or used in violation of these agreements. Given that Samsara’s proprietary position is based, in part, on Samsara’s know-how and trade secrets, and despite Samsara’s efforts to protect its trade secrets, a competitor’s discovery of Samsara’s proprietary technology and confidential information or other unauthorized use or disclosure would impair Samsara’s competitive position and may have a material adverse effect on Samsara’s business, financial condition, results of operations and prospects.
Samsara may seek to enter into collaborations, licenses and other similar arrangements and may not be successful in doing so, and even if Samsara is, it may not realize the benefits of such relationships.
Samsara may seek to enter into collaborations, joint ventures, licenses and other similar arrangements for the development or commercialization of Samsara’s products, due to capital costs required to develop or commercialize the products or manufacturing constraints. Samsara may not be successful in its efforts to establish such collaborations for Samsara’s products. In addition, Samsara faces significant competition in seeking appropriate strategic partners, and the negotiation process can be time consuming and complex. Further, any future collaboration agreements may restrict Samsara from entering into additional agreements with potential collaborators. Samsara cannot be certain that, following a strategic transaction or license, Samsara will achieve an economic benefit that justifies such transaction.
Even if Samsara is successful in its efforts to establish such collaborations, the terms that Samsara agrees upon may not be favorable to Samsara, and Samsara may not be able to maintain such collaborations.
In addition, any potential future collaborations may be terminable by Samsara’s strategic partners, and Samsara may not be able to adequately protect its rights under these agreements. Furthermore, strategic partners may negotiate for certain rights to control decisions regarding the development and commercialization of Samsara’s products, if approved, and may not conduct those activities in the same manner as Samsara would. Any termination of collaborations Samsara enters in the future, or any delay in entering into collaborations related to Samsara’s products, could delay the development and commercialization of Samsara’s products and reduce their competitiveness if they reach the market, which could have a material adverse effect on Samsara’s business, financial condition and results of operations.
Business disruptions could seriously harm Samsara’s future revenue and to our industry in particularfinancial condition and may becomeincrease its costs and expenses.
Samsara’s operations could be subject to costly government regulation.
Samsara is subject to direct regulation by anyU.S. and certain foreign export and import controls, sanctions, embargoes, anti-corruption laws and anti-money laundering laws and regulations. Compliance with these legal standards could impair Samsara’s ability to compete in domestic or foreign governmental agency,and international markets. Samsara could face criminal liability and other than regulations applicableserious consequences for violations, which could harm its business.
Samsara is subject to businesses generally,export control and laws or regulations directly applicable to online commerce. However, it is possible thatimport laws and regulations, may be adopted that would apply toincluding the internetU.S. Export Administration Regulations, U.S. Customs regulations, and other online services. Furthermore,various economic and trade sanctions regulations administered by the growthU.S. Treasury Department’s Office of Foreign Assets Controls, and development of the market for online commerce may prompt calls for more stringent consumer protection laws that may impose additional burdens on those companies conducting business online. The adoption of any additional laws or regulations may increase our cost of doing business and/or decrease the demand for our productsanti-corruption and services and increase our cost of doing business.
Samsara may engage in strategic transactions that could impact its liquidity, increase its expenses and present significant distractions to accurately forecast net salesSamsara’s management.
From time to time, Samsara may consider strategic transactions, such as acquisitions of companies, asset purchases and appropriately plan our expenses.
If Samsara fails to comply with its obligations in the agreements under which we can offer products. In May 2011 our website became functional. Asit licenses intellectual property rights from third parties, or otherwise experiences disruptions in its business relationships with its licensors, Samsara could lose license rights that are important to its business.
Samsara is a result,party to several license agreements under which it is difficultgranted rights to accurately forecast our net salesintellectual property that are important to its business and plan our operating expenses. We base our currentSamsara may enter into additional license agreements in the future. These license agreements impose, and Samsara expects that any future expense levelslicense agreements where Samsara licenses intellectual property will impose, on our operating forecastsSamsara, various development, regulatory and/or commercial diligence obligations, payment of milestones and/or royalties and estimatesother obligations. If Samsara fails to comply with its obligations under these agreements, or Samsara is subject to bankruptcy-related proceedings, the licensor may have the right to terminate the license, in which event Samsara would not be able to market products covered by the license.
Samsara may need to obtain licenses from third parties to advance its research or allow commercialization of future net sales. Net salesits products, and operating results are difficultSamsara cannot provide any assurances that third-party patents do not exist which might be enforced against Samsara’s products in the absence of such a license. Samsara may fail to forecast because they generally dependobtain any of these licenses on commercially reasonable terms, if at all. Even if Samsara is able to obtain a license, it may be non-exclusive, thereby giving Samsara’s competitors access to the volumesame technologies licensed to Samsara. In that event, Samsara may be required to expend significant time and timing of the orders we receive, which are uncertain. Some of our expenses are fixed, and, as a result, weresources to develop or license replacement technology. If Samsara is unable to do so, Samsara may be unable to adjust our spendingdevelop or commercialize the affected products, which could materially harm Samsara’s business and the third parties owning such intellectual property rights could seek either an injunction prohibiting Samsara’s sales, or, with respect to Samsara’s sales, an obligation on Samsara’s part to pay royalties and/or other forms of compensation. Licensing of intellectual property is of critical importance to Samsara’s business and involves complex legal, business and scientific issues. Disputes may arise between Samsara and its licensors regarding intellectual property subject to a license agreement, including:
| ● | the scope of rights granted under the license agreement and other interpretation-related issues; |
| ● | whether and the extent to which Samsara’s technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement; |
| ● | Samsara’s right to sublicense patents and other rights to third parties; |
| ● | Samsara’s diligence obligations with respect to the use of the licensed technology in relation to its development and commercialization of Samsara’s products, and what activities satisfy those diligence obligations; |
| ● | Samsara’s right to transfer or assign the license; and |
| ● | the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by Samsara’s licensors and Samsara and its partners. |
If disputes over intellectual property that Samsara has licensed prevent or impair Samsara’s ability to maintain its current licensing arrangements on acceptable terms, Samsara may not be able to successfully develop and commercialize the affected product candidates, which would have a material adverse effect on Samsara’s business.
Samsara’s commercial success depends significantly on its ability to operate without infringing the patents and other proprietary rights of third parties. Claims by third parties that Samsara infringes their proprietary rights may result in liability for damages or prevent or delay Samsara’s developmental and commercialization efforts.
Samsara’s commercial success depends in part on avoiding infringement of the patents and proprietary rights of third parties. However, Samsara’s or its licensee’s research, development and commercialization activities may be subject to claims that Samsara or its licensee infringes or otherwise violates patents or other intellectual property rights owned or controlled by third parties. Other entities may have or obtain patents or proprietary rights that could limit Samsara’s or its licensee’s ability to make, use, sell, offer for sale or import Samsara’s products, or impair Samsara’s competitive position. There is a substantial amount of litigation, both within and outside the United States, involving patent and other intellectual property rights. Numerous third-party U.S. and foreign issued patents and pending patent applications exist in the fields in which Samsara is developing products.
Because patent applications are maintained as confidential for a certain period of time, until the relevant application is published Samsara may be unaware of third-party patents that may be infringed by commercialization of any of Samsara’s products, and Samsara cannot be certain that Samsara was the first to file a patent application related to a product candidate or technology. Moreover, because patent applications can take many years to issue, there may be currently pending patent applications that may later result in issued patents that Samsara’s products may infringe. In addition, identification of third-party patent rights that may be relevant to Samsara’s technology is difficult because patent searching is imperfect due to differences in terminology among patents, incomplete databases and the difficulty in assessing the meaning of patent claims. In addition, third parties may obtain patents in the future and claim that use of Samsara’s technologies infringes upon these patents. Any claims of patent infringement asserted by third parties would be time consuming and could:
| ● | result in costly litigation that may cause negative publicity; |
| ● | divert the time and attention of Samsara’s technical personnel and management; |
| ● | cause development delays; |
| ● | subject Samsara to an injunction preventing Samsara from making, using, selling, offering for sale, or importing Samsara products; |
| ● | prevent Samsara from commercializing any of its products until the asserted patent expires or is held finally invalid or not infringed in a court of law; |
| ● | require Samsara to develop non-infringing technology, which may not be possible on a cost-effective basis; |
| ● | subject Samsara to significant liability to third parties; or |
| ● | require Samsara to enter into royalty or licensing agreements, which may not be available on commercially reasonable terms, or at all, or which might be non-exclusive, which could result in Samsara’s competitors gaining access to the same technology. |
Although no third-party has asserted a claim of patent infringement against Samsara as of the date of this prospectus, others may hold proprietary rights that could prevent Samsara’s products from being marketed. Any patent-related legal action against Samsara claiming damages and seeking to enjoin activities relating to Samsara’s products could subject Samsara to potential liability for damages, including treble damages if Samsara were determined to have willfully infringed, and require Samsara to obtain a license to manufacture or develop its products. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from Samsara’s business. Samsara cannot predict whether it would prevail in any such actions or that any license required under any of these patents would be made available on commercially reasonable terms, if at all. Moreover, even if Samsara or its future strategic partners were able to obtain a license, the rights may be nonexclusive, which could result in Samsara’s competitors gaining access to the same intellectual property. In addition, Samsara cannot be certain that it could redesign its products to avoid infringement, if necessary. Accordingly, an adverse determination in a timely mannerjudicial or administrative proceeding, or the failure to compensateobtain necessary licenses, could prevent Samsara from developing and commercializing its products, which could harm Samsara’s business, financial condition and operating results.
Parties making claims against Samsara may be able to sustain the costs of complex patent litigation more effectively than Samsara can because they have substantially greater resources. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation or administrative proceedings, there is a risk that some of Samsara’s confidential information could be compromised by disclosure. In addition, any uncertainties resulting from the initiation and continuation of any litigation could have a material adverse effect on Samsara’s ability to raise additional funds or otherwise have a material adverse effect on Samsara’s business, results of operations, financial condition and prospects.
If Samsara is unable to protect the confidentiality of its trade secrets, its business and competitive position would be harmed.
In addition, Samsara relies on the protection of its trade secrets, including unpatented know-how, technology and other proprietary information to maintain Samsara’s competitive position. Although Samsara has taken steps to protect its trade secrets and unpatented know-how, including entering into confidentiality agreements with third parties, and confidential information and inventions agreements with employees, consultants and advisors, Samsara cannot provide any assurances that all such agreements have been duly executed, and any of these parties may breach the agreements and disclose Samsara’s proprietary information, including its trade secrets, and Samsara may not be able to obtain adequate remedies for such breaches. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time consuming, and the outcome is unpredictable. In addition, some courts inside and outside the United States are less willing or unwilling to protect trade secrets.
Moreover, third parties may still obtain this information or may come upon this or similar information independently, and Samsara would have no right to prevent them from using that technology or information to compete with Samsara. If any unexpected shortfallof these events occurs or if Samsara otherwise loses protection for its trade secrets, the value of this information may be greatly reduced and Samsara’s competitive position would be harmed. If Samsara does not apply for patent protection prior to such publication or if Samsara cannot otherwise maintain the confidentiality of its proprietary technology and other confidential information, then Samsara’s ability to obtain patent protection or to protect its trade secret information may be jeopardized.
Risks Related to the Company’s Common Stock
An active, liquid and orderly market for the Company’s Common Stock may not develop, and you may not be able to resell your Common Stock at or above the purchase price.
Samsara’s Common Stock is quoted on the OTCQB. An active trading market for the Company’s Common Stock has not developed and may never develop or be sustained. The lack of an active market may impair an investor’s ability to sell its shares at the time it wishes to sell them or at a price that it considers reasonable. An inactive market may also impair the Company’s ability to raise capital by selling shares and may impair the Company’s ability to acquire other businesses or technologies using the Company’s shares as consideration, which, in net sales. This inabilityturn, could cause our net income in a given quartermaterially adversely affect the Company’s business.
The trading price of the shares of the Company’s Common Stock could be highly volatile, and purchasers of the Company’s Common Stock could incur substantial losses.
The Company’s stock price is likely to be lower than expected.
| ● | the success or failure of the Company’s efforts to acquire, license or develop additional products; |
| ● | innovations or new products developed by the Company or its competitors; |
| ● | announcements by the Company or its competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; |
| ● | manufacturing, supply or distribution delays or shortages; |
| ● | any changes to the Company’s relationship with any manufacturers, suppliers, licensors, future collaborators or other strategic partners; |
| ● | achievement of expected product sales and profitability; |
| ● | variations in the Company’s financial results or those of companies that are perceived to be similar to the Company; |
| ● | trading volume of the Company’s Common Stock; |
| ● | an inability to obtain additional funding; |
| ● | sales of the Company’s stock by insiders and stockholders; |
| ● | general economic, industry and market conditions other events or factors, many of which are beyond the Company’s control; |
| ● | additions or departures of key personnel; and |
| ● | intellectual property, product liability or other litigation against the Company. |
Samsara does not currently intend to pay dividends on our common stockits Common Stock, and, consequently, yourinvestors’ ability to achieve a return on your investment will depend on appreciation, if any, in the price of our common stock. the Company’s Common Stock.
Samsara has never declared or paid any cash dividendsdividend on our common stockits Common Stock. Samsara currently anticipates that it will retain future earnings for the development, operation and doexpansion of the Company’s business and does not currently intend to do soanticipate declaring or paying any cash dividends for the foreseeable future. We currently intendAny return to invest our future earnings, if any,stockholders will therefore be limited to fund our growth. Therefore, you are not likely to receive any dividends on your common stock for the foreseeable future and the successappreciation of an investment in shares of our common stock will depend upon any future appreciation in its value.their stock. There is no guarantee that shares of our common stockthe Company’s Common Stock will appreciate in value or even maintain the price at which our stockholders have purchased their shares.
Sales of a cost-effective manner.
Sales of eco-friendly products, we will have to hire qualified consultants. If we cannot locate qualified consultants, we may have to suspend or cease operations which will resulta substantial number of shares of the Company’s Common Stock in the loss of your investment.
If the Company fails to maintain proper and effective internal control over financial reporting, the Company’s ability to produce accurate and timely financial statements could be impaired, investors may lose confidence in the Company’s financial reporting and the trading price of the Company’s Common Stock may decline.
Pursuant to Section 404 of Sarbanes-Oxley, the Company’s management is required to report upon the effectiveness of the Company’s internal control over financial reporting. Additionally, if the marketplace does not orderly adjustCompany reaches an accelerated filer threshold, the Company’s independent registered public accounting firm will be required to attest to the increase in shareseffectiveness of the Company’s internal control over financial reporting. The rules governing the standards that must be met for management to assess the Company’s internal control over financial reporting are complex and require significant documentation, testing and possible remediation. To comply with the requirements of being a reporting company under the Exchange Act, the Company will need to upgrade its information technology systems; implement additional financial and management controls, reporting systems and procedures; and hire additional accounting and finance staff. If the Company or, if required, its auditors are unable to conclude that the Company’s internal control over financial reporting is effective, investors may lose confidence in the marketCompany’s financial reporting and the valuetrading price of your investmentthe Company’s Common Stock may decline.
The Company cannot assure its investors that there will not be material weaknesses or significant deficiencies in the company may decrease. Management's stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtainCompany’s internal control of us, whichover financial reporting in turn could reduce our stock price or prevent our stockholders from realizing a premium over our stock price.
USE OF PROCEEDS
We will not receive any proceeds from the sale of shares by the selling stockholder. As of the date hereof, we are liable for fraudulent credit card transactions because we do not obtainreceived $500,000 from the sale of a cardholder’s signature. We do not currently carry insurance against this risk. ToConvertible Note to the selling stockholder under the Purchase Agreement. Within one day from the date we have experienced minimal lossesfile the registration statement of which this prospectus forms a part, we will receive another $500,000 from credit card fraud, butthe sale of Convertible Notes to the selling stockholder. Within one day from the effective date of the registration statement of which this prospectus forms a part, we facewill receive up to another $1,250,000 from the risksale of significant losses from this typeConvertible Notes to the selling stockholder. These proceeds will be used for general corporate and working capital or other purposes that our Board of fraud as our net sales increase. Our failureDirectors deems to adequately control fraudulent credit card transactions could damage our reputation and brand and substantially harm our business and results of operations.
Amount of Proceeds from Sale of Convertible Notes
Shortly after the effectiveness of the registration statement of which this prospectus forms a part, we will have sold an aggregate of $1,250,000 of Convertible Notes. We may be required to license emerging technologies usefulmake additional payments to the selling stockholder. These additional fees could total up to $375,000, in our business, enhance our existing services, develop new services and technologies that addresswhich case we would have net proceeds from the increasingly sophisticated and varied needssale of our prospective customers and respondthe Convertible Notes equal to technological advances and emerging industry standards and practices on a cost-effective and timely basis. We may not be able to successfully implement new technologies or adapt our web site. Our failure to do so would substantially harm our business and results of operations.
| Interest Payments (1) | $ | 125,000 | ||
| Redemption Premium (2) | $ | 62,500 | ||
| Maximum Liquidated Damages (3) | $ | 187,500 | ||
| Total: | $ | 375,000 |
| (1) | The convertible notes mature in one year and bear interest at a rate of 10% per annum. |
| (2) | If we redeem the convertible notes, we must pay an amount equal to the principal amount being redeemed plus a redemption premium equal to 5% of the outstanding principal amount being redeemed plus outstanding and accrued interest. |
| (3) | In the event the registration statements is not timely filed or declared effective, we must pay to the selling stockholder a cash amount equal to 2% of the outstanding principal balance of the Notes as liquidated damages and not as a penalty. Liquidated damages shall be capped at 15% of the principal of the Convertible Debentures. |
We have not made, and do not need to make, any payments to any affiliate of incorporation authorizethe Selling Shareholder, or any person with whom the Selling Shareholder has a contractual relationship.
The following sets forth upon the issuance of 500,000,000 shares$1,250,000 of common stock, par value $.0001 per share,Convertible Notes, the gross proceeds paid or payable to us in connection with our issuance of which 10,000,000 shares are currently issued and outstanding. As discussedthe Convertible Notes, all payments that have been made or that may be required to be made by us in the “Dilution” section of this prospectus,connection with the issuance of the shares of common stock described in this prospectus will result in substantial dilution in the percentage ofConvertible Notes, our common stock held by our then existing shareholders. The issuance of common stock for future services or acquisitions, including any acquisition of Real Aesthetics pursuant to the LOI, or other corporate actions may have the effect of diluting the value of the shares held by our investors, and might have an adverse effect on any trading market for our common stock.
| Gross proceeds to the Company | $ | 1,250,000 | ||
| All payments that have been made or that may be required to be made by the Company to the Selling Shareholder in the first year of the convertible notes | $ | 375,000 | ||
| Net proceeds to the Company if we make all such payments to the Selling Shareholder | $ | 875,000 | ||
| All payments that have been made or that may be required to be made by the Company to the Selling Shareholder in the first year of the convertible notes as a percentage of net proceeds | 30 | % | ||
| The combined total possible profit to be realized as a result of any conversion discounts regarding the securities underlying the convertible notes (1) | $ | 312,501 | ||
| The combined total possible profit to be realized as a result of any conversion discounts regarding the securities underlying the convertible notes as a percentage of net proceeds | 26.41 | % |
| (1) | As calculated in “Selling Stockholder - Potential Profits to Selling Stockholder” using the date of issuance as the conversion date for the first tranche and the other tranches. The actual profit as a result of the conversion discount cannot be calculated until conversion as the conversion price depends on market conditions at and before conversion, and it may be significantly greater. |
DETERMINATION OF OFFERING PRICE
The selling stockholder will offer Common Stock at the prevailing market for penny stocks has suffered from patterns of fraud and abuse. Such patterns include:
PLAN OF DISTRIBUTION
The Common Stock held by the selling stockholder may be sold or distributed from time to time by the selling stockholder directly to one or more purchasers or through brokers, dealers, or underwriters who may act solely as agents at market prices prevailing at the time of sale, at prices related to the prevailing market prices, at negotiated prices, or at fixed prices, which may be changed on any stock exchange, market or trading facility on which the shares are traded or in private transactions. The sale of the market for shares of our common stock, developments affecting our business, including the impactselling stockholder’s Common Stock offered by this prospectus may be affected in one or more of the factors referredfollowing methods:
| ● | ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; | |
| ● | transactions involving cross or block trades; | |
| ● | a purchase by a broker-dealer as principal and resale by the broker-dealer for its account; | |
| ● | an exchange distribution in accordance with the rules of the applicable exchange; | |
| ● | in privately negotiated transactions; | |
| ● | broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share; | |
| ● | “at the market” into an existing market for the Common Stock; | |
| ● | through the writing of options on the shares; | |
| ● | a combination of any such methods of sale; and | |
| ● | any other method permitted pursuant to applicable law. |
In order to elsewhere in these risk factors, investor perceptioncomply with the securities laws of the company and general economic and market conditions. No assurances can be given that an orderly or liquid market will ever develop forcertain states, if applicable, the shares of our common stock.
The selling stockholder may also sell shares of Common Stock under Rule 144 promulgated under the Securities Act, if available, or any other exemption available under the Securities Act rather than under this prospectus. In addition, the selling stockholder may transfer the shares of Common Stock by other means not described in this prospectus.
The selling stockholder may also sell the shares directly to market makers acting as holdersprincipals and/or broker-dealers acting as agents for themselves or their customers. Such broker-dealers may receive compensation in the form of common stock
Brokers, dealers or agents participating in the distribution of the shares held by the selling stockholder as agents may receive compensation in the form of commissions, discounts, or concessions from the selling stockholder and/or purchasers of the Common Stock for whom the broker-dealers may act as agent. The selling stockholder may agree to indemnify any agent, dealer or broker-dealer that participates in transactions involving sales of the shares if liabilities are imposed on that person under the Securities Act.
The selling stockholder acquired the securities offered hereby in the ordinary course of business and has advised us that they have not entered into any agreements, understandings or arrangements with any underwriters or broker-dealers regarding the sale of their shares of Common Stock, nor is there an underwriter or coordinating broker acting in connection with a proposed sale of shares of Common Stock by the selling stockholder. If we are notified by the selling stockholder that any material arrangement has been entered into with a broker-dealer for the sale of shares of Common Stock, if required, we will file a supplement to this prospectus.
We are required,may suspend the sale of shares by the selling stockholder pursuant to Section 404this prospectus for certain periods of time for certain reasons, including if the prospectus is required to be supplemented or amended to include additional material information.
If the selling stockholder use this prospectus for any sale of the Sarbanes-Oxley Actshares of 2002,Common Stock, it will be subject to include in our annual report our assessment of the effectiveness of our internal control over financial reporting. We expect to incur significant continuing costs, including accounting fees and staffing costs, in order to maintain compliance with the internal controlprospectus delivery requirements of the Sarbanes-Oxley ActSecurities Act.
Regulation M
The anti-manipulation rules of 2002. Development of our business will necessitate ongoing changes to our internal control systems, processes and information systems. Currently, we have no employees. As we develop our business, hire employees and consultants and seek to protect our intellectual property rights, our current design for internal control over financial reporting will not be sufficient to enable management to determine that our internal controls are effective for any period, or on an ongoing basis. Accordingly, as we develop our business, such development and growth will necessitate changes to our internal control systems, processes and information systems, all of which will require additional costs and expenses.
We have advised the selling stockholder that while it is engaged in a distribution of the shares included in this prospectus it is required to comply with Regulation M promulgated under the Exchange ActAct. With certain exceptions, Regulation M precludes the selling stockholder, any affiliated purchasers, and any broker-dealer or other person who participates in the distribution from bidding for or purchasing or attempting to induce any person to bid for or purchase any security which is the subject of 1934, we incur ongoing expenses associated with professional fees for accounting, legal and SEC filings and compliance. We estimate that these costs will increase if our business volume and activity increases. As a result of such expenses, we may not have sufficient fundsthe distribution until the entire distribution is complete. Regulation M also prohibits any bids or purchases made in order to develop our operations.
DESCRIPTION OF SECURITIES
General
We are authorized by our articles of incorporation to issue an aggregate of 7,500,000,000 shares of Common Stock, par value $0.0001 per share, of which 1,447,955 were outstanding as of August 23, 2021, and 5,000,000 shares of preferred stock of which none were outstanding as of that date.
This prospectus contains only a summary of the net proceedsCommon Stock the selling stockholder is offering.
The following summary of the terms of our Common Stock and preferred stock, respectively, may not be complete and is subject to, and qualified in its entirety by reference to, the terms and provisions of our Amended and Restated Articles of Incorporation (the “Articles of Incorporation”) and our Bylaws, as amended (the “Bylaws”). You should refer to, and read this summary together with, our amended and restated articles of incorporation and amended and restated bylaws to review all of the terms of our Common Stock and preferred stock, respectively, that may be important to you.
Common Stock
Holders of our Common Stock are entitled to one vote for each share held of record on each matter submitted to a vote of stockholders. Except as otherwise expressly provided by the laws of the State of Nevada, or by the Articles of Incorporation at any and all meetings of the stockholders of the Corporation there must be present, either in person or by proxy, stockholders owning a majority of the issued and outstanding shares of the capital stock of the Corporation entitled to vote at said meeting. At any meeting of stockholders at which a quorum is not present, the holders of, or proxies for, a majority of the stock, which is represented at such meeting, may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented.
To the extent permitted by law, the Board shall have full power and discretion, subject to the provisions of the Articles of Incorporation, to determine what, if any, dividends or distributions shall be declared and paid or made. Dividends may be paid in cash, in property, or in shares of capital stock, subject to the provisions of the Articles of Incorporation. Before payment of any dividend, there may be set aside out of any funds of the Company available for dividends such sums as the Directors think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Company, or for such other purpose as the Directors think conducive to the interests of the Company. The Directors may modify or abolish any such reserve in the manner in which it was created.
Articles of Incorporation and Bylaws
Our articles of incorporation are silent as to cumulative voting rights in the election of our offeringdirectors. Nevada law requires the existence of common stockcumulative voting rights to be provided for by a corporation’s articles of incorporation. In the event that a few stockholders end up owning a significant portion of our issued and outstanding Common Stock, the lack of cumulative voting would make it more difficult for other stockholders to replace our Board of Directors or for a third party to obtain control of us by replacing our Board of Directors. Our articles of incorporation and bylaws do not contain any explicit provisions that would have an effect of delaying, deferring or preventing a change in control of us.
Transfer Agent and Registrar
The transfer agent and registrar for our Common Stock is Worldwide Stock Transfer, LLC, 1 University Plaza Dr., #505, Hackensack, NJ 07601, Phone: (201) 820-2008.
Listing
The shares of our Common Stock are quoted on the OTCQB under the symbol SAML. On August 23, 2021, the last reported sale price per share for our Common Stock on the OTCQB market as reported was $2.98.
THE PURCHASE AGREEMENT
The selling stockholders under this prospectus will be approximately $3,395,500, after deducting estimatedis offering expenses (which include legal and professional fees and expenses related to public company filings) payable by us. We intend to use the proceeds of this offering to consummate the transaction with Real Aesthetics and for working capital and general corporate purposes.
We sold $500,000 worth of Convertible Notes to the selling stockholder on June 7, 2021, and we expect to incur offering expenses estimated at approximately $4,500 for legal, accountingsell an additional $500,000 within three days of filing the registration statement of which this prospectus forms a part and other costs in connection with this offering.
| % of total shares offered | 25% | 50% | 75% | 100% | ||||||||||||
| Shares sold | 500,000 | 1,000,000 | 1,500,000 | 2,000,000 | ||||||||||||
| Gross Proceeds | $ | 850,000 | $ | 1,700,000 | $ | 2,550,000 | 3,400,000 | |||||||||
| Less offering expenses | $ | 4,500 | $ | 4,500 | $ | 4,500 | 4,500 | |||||||||
| Net offering proceeds | $ | 845,500 | $ | 1,695,500 | $ | 2,545,500 | 3,395,500 | |||||||||
| Purpose | 50% | 75% | 100% | |||||||||
| R & D | $ | 100,000 | $ | 200,000 | $ | 300,000 | ||||||
| Compliance | 100,000 | 150,000 | 200,000 | |||||||||
| Marketing | 125,000 | 325,000 | 475,000 | |||||||||
| Manufacturing | 375,000 | 675,000 | 975,000 | |||||||||
| Salaries & Operations | 600,000 | 750,000 | 1,000,000 | |||||||||
| Legal, Auditing and Consulting | 400,000 | 450,000 | 450,000 | |||||||||
| Total | $ | 1,700,000 | $ | 2,550,000 | $ | 3,400,000 |
We, in our sole discretion, may redeem in cash any and all amounts owed under the net tangible assetsConvertible Notes prior to Maturity by providing the selling stockholder with five business days advance notice. In such a case, we would pay a redemption premium equal to 20% of the principal amount being redeemed.
In the event registration statements are not timely filed or declared effective, then the Company (total assets lessshall pay to the selling stockholder a cash amount within three business days of the end of each month equal to 2% of the outstanding principal balance of the Notes as liquidated damages and not as a penalty. Liquidated damages shall be capped at fifteen 15% of the Purchase Price paid by the selling stockholder.
As of August 23, 2021, there were 1,447,955 shares of our Common Stock outstanding, of which 1,099,063 shares were held by non-affiliates. If the selling stockholder converts the Convertible Notes, the ownership position of the shareholders prior to the conversion would be diluted. If the selling stockholder converts the Convertible Notes into all of the 361,596 shares being registered under the registration statement of which this prospectus forms a part, such shares would represent 16.65% of all of our then outstanding shares and 22.89% of the then total liabilitiesnumber of shares held by non-affiliates (assuming no further issuances). Under the terms of a Registration Rights Agreement entered into with the selling stockholder at the same time as the Purchase Agreement, we must register with the U.S. Securities and tangible assets) dividedExchange Commission 361,596 shares of Common Stock underlying the Convertible Notes for resale by the selling stockholder Under the Purchase Agreement, however, the Convertible Notes may be converted into more than the 361,596 shares of our Common Stock being offered under this prospectus. The number of shares ultimately offered for resale by the selling stockholder depends upon the number of Convertible Notes we sell to it under the Purchase Agreement, the market price of our Common Stock and if we are in default on the Convertible Notes.
Issuances of Convertible Notes in this offering will not affect the rights or privileges of our existing stockholders, except that the economic and voting interests of each of our existing stockholders will be diluted as a result of any conversion of such notes. Although the number of shares of Common Stock outstanding. Upon completionthat our existing stockholders own will not decrease, the shares owned by our existing stockholders will represent a smaller percentage of this offering, ifour total outstanding shares after any such issuance to the maximum number of shares are sold, there will be 12,000,000Equity Purchaser.
SELLING STOCKHOLDER
The shares of the Company’s Common Stock outstanding having a net tangible book value (pro forma asbeing offered by the selling stockholder are those issuable to the selling stockholder upon conversion of October 31, 2012) of approximately $3,354,711, or $.28 per share. Upon completion of this offering, if the minimum number of sharesConvertible Notes. We are sold, there will be 10,014,700registering the shares of the Company’s Common Stock outstanding having a net tangible book value (pro forma as of October 31, 2012) of approximately $(20,299), or $(.0020) per share. “Dilution” per share representsin order to permit the difference betweenselling stockholder to offer the price per shareshares for resale from time to be paid bytime.
The table below lists the new investorsselling stockholders and the net tangible book value per share after this offering.
| Minimum | Maximum | |||||||
| Public Offering Price Per Share | $ | 1.70 | $ | 1.70 | ||||
| Net Tangible Book Value Per Share, Before Offering | $ | (0.00 | ) | $ | (0.00 | ) | ||
| Increase Per Share Attributable to Payment by New Investors | $ | 0.00 | $ | 0.28 | ||||
| Pro-forma Net Tangible Book Value After Offering | $ | (0.00 | ) | $ | 0.28 | |||
| Dilution to New Investors | $ | 1.70 | $ | 1.42 | ||||
The third column lists the shares of Common Stock being offered by this prospectus by the selling stockholder and does not take in account any limitations on conversion of the Convertible Notes set forth therein.
The fourth column assumes the sale of all of the shares offered by the selling stockholder pursuant to this prospectus.
Under the terms of the Convertible Notes and the Purchase Agreement, the selling stockholder may not convert the Convertible Notes such that selling stockholder or any of its affiliates would beneficially own a number of shares of our Common Stock which would occur ifexceed 9.99%. The number of shares in the market valuesecond column reflects these limitations. The selling stockholder may sell all, some or none of our ordinaryits shares that is held by non-affiliates exceeds $700 million asin this offering. See “Plan of the last business day of our most recently completed second fiscal quarter or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.Distribution.”
| Name of Selling Stockholder | Number of Shares of Common Stock Owned Prior to Offering | Maximum Number of Shares of Common Stock to be Sold Pursuant to this Prospectus (2) | Number of Shares of Common Stock Owned After Offering (3) | Which May Be Sold in This Offering as A Percentage of Currently Outstanding Shares (4) | Percentage of Shares of Common Stock Owned After the Offering (5) | |||||||||||||||
| YA II PN, LTD. (1) | - | 361,596 | 414,157 | 16.65 | % | 22.89 | % | |||||||||||||
| (1) | YA II PN, Ltd (“YA”) is the investor under the Purchase Agreement. Yorkville Advisors Global, LP (“Yorkville LP”) is YA II PN, Ltd.’s. investment manager and Yorkville Advisors Global II, LLC (“Yorkville LLC”) is the General Partner of Yorkville LP. All investment decisions for YA are made by Yorkville LLC’s President and Managing Member, Mr. Mark Angelo. The address of YA is 1012 Springfield Avenue, Mountainside, NJ 07092, Attention: Mark Angelo, Portfolio Manager. |
| (2) | Includes shares of Common Stock underlying the Convertible Notes that may held by the selling stockholder that are covered by this prospectus, including any such securities that, due to contractual restrictions, may not be exercisable if such conversion or put would result in beneficial ownership greater than 9.99%. |
| (3) | Represents the difference between the maximum number of shares into which the principal and interest on the Convertible Notes may be converted and the shares being registered under the registration statement of which this prospectus forms a part. |
| (4) | Assumes that the total number of our issued and outstanding Common Stock remains unchanged at 1,447,955 prior to the issuance of the common shares underlying the Convertible Notes. If all of the shares are sold pursuant to this offering and the total number of our issued and outstanding common shares otherwise remains unchanged at 361,596, such shares sold in this offering shall equal approximately 16.65% of the then issued outstanding shares of our Common Stock. |
| (5) | Assumes that the total number of our issued and outstanding common shares remains unchanged at 1,447,955 prior to the issuance of the common shares underlying the Convertible Notes, that the selling stockholder exercises its right to convert all of the principal and interest on the Convertible Notes at $3.32 and that it sells all of the shares offered pursuant to this prospectus. |
Additional Selling Stockholder Information
| Number of Shares outstanding prior to the Convertible Notes transaction held by persons other than the Selling Shareholders, affiliates of the Company, and affiliates of the Selling Shareholder | 1,099,063 | |||
| Number of Shares registered for resale by the Selling Shareholder or affiliates of the Selling Shareholder in prior registration statements | 0 | |||
| Number of Shares registered for resale by the Selling Shareholder or affiliates of the Selling Shareholder that continue to be held by the Selling Shareholder or affiliates of the Selling Shareholder | 0 | |||
| Number of Shares that have been sold in registered resale transactions by the Selling Shareholder or affiliates of the Selling Shareholder | 0 | |||
| Number of Shares registered for resale on behalf of the Selling Shareholder or affiliates of the Selling Shareholder in the current transaction | 1,099,063 |
BUSINESS
Formation
Samsara Luggage, Inc. (the “Company” or “Samsara”) was incorporated on May 7, 2007 under the name, “Darkstar Ventures, Inc.” under the laws of the State of Nevada. From the date of its formation until May 2011, the Company did not have any business activity except for the development stage company offeringof its website and locating companies through which it could offer products. Once its proprietary website was officially launched in July 2011, the Company engaged in the business of marketing eco-friendly health and wellness products, to the general public via the internet. Current products being offered includesuch as air and water filtration systems, organic baby products, and eco-friendly beds and linens.linens through affiliate marketing arrangements.
On May 14, 2015, the founder of the Company, Chizkiyau Lapin, sold all of his shares of Common Stock of the Company, then constituting 51% of the issued and outstanding shares of Common Stock of the Company, to Mr. Avraham Bengio. Beginning in April 2016, the Company began to focus, through its wholly owned Israeli subsidiary, Bengio Urban Renewal Ltd. (“Bengio Urban Renewal”), in the area of real estate development, particularly on the urban renewal market in Israel. As a result of the business activities of Bengio Urban Renewal, the Company’s Form 10-K for the fiscal year ended July 31, 2016, which was filed on November 14, 2016, stated that the Company was no longer a “shell” company as defined in Rule 12b-2 of the Exchange Act.
Reverse Stock Split
On March 17, 2021, the Company filed a Certificate of Change with the Secretary of State of the State of Nevada (the “Certificate of Change”) to affect a reverse split of Company’s Common Stock at a ratio of 1-for-7,000 (the “Reverse Stock Split”). The Reverse Stock Split took effect at the open of business on Tuesday, March 23, 2021. As a result of the Reverse Stock Split, each seven thousand (7,000) pre-split shares of Common Stock outstanding were automatically combined into one (1) new share of Common Stock without any action on the part of the holders, and the number of outstanding shares of Common Stock was reduced from 5,995,825,131 shares to 856,647 shares.
Merger Transaction
On November 12, 2019, the Company completed its merger with the Delaware corporation that was previously known as “Samsara Luggage, Inc.” (“Samsara Delaware”) in accordance with the terms of the Merger Agreement and Plan of Merger, dated as of May 10, 2019, (the “Merger Agreement”) by and among the Company, Samsara Delaware, and Avraham Bengio, pursuant to which Samsara Delaware merged with and into the Company, with the Company being the surviving corporation (the “Merger”). Following the completion of the Merger, the business of the Company going forward became the business of Samsara Delaware prior to the Merger, namely, the development and sale of smart luggage products.
The Company filed (1) Articles of Merger with the Secretary of State of the State of Nevada in which the Company amended its Articles of Incorporation to change the Company’s name from “Darkstar Ventures, Inc.” to “Samsara Luggage, Inc.” (the “Name Change”); and (2) a Certificate of Amendment with the Secretary of State of the State of Nevada in which the Company increased the number of authorized shares of Common Stock of the Company from 2,000,000,000 shares of Common Stock to 5,000,000,000 shares of Common Stock.
In connection with the Merger, the Company and Avraham Bengio entered into an Assignment and Assumption Agreement pursuant to which the Company sold 100% of the issued and outstanding shares of the Company’s wholly-owned Israeli subsidiary, Bengio Urban Renewal and all of the Company’s interest in Bengio Urban Renewal (including all debts and liabilities owed by the Company to Bengio Urban Renewal and the debts of Bengio Urban Renewal to the Company) to Avraham Bengio, the former CEO and principal shareholder of the Company (prior to the Merger).
At the effective time of the Merger, each share of Common Stock of Samsara, $0.0001 par value, was converted into the right to receive 0.0654 shares of the Company’s Common Stock, such that the shareholders of Samsara Delaware were issued new shares of the Company representing approximately 80% of the issued and outstanding shares of the Company’s Common Stock following the completion of the Merger. The exchange rate was determined through arms-length negotiations between the Company and Samsara Delaware.
On November 13, 2019, the Board of Directors of the Company (the “Board”) amended Section 3 of Article VII of the bylaws of the Company to change the fiscal year end-date of the Company from July 31 to December 31.
On October 5, 2020, the Company’s stockholders approved amending the Company’s Articles of Incorporation to increase the number of authorized shares of Common Stock from 5,000,000,000 to 7,500,000,000 (the “Authorized Capital Increase”). On November 3, 2020, the Company effected the Authorized Capital Increase by filing with the Secretary of State of the State of Nevada a Certificate of Amendment amending the Company’s Articles of Incorporation to increase the number of authorized shares of Common Stock from 5,000,000,000 to 7,500,000,000.
Address and Market for Securities
Our principal executive offices are located at the following address: One University Plaza, Suite 505, Hackensack, NJ 07601. Our telephone number is (877) 421-1574. Our website is www.samsaraluggage.com.
Our Common Stock is quoted on the OTCQB under the symbol “SAML.” On August 23, 2021, the closing price for shares of our Common Stock as reported on the OTCQB was $2.98 per share.
Bankruptcy, Receivership or Similar Proceeding
We have never declared bankruptcy, have never been in receivership, and have never been involved in any legal actions or proceedings.
Transactions during 2020
Convertible Loan Agreement (YA II PN, Ltd.)
On September 3, 2020, the Company entered into a Securities Purchase Agreement (“SPA”) with YA II PN, Ltd. (the “Investor”), pursuant to which the Investor will invest an aggregate amount of $220,000 in two tranches, and the Company will issue convertible debentures and warrants to the Investor. The first tranche of the investment in the amount of $150,000 will be provided upon signature of the SPA. The second tranche in the amount of $70,000 was provided on October 7, 2020. The funds are expected to be used to finance Samsara’s working capital and other general corporate needs.
Each tranche of the investment will bear interest at an annual rate of ten percent (10%) and will be repayable after two years. Each tranche of the investment will be convertible at any time into shares of the Company’s Common Stock at a conversion price equal to the lower of (a) $0.003 per share, or (b) 80% of the lowest the daily dollar volume-weighted average price for the Company’s Common Stock during the 10 trading days immediately preceding the conversion date.
As part of the transaction, the Company issued to the Investor warrants to purchase an aggregate of 2,619 shares of Common Stock, at an exercise price equal to $0.003. The term of each warrant is five years from the issue date. Each warrant may be exercised by cash payment or through cashless exercise by the surrender of warrant shares having a value equal to the exercise price of the portion of the warrant being exercised.
The Company undertook to increase its authorized shares of Common Stock to at least 7,000,000,000 within 90 days of the closing.
The SPA and the convertible debentures contain events of default, including, among other things, failure to repay the convertible debentures by the maturity date, and bankruptcy and insolvency events, that could result in the acceleration of the Investor’s right to convert the convertible debentures into shares of Common Stock.
On April 19, 2021, the Investor exercised its option to convert the second Convertible Promissory Note principal in the amount of $40,000 and the accrued interest in the amount of $7,067 into 40,861 shares of Common Stock of the Company.
Convertible Loan Agreement (Power Up Lending Group Ltd.)
On June 26, 2020, the Company entered into a Securities Purchase Agreement (“Power Up SPA”) with Power Up Lending Group Ltd. (the “Power Up”), pursuant to which Power Up agreed to provide the Company with an initial investment in the form of a convertible loan in the principal amount of $66,700 (the “Initial Investment”). The Power Up SPA contemplates additional financing of up to $925,000 in the aggregate, subject to the agreement of both parties. The funds are expected to be used to finance the Company’s working capital needs.
The convertible loan will bear interest at an annual rate of eight percent (8%) with a maturity date of June 25, 2021 (the “Maturity Date”). The loan will be convertible after six months into shares of the Company’s Common Stock at a conversion price equal to seventy-five percent (75%) of the average of the lowest trading price for the Company’s Common Stock during the twenty (20) trading day period prior to the conversion date. The Company agreed to an original issue discount of $8,700 and to reimburse the Investor for its costs in the amount of $3,000. Accordingly, the net proceeds to the Company from the Initial Investment amounted to $55,000.
The Power Up SPA and the convertible note contain events of default, including, among other things, failure to repay the loan amount by the Maturity Date, and bankruptcy and insolvency events, that could result in the acceleration of Power Up’s right to convert the loan amount into shares of Common Stock.
On December 28, 2020 and pursuant to the Power Up SPA, Power Up exercised its option to convert the convertible note principal in the amount of $38,100 into 36,286 shares of Common Stock of the Company. On December 31, 2020, Power Up exercised its option to convert the convertible note principal in the amount of $23,100 into 22,000 shares of Common Stock of the Company. On January 11, 2021, Power Up exercised its option to convert the convertible note principal in the amount of $ 7,000 into 7,448 shares of Common Stock of the Company.
Business Strategy
Samsara Luggage focuses on the travel sector, specializing in high-tech smart luggage and protective travel products and accessories. The company’s hero products are carry-on trolley suitcases with a variety of tech features. The current model is equipped with a smart unit that uses Bluetooth technology to connect to a mobile app to send notifications when the suitcase is moving away or being opened out of sight. The smart unit also doubles as a powerful removable battery and has an LED light that turns on automatically when it senses darkness. This model is made of a durable and lightweight aluminum in two colorways.
The Next Generation collection has the most advanced tech features including a GPS tracking system and Wi-Fi Hotspot. This collection will be available in both aluminum and a sturdy polycarbonate material in a variety of colorways.
Samsara Luggage differentiates itself in the consumer marketplace with its unique technology and the ergonomic design of the suitcase. The company stays ahead of the competition with the most advanced tech features partnered with a design that allows the suitcase to double as a portable desk and charging station. Tech-savvy features, functional design and quality materials distinguishes Samsara Luggage from its competitors and in the consumer market.
Samsara strategically sources mid-tier materials that are low-cost and abundant, yet also durable, high-quality, and luxurious. This allows the company to attract consumers with superior products at a moderate price range. This business model also helps the company maximize its earnings and profits.
In 2020, Samsara launched Sarah and Sam, an online fashion and lifestyle brand to create a new revenue stream during the coronavirus pandemic. Sarah and Sam leveraged Samsara Luggage’s digital assets and supply chain capabilities to launch the new online brand that compliments the aesthetic of Samsara Luggage. Sarah and Sam generated significant sales during the pandemic and continues to bring revenues to the company.
Due to COVID-19, Samsara postponed the launch of its Next-Gen line of suitcases that were presented in January 2020 at the CES exhibition. The Company decided to make changes to its business plan and developed alternative product lines to create a new revenue stream during the coronavirus pandemic. These new products are all sold online by Samsara’s digital unit utilizing the Company’s digital assets.
| ● | In March 2020, Samsara launched the “Essentials Kit” a curation of safety products for travelers and commuters to stay protected during the pandemic. |
| ● | In July 2020, Samsara launched the “Nano Weekender Bag,” an overnight travel bag treated with a layer of bacteriostatic Nano protection that prevents colonies of bacteria from developing on fabric. |
| ● | In the fourth quarter of 2020, Samsara expanded its D2C activities with the launch of its “Sarah & Sam” Fashion and Lifestyle Collection on a new dedicated website: www.sarah-sam.com. |
Research and Development
Samsara performs research and development in the fields of materials, design, and technology to develop new features and functionality, such as Wi-Fi hotspots, SIM cards, GPS, Bluetooth, RFID, built-in batteries, digital scaling, tracking systems, and automated locking.
Samsara’s R&D team is also exploring ways to add new Internet of Things (IoT) components to its existing smart luggage product such as a Samsara online community platform and integration with airline and airport systems. Additionally, Samsara’s R&D team is exploring new composite materials to use in Samsara’s luggage products.
Samsara works with three designers on an ongoing basis, and with NOA Labs Ltd., a Hong Kong company. Samsara’s R&D activities are overseen by David Dahan.
Manufacturing
Samsara utilizes two manufacturers in China to manufacture its smart luggage products, and utilizes contractors to provide order fulfilment services.
Marketing and Sales
Samsara Luggage is focused on conceptualizing and executing new marketing strategies that will attract a broader audience and strengthen its marketing assets. Samsara’s current customer base includes business professionals that travel extensively for work or tech-minded consumers that are always looking for the latest in technology and modern design. With the launch of the Next Generation collection of suitcases we will be introducing a new price point and advanced technologies that will suit the needs of a variety of travelers that are younger and use social media to showcase their purchases and travel adventures.
Samsara’s marketing efforts will focus on increasing online sales and expanding its target audience to strengthen its digital assets that proved to be an asset during the coronavirus pandemic.
Marketing and Sales Strategy
Samsara’s Digital Unit designs and implements a direct-to-consumer sales and marketing strategy using its hero product, the smart carry-on suitcase. The Digital Unit creates digital assets that are an integral part of the company’s intellectual property and develops sales techniques to advertise and sell Samsara’s products online.
In addition, a newly established Professional Media Unit provides organic online exposure that is leveraged as “social proof” on the Samsara website, social media platforms and all advertising assets.
These two pillars are key to meeting the company’s sales and marketing goals.
Company D2C Website
Samsara’s most important digital asset is its website. The site runs on an ecommerce retail platform designed to work directly with the digital marketing assets and supply chain system. The Digital Unit updates the site’s contents daily for search engine optimization that will drive new traffic to the site from all over the world.
Inhouse Lists of Identified Users
The list of identified users Samsara has gained over time helps to increase sales from customers who return to the site after not making a purchase on their first visit.
Mailing Lists
The mailing list is composed of buyers, potential customers who subscribe to receive updates and customers who responded to emails from previous mailing lists. This list helps the company continually communicate with customers regarding upcoming promotions and new product launches. This list helps Samsara increase its conversions and acquire repeat buyers.
Social Media Presence – Paid and Organic
Samsara uses its digital assets to attract its target audience who is very active on various social media platforms. Samsara’s paid and organic posts are geared towards converting sales from social media users and increasing the company’s social following on all the online social networks.
Building Digital Sales Capabilities
Samsara’s digital sales are reliant on leveraging digital assets and establishing multiple sales channels using valuable data to target potential customers.
The Digital Unit gathers information from all the digital activity accrued from Samsara’s advertising, public relations, and branding initiatives. Using this information, we can use targeted algorithms to reach potential customers and achieve higher conversion rates.
Advertising
| - | Paid Media |
Advertising in recognizable media outlets (Google, Facebook, etc.) and tracking sales conversions helps us identify our buyer personas to an accurate degree. We can leverage this information to target this customer profile precisely through paid media opportunities.
| - | Partnerships with External Content Providers |
| o | PR and articles. |
| o | Content marketing. |
| o | Partnerships with Affiliates. |
| - | Use of Designated Mailing Lists |
Promoting products to target audiences and groups that offer promotional content to their extensive relevant mailing lists.
| - | Selling on Online Trading Platforms |
Samsara has established relationships with sellers in online trading platforms with affiliate programs.
Competition
Samsara’s primary competitors offering aluminum suitcases in the carry-on luggage market include Away, Rimowa, Samsonite (Tumi), and Zero Halliburton.
| Competitor | Product | Price | Features | ||||||
| Away | Aleon 21” Carry-On Aluminum Hardside Luggage | $ | 549 | ● | Dimensions: 20.9 x 15.7 x 9.0 inches, Weight: 10.6 lbs., Volume: 2098 cubic inches | ||||
| ● | Lightweight and extremely durable Aircraft Grade Aluminum Frame and Body with two TSA-Approved Resettable Combination Locks | ||||||||
| ● | Interior Compression Packing System will keep items from shifting to the bottom, and prevent wrinkles | ||||||||
| ● | A telescoping handle, 360-degree spinner wheels, double reinforced square corners for extra space, a fitted rubber seal makes the case water-resistant and airtight; piano hinges extend the length of the case for added durability | ||||||||
| ● | 10-year Worry Free Warranty | ||||||||
| Rimowa | Rimowa Topas IATA Carry- On Luggage 21” Inch Multi-wheel 32L TSA Lock Spinner Suitcase Silver | $ | 799 | ● | Dimensions: 21.7 x 7.9 x 15.7 inches | ||||
| ● | 4-wheel spinners for smooth-rolling mobility in any direction | ||||||||
| ● | The height-adjustable Flex-Divider system on the interior can also be set to accommodate the exact volume of your luggage and keeps your belongings in the greatest possible order | ||||||||
| ● | Integrated in the case, the innovative TSA lock that can be opened without damage during security checks | ||||||||
| Zero Halliburton | Zero Halliburton Geo Aluminum 3.0 International Carry-On (Silver) | $ | 850 | ● | Dimensions: 15 x 8 x 21 inches | ||||
| ● | Made in USA from imported materials. Utilizes premium anodized aluminum that is as strong as steel but only one-fourth the weight. Innovative and unique double-rib design provides additional strength and durability as well as optimum protection of its contents. The intuitive 3-stage dual-button handle system allows for quicker release for both left and right-handed travelers. | ||||||||
| ● | Designed to securely close using two TSA accepted combination locks that are integrated into the draw-bolt latches. Seals airtight with the addition of a neoprene gasket seal around the opening’s perimeter. | ||||||||
| ● | The spinner wheels provide convenient and controlled ‘by-your-side’ mobility for easy traveling. Our superior piano hinge is used to keep the shells of each case in alignment and adds additional strength and integrity to the seal. | ||||||||
| ● | The interior is divided into two compartments with flat panels in place to hold clothes securely and discreetly. Our signature lining is stain-resistant and non-abrasive to clothes. | ||||||||
| ● | Our newly introduced ZH Global Tracking allows your case to be tracked anywhere in the world, providing additional peace of mind for your travel. | ||||||||
| Samsonite | Samsonite LITE-BOX ALU SPINNER (4 WHEELS) 55CM | $ | 667 | ● | Dimensions: 55 x 40 x 23 cm (including handles, wheels, bottom glides, side pockets and other external parts) | ||||
| ● | Volume: 40 L | ||||||||
| ● | Weight: 4.7 kg | ||||||||
| ● | Warranty: Limited 10-year global warranty | ||||||||
| ● | Model: Spinner (4 wheels) | ||||||||
| ● | Color: Aluminum | ||||||||
| ● | Material: 100% High-end anodized aluminum | ||||||||
Intellectual Property
Samsara owns a design patent on its carry-on luggage product, filed in the United States (136531) on October 3, 2017, in Europe (004385086-0001) on October 4, 2017, in China (315400) on October 9, 2017 and in Israel (60249) on April 6, 2017. Samsara also owns registered trademarks on the “Samsara” trade name in Europe and the US.
Government Regulations
Several aspects of Samsara’s smart luggage products, including its battery, locks and LED lights, are subject to the requirements of federal law relating to aviation and homeland security, as well as international regulation of electronic devices. Part 15 of the FCC Rules requires operation of electronic equipment not to cause harmful interference and to accept any interference received, including interference that may cause undesired operation. The Transportation Security Administration (TSA) recommends that only TSA approved locks be used on luggage, to avoid risk of TSA agents breaking the lock for inspection. The European Union requires all electronic devices to comply with the Restriction of Hazardous Substances (ROHS) regulations which restricts the use of specific hazardous materials found in electrical and electronic products. BS EN 62471 gives universal best-practice recommendations for the photobiological safety of electric lamps and lighting systems, including LED lights. This standard specifies exposure limits, measurement techniques and classification systems to control photobiological and light hazards. The EU radio equipment directive establishes a regulatory framework for placing radio equipment on the market, setting requirements for safety and health, electromagnetic compatibility, and the efficient use of the radio spectrum. Additionally, smart luggage products are subject to airline regulations applicable to manufacturing materials, size and weight.
Samsara believes that it is in substantial compliance with the laws and regulations which regulate its business, as detailed below:
Air Travel Regulations
The Samsara Luggage Carry-on case complies with all airline regulations applicable to manufacturing materials, size and weight. Additionally, it incorporates all the electronic parts into one removeable unit, leaving an option for the suitcase to be completely electronic free, if needed, in compliance with the airline regulations of January 2018, requesting passengers to remove batteries from checked-in smart luggage.
Samsara carry-on locks, bearing the Travel Sentry logo, meet TSA recommendations for accepted locks which can be opened by the TSA without being broken.
Electronic Equipment
On March 12, 2018, Samsara received a Grant of Equipment Authorization Certification Issued Under the Authority of the Federal Communications Commission stating that the Samsara smart unit is in compliance with the FCC part 15c (Regulating the interference of electronic equipment during operation).
On April 17, 2018, Samsara received a Certificate of Compliance with the European Union RoHS regulations (regulating and restricting the use of certain hazardous substances in electrical and electronic equipment).
On January 25, 2018, Samsara received an Attestation of Global Compliance with regulation EN 62471 (regulation of the photo biological safety of lamps and lamp systems).
On February 27, 2018, Samsara received the EU-RED (Radio Equipment Directive) Certificate of Conformity (regulating radio equipment, electromagnetic compatibility, and the efficient use of the radio spectrum.)
Employees
Samsara does not have any employees. All of its business activities are performed by independent contractors and third-party service providers.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Our Common Stock is listed on OTCQB under the symbol “SAML.” The market for our Common Stock is limited, volatile and sporadic. The following table sets forth, for the periods indicated, the high and low bid prices of our Common Stock on the OTCQB as reported by Google Finance. The following quotations reflect inter-dealer prices, without retail mark-up, markdown, or commissions, and may not reflect actual transactions. Those fiscal quarters during which there were no sales of our Common Stock have been labeled as “n/a.”
| High Bid | Low Bid | |||||||
| Fiscal Year 2021 | ||||||||
| June 30, 2021 | $ | 8.40 | $ | 1.40 | ||||
| March 31, 2021 | $ | 14.69 | $ | 1.40 | ||||
| Fiscal Year 2020 | ||||||||
| December 31, 2020 | $ | 9.79 | $ | 1.40 | ||||
| September 30, 2020 | $ | 11.19 | $ | 4.90 | ||||
| June 30, 2020 | $ | 31.47 | $ | 11.19 | ||||
| March 31, 2020 | $ | 48.25 | $ | 13.99 | ||||
| Fiscal Year 2019 | ||||||||
| December 31, 2019 | $ | 244.76 | $ | 17.48 | ||||
| September 30, 2019 | $ | 55.24 | $ | 16.78 | ||||
| June 30, 2019 | $ | 174.83 | $ | 9.79 | ||||
| March 31, 2019 | $ | 16.78 | $ | 8.39 | ||||
The last reported sales price for our shares of Common Stock on the OTCQB as of August 23, 2021, was $2.98 per share. As of August 12, 2021, we had approximately 170 shareholders who held shares of Common Stock through securities position listings.
Dividend Policy
We have never declared or paid any cash dividends on our Common Stock. For the foreseeable future, we intend to retain any earnings to finance the development and expansion of our business and do not anticipate paying any cash dividends on our Common Stock. Any future determination to pay dividends will be at the discretion of the Board of Directors and will depend upon then existing conditions, including our financial condition and results of operations, capital requirements, contractual restrictions, business prospects and other factors that the board of directors considers relevant.
Securities Authorized for Issuance under Compensation Plans
None.
Stock Incentive Plan
None.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
Samsara Luggage, Inc. was incorporated in the State of Nevada on May 7, 2007, under the name “Darkstar Ventures, Inc.” under the laws of the State of Nevada. Currently, the Company develops and sells smart luggage products.
Recent Developments
Reverse Stock Split
On March 17, 2021, the Company filed a Certificate of Change with the Secretary of State of the State of Nevada (the “Certificate of Change”) to effect a reverse split of Company’s common stock at a ratio of 1-for-7,000 (the “Reverse Stock Split”). The Reverse Stock Split took effect at the open of business on Tuesday, March 23, 2021. As a result of the Reverse Stock Split, each seven thousand (7,000) pre-split shares of common stock outstanding automatically combined into one (1) new share of common stock without any action on the part of the holders, and the number of outstanding shares common stock were reduced from 5,995,825,131 shares to 856,546 shares (subject to rounding of fractional shares).
No fractional shares were issued in connection with the Reverse Stock Split. The Company issued one whole share of the post-Reverse Stock Split Common Stock to any stockholder who otherwise would have received a fractional share as a result of the Reverse Stock Split.
Increase in Authorized Share Capital
On October 5, 2020, the Board of Directors of the Company approved, and the holders of a majority of the outstanding shares of our common stock, par value $0.0001 per share, (the “Common Stock”), executed a written consent in lieu of a meeting that approved, amending the Company’s Articles of Incorporation to increase the number of authorized shares of Common Stock from 5,000,000,000 to 7,500,000,000 (the “Authorized Capital Increase”).
On November 3, 2020, the Company effected the Authorized Capital Increase by filing with the Secretary of State of the State of Nevada a Certificate of Amendment amending the Company’s Articles of Incorporation to increase the number of authorized shares of Common Stock from 5,000,000,000 to 7,500,000,000.
YAII PN Ltd. Convertible Debentures
September 2020
On September 3, 2020, the Company entered into a Securities Purchase Agreement (“SPA”) with YAII PN, Ltd. (the “Investor”), pursuant to which the Investor invested an aggregate amount of $220,000 in two tranches, and the Company issued convertible debentures and warrants to the Investor. The first tranche of the investment in the amount of $150,000 was provided upon signature of the SPA. The second tranche in the amount of $70,000 was provided on October 7, 2020. The funds are expected to be used to finance the Company’s working capital and other general corporate needs. Each tranche of the investment will bear interest at an annual rate of ten percent (10%) and will be repayable after two years. Each tranche of the investment will be convertible at any time into shares of the Company’s Common Stock at a conversion price equal to the lower of (a) $0.003 per share, or (b) 80% of the lowest the daily dollar volume-weighted average price for the Company’s Common Stock during the 10 trading days immediately preceding the conversion date.
As part of the transaction, the Company issued to the Investor warrants to purchase an aggregate of 18,333,333 shares of Common Stock, at an exercise price equal to $0.003. The term of each warrant is five years from the issue date. Each warrant may be exercised by cash payment or through cashless exercise by the surrender of warrant shares having a value equal to the exercise price of the portion of the warrant being exercised.
The Company undertook to increase its authorized shares of Common Stock to at least 7,000,000,000 within 90 days of the closing.
The foregoing descriptions of the terms and conditions of the SPA and the convertible debentures are qualified in their entirety by reference to the full text of the SPA and the convertible debentures.
The Company issued the convertible debentures and the warrants under the exemptions from registration provided by Section 4(a)(2) of the Securities Act of 1933. The Company expect that any issuance of shares of Common Stock pursuant to the terms of the convertible debentures and the warrants will be exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and regulations promulgated thereunder. None of these transactions involved any underwriters, underwriting discounts or commissions, or any public offering, and the Investor had adequate access, through their relationships with the Company, to information about the Company.
The shares of Common Stock to be issued in the event of conversion of the convertible debentures and upon exercise of the warrants will not be registered under the Securities Act, or any state securities laws, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act.
April 2021
On April 6, 2021, the Company entered into a Securities Purchase Agreement (“Second SPA”) with the Investor, pursuant to which the Investor will invest $150,000, and the Company will issue a convertible debenture and warrants to the Investor. The $150,000 investment was provided upon signature of the Second SPA. The investment will bear interest at an annual rate of ten percent (10%) and will be repayable after two years. The investment will be convertible at any time into shares of the Company’s Common Stock at a conversion price equal to the lower of (a) $3.46, or (b) 80% of the lowest the daily dollar volume-weighted average price for the Company’s Common Stock during the 10 trading days immediately preceding the conversion date.
As part of the transaction, the Company issued to the Investor warrants to purchase an aggregate of 10,838 shares of Common Stock, at an exercise price equal to $3.46. The term of each warrant is five years from the issue date. Each warrant may be exercised by cash payment or through cashless exercise by the surrender of warrant shares having a value equal to the exercise price of the portion of the warrant being exercised.
Financial Overview
Critical Accounting Policies and Estimates
This Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). In connection with the preparation of our financial statements, we were required to make assumptions and estimates about future events and apply judgments that affect the reported amounts of assets, liabilities, revenue, expenses and the related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends and other factors that management believes to be relevant at the time our consolidated financial statements are prepared. On a regular basis, management reviews the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are presented fairly and in accordance with U.S. GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material. As applicable to the consolidated financial statements included elsewhere in this prospectus, the most significant estimates and assumptions relate to the going concern assumptions and convertible loans Derivative Liabilities and Fair Value of Financial Instruments.
Our significant accounting policies are discussed in Note 2, “Summary of Significant Accounting Policies,” of the notes to consolidated financial statement, which are incorporated by reference into this prospectus. Our management believes that, as for the financial statements for the periods included in this prospectus, the “going concern” assessment and accounting for Derivative Liabilities and Fair Value of Financial Instruments are critical accounting policies. However, due to the early stage of operations of our Company, there are no other accounting policies that are considered to be critical accounting policies by management.
Going Concern Uncertainty
The development and commercialization of our product will require substantial expenditures. We have not yet generated any material revenues and have incurred substantial accumulated deficit and negative operating cash flows. We currently have no employees other than our officers, bothsources of whomrecurring revenue and are also directors. We have never intended and do not intend to be a blank check company. We have a specific business plan and do not intend to engage in any merger, acquisition or business reorganization with any entity. We do not have revenues, have minimal assets and have incurred losses since inception.
| Website Upkeep | $ | 2,000 |
| Marketing and Sales | $ | 6,000 |
| Legal and auditing | $ | 15,000 |
| Working Capital | $ | 5,000 |
Results of Operations
Six months ended June30, 2021 compared to the Company. Other than our agreementsix months ended June30, 2020
Revenue
The Company generates revenues through the sale and distribution of smart luggage products and sales through the Sarah & Sam fashion brand. Revenues during the six months ended June 30, 2021 totaled $184,000 compared to $351,000 for the six months ended June 30, 2020. The decrease in the total revenue is mainly due to the Essentials Kits sales in second quarter of 2020, that increased sales dramatically, offering COVID essentials products that were in high demand at the beginning of the pandemic. Revenues generated exclusively by Sarah & Sam during the six months ended June 30, 2021 totaled $150,000 with First Linea gross profit of $80,000 which represents a gross profit margin of 53.3%. Revenues for the second quarter ending June 30, 2021 grew by 200% with an increase in new cluster sales from its newest vertical Sarah and Sam. Samsara launched Sarah & Sam, a fashion and lifestyle collection in the fourth quarter of the 2020 fiscal year. Sarah & Sam is a part of Samsara Direct, a new business model initiated in response to borrowthe travel restrictions enforced due to the coronavirus pandemic. Samsara Direct leverages the company's established digital assets and manufacturing and fulfillment supply chain capabilities to offer additional consumer products that respond to the changing needs of the market.
Costs of Revenue
Costs of revenue consists of the purchase of raw materials and the cost of production. Cost of revenues during the six months ended June 30, 2021 totaled $141,000 compared to $186,000 for the six months ended June 30, 2020. The decrease in incrementsthe costs of uprevenue is mainly due to $50,000decrease in sales as described above.
Gross Profit
During the six months ended June 30, 2021, Gross Profit totaled $43,000, representing a Gross Profit margin of 23.36%. During the six months ended June 30, 2020, Gross Profit totaled $165,000, representing a Gross Profit margin of 47%.
Operating Expenses
Operating expenses totaled $777,000 during the six months ended June 30, 2021, compared to $851,000 during the six months ended June 30, 2020, representing a net decrease of $74,000. The decrease in the operating expenses is mainly due to decrease in the research and development and selling and marketing expenses.
Financing Income (expenses)
Financing expenses totaled $1,743,000 during the six months ended June 30, 2021 compared to a financing income of $461,000 during the six months ended June 30, 2020 representing a net decrease of 2,204,000. The increase in the financing expenses is mainly due to increase in the expenses in respect of warrants issued and convertible component in convertible loan, net interest expenses mostly attributed to the conversion of the warrants into the Common Shares of the Company.
Net Profit/Loss
We realized a net loss of $2,477,000 for the six months ended June 31, 2021, as compared to a net loss of $225,000 for the six months ended June 31, 2020, for the reasons described above.
Three months ended June30, 2021 compared to the three months ended June30, 2020
Revenue
The Company generates revenues through the sale and distribution of smart luggage products and sales through the Sarah & Sam fashion brand. Revenues during the three months ended June 30, 2021 totaled $109,000 compared to $330,000 for the three months ended June 30, 2020.The decrease in the total revenue is mainly due to the Essentials Kits sales in Q2 of 2020, that increased sales dramatically, offering COVID essentials products that were in high demand at the beginning of the pandemic. Revenues generated exclusively by Sarah & Sam during the three months ended June 30, 2021 totaled $98,000 with a gross profit of $45,000 which represents a gross profit margin of 46%.
Costs of Revenue
Costs of revenue consists of the purchase of raw materials and the cost of production. Cost of revenues during the three months ended June 30, 2021 totaled $104,000 compared to $172,000 for the three months ended June 30, 2020. The increase in the costs of revenue is mainly due to increase in sales as described above.
Gross Profit
During the three months ended June 30, 2021, Gross Profit totaled $5,000, representing a Gross Profit margin of 4.58%. During the three months ended June 30, 2020, Gross Profit totaled $158,000, representing a Gross Profit margin of 48%.
Operating Expenses
Operating expenses totaled $451,000 during the three months ended June 30, 2021, compared to $487,000 during the three months ended June 30, 2020, representing a net decrease of $36,000. The decrease in the operating expenses is mainly due to decrease in the research and development, selling and marketing expenses.
Financing Income (expenses)
Financing expenses totaled $1,396,000 during the three months ended June 30, 2021 compared to a financing expenses of $58,000 during the three months ended June 30, 2020 representing a net increase of 1,338,000. The increase in the operating expenses is mainly due to increase in the expenses in respect of warrants issued and convertible component in convertible loan, net interest expenses. The decrease in the financing expenses is mainly due to increase in the expenses in respect of warrants issued and convertible component in convertible loan, net interest expenses mostly attributed to the conversion of the warrants into the Common Shares of the Company.
Net Profit/Loss
We realized a net loss of $1,842,000 for the three months ended June 31, 2021, as compared to a net loss of $387,000 for the three months ended June 31, 2020, for the reasons described above.
Liquidity and Capital Resources
Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures.
As of June 30, 2021, the Company currently has no agreements, arrangements or understandings with any person to obtain funds through bank loans, lineshad $197,000 of credit or any other sources. The officerscash, total current assets of $294,000, and directors have orally agreed to lend funds tototal current liabilities of $1,166,000, creating a working capital deficit of $872,000. As of December 31, 2020, the Company had $54,000 of cash, total current assets of $211,000 and total current liabilities of $1,127,000 creating a working capital deficit of $916,000. The decrease in the event funds are requiredour working capital deficit was mainly attributable to decrease of $46,000 in cash and cash equivalents.
Net cash used in operating activities was $285,000 for the operationssix months ended June 30, 2021, as compared to cash used in operating activities of the Company. However, there is no guarantee that our officers and directors will lend us sufficient funds to operate. Notwithstanding that our officers and directors are committed to ensuring that the Company can operate its business, they are not legally or contractually obligated to lend us any money. Since the Company has no such arrangements or plans currently in effect, its inability to raise funds$376,000 for the above purposes willsix months ended June 30, 2020. The Company’s primary uses of cash have a severe negative impact on its abilitybeen for research and development expenses, sales and marketing expenses, and working capital purposes.
Net cash provided by financing activities was $428,000 for the six months ended June 30, 2021, as compared to remain a viable company.
We have principally financed our operations through the sale of our common stock and the issuance of debt. Due to our operational losses, we cannot guarantee thatrelied to a large extent on financing our cash flow requirements through issuance of common stock and debt. There can be no assurance we will be successful in developing our business. If we are unable to successfully attract customers and develop our business, we may quickly use up the proceeds, if any, from this offering.
Year ended JulyDecember 31, 2012 as2020, compared to the year ended JulyDecember 31, 20112019
Revenue
The Company generates revenues through the sale and distribution of smart luggage products. Revenues during the year ended December 31, 2020, totaled $468,000, compared to $649,000 for the year ended December 31, 2019. The decrease in the total revenue is a development stage companymainly due to the fact that the 2019 revenues included proceeds from the Company’s crowdfunding campaign.
Costs of Revenue
Costs of revenue consists of the purchase of raw materials and did not generate anythe cost of production. Cost of revenues during the yearsyear ended JulyDecember 31, 2012 and July2020, totaled $285,000, compared to $525,000 for the year ended December 31, 2011.2019. The decrease in the total revenue is mainly due to the decrease in sales.
Gross Profit
During the year ended JulyDecember 31, 2012, total2020, Gross Profit totaled $183,000, representing a Gross Profit margin of 39.1%. During the year ended December 31, 2019, Gross Profit totaled $124,000 representing Gross Profit margin of 19%.
Operating Expenses
Operating expenses were $45,863. The operating expenses consisted of professional fees of $31,366, general and administrative expenses of $5,188, consulting fees of $9,167 and interest expense of $142 as compared with total expenses of $17,323totaled $1,636,000 during the year ended JulyDecember 31, 2011, which consisted of professional fees of $10,000, general and administrative expenses of $2,323 and website design expense of $5,000.
Net lossLoss
We incurred a net loss of $13,253$1,140,000 for the quarteryear ended OctoberDecember 31, 2012, and2020, as compared to a net loss of $76,439$3,142,000 for the period May 8, 2007 (inception) to Octoberyear ended December 31, 2012.
Liquidity and Capital Resources
Liquidity is the ability of a company to Octobergenerate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures.
As of December 31, 20122020, the Company has $54,000 of cash, total current assets of $211,000, and a net losstotal current liabilities of $76,439 for the period May 8, 2007 (inception) to October 31, 2012. We had$1,127,000, creating a working capital deficiencydeficit of $916,000. As of December 31, 2019, the Company had $477,000 of cash, total current assets of $616,000, and stockholders' deficiencytotal current liabilities of $40,789$1,810,000, creating a working capital deficit of $1,194,000.
The decrease in our working capital deficit was mainly attributable to the decrease of $560,000 in Fair Value of the convertible component in a convertible loan and decrease of $299,000 in Fair Value of warrants issued in convertible loan, which was mitigated by a decrease of $423,000 in cash and cash equivalents.
Net cash used in operating activities was $626,000 for the year ended December 31, 2020, as compared to cash used in operating activities of October$1,100,000 for the year ended December 31, 2012. This all raises2019. The Company’s primary uses of cash have been for professional support, research and development expenses, sales and marketing expenses, and working capital purposes.
Net cash used in investing activities was $0 for the year ended December 31, 2020, as compared to net cash generated from investing activities of $6,000 for the year ended December 31, 2019.
Net cash provided by financing activities was approximately $191,000 for the year ended December 31, 2020, as compared to approximately $1,454,000 for the year ended December 31, 2019. We have principally financed our operations through the sale of our common stock and the issuance of debt. Due to our operational losses, we relied to a large extent on financing our cash flow requirements through issuance of common stock and debt. There can be no assurance we will be successful in raising the necessary funds to execute our business plan.
Necessity of Additional Financing
Securing additional financing is critical to implementation of our business plan. If and when we obtain the required additional financing, we should be able to fully implement our business plan. In the event we are unable to raise any additional funds we will not be able to pursue our business plan, and we may fail entirely. We currently have no committed sources of financing.
Going Concern Consideration
The above conditions raise substantial doubt about our ability to continue as a going concern. Our independent auditors included an explanatory paragraph in their report on the accompanying financial statements regarding concerns about our ability to continue as a going concern is dependent on our ability to raise additional capital and implement our business plan.concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors. Although we anticipate that our current operations will provide us with cash resources, we believe existing cash will not be sufficient to fund planned operations and projects through the next 12 months. Therefore, we believe we will need to increase our sales, attain profitability, and raise additional funds to finance our future operations. Any meaningful equity or debt financing will likely result in significant dilution to our existing stockholders. There is no assurance that additional funds will be available on terms acceptable to us, or at all.
To address these risks, we must, among other things, implement and successfully execute our business and marketing strategy surrounding our products, continually develop and upgrade our website, respond to competitive developments, lower our financing costs, and attract, retain and motivate qualified personnel. There can be no assurance that we will be successful in addressing such risks, and the failure to do so can have a material adverse effect on our business prospects, financial condition and results of operations.
Seasonality
We do not expect our sales to be impacted by seasonal demands for our products.
Obligations and Commitments
Legal
We are not currently involved in any legal matters arising in the normal course of business. From time to time, we could become involved in disputes and various litigation matters that arise in the normal course of business. These may include disputes and lawsuits related to intellectual property, licensing, contract law and employee relations matters. Periodically, we review the status of significant matters, if any adjustments that may be necessary if we are unable to continue as a going concern.
Off-Balance Sheet Arrangements
We do not have any agreements or arrangements with any parties regarding these programs, other than our current merchant partners. A further componentoff-balance sheet arrangements.
MANAGEMENT
Our directors and executive officers and their respective ages as of the marketing programdate of this prospectus are as follows:
| Name | Age | Position(s) | ||
| Atara Dzikowski | 48 | Chief Executive Officer and Director | ||
| David Dahan | 49 | Chief Technical Officer and Director |
Atara Dzikowski
Atara Dzikowski served as Director and CEO of the Delaware company, Samsara Luggage, Inc., from its inception in 2017 until the Merger, and following the Merger has served as Director and CEO of Samsara. She has served as Chairperson and CEO of Design Boxes Ltd. from 2013 to date. From 2009 to 2013, Ms. Dzikowski was Director of Development and Public Affairs of Shenkar College of Engineering, Design and Art. She holds a Master’s in Public Administration from Clark University and a BA degree in Communication and Management from The College of Management in Tel Aviv. Since the Merger, Atara has been employed full time by Samsara as its Chief Executive Officer.
David Dahan
David Dahan served as Director and CTO of the Delaware company, Samsara Luggage, Inc., from its inception in 2017 until the Merger, and following the Merger has served as Director and CTO of Samsara. From 2015 to date, Mr. Dahan is also employed at Nova-Sight Ltd., a medical device company developing products for diagnostics and therapy in the field of ophthalmology, as its Software Department Manager. In 2009, Mr. Dahan co-founded Serve Africa Ltd., a holding company that provides Satellite IP connectivity communication services throughout the continent of Africa, and from 2013 to 2017 he served as its CEO. In 2008, Mr. Dahan founded Viramedics Ltd., a Bio-Tech firm dealing with Skin Cancer detection, working with leading medical institutes worldwide towards clinical studies and implementation, and served as its CTO through 2009. He also serves as a consultant to companies, mainly in the software algorithm field. Mr. Dahan holds a B.Sc degree in Physics and Computer Science from Ben Gurion University. Since the Merger, David has been employed part-time by Samsara as its Chief Technical Officer.
Committees of the Board of Directors
The Company does not have a separately constituted audit committee, compensation committee, nominating committee, executive committee or any other committee of the Board of Directors. As such, the entire Board of Directors acts as Samsara’s audit committee.
Audit Committee Financial Expert
The Company does not have any member who qualifies as an audit committee financial expert. Samsara believes that the cost of retaining such a financial expert at this time is under considerationprohibitive. Further, because the Company is still in an early development stage, Samsara believes the developmentservices of revenue sharing relationships with established eco-friendly product manufacturers.an audit committee financial expert are not necessary at this time.
Term of Office
Each director is elected by the Board and serves until his or her successor is elected and qualified, unless he or she resigns or is removed earlier. Each of our officers is elected by the Board to a term of one (1) year and serves until his or her successor is duly elected and qualified, or until he or she is earlier removed from office or resigns.
Involvement in Certain Legal Proceedings
None of our directors, executive officers or control persons has been involved in any of the following events during the past five years: (i) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (ii) any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offences); (iii) being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or (iv) being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.
Code of Ethics
We have not adopted a code of corporate conduct.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Exchange Act requires our directors and officers, and the persons who beneficially own more than 10% of our common stock, to file reports of ownership and changes in ownership with the SEC. Copies of all filed reports are required to be furnished to us pursuant to Rule 16a-3 promulgated under the Exchange Act. Based solely on the reports received by us and on the representations of the reporting persons, we believe that these persons have complied with all applicable filing requirements during the year ended December 31, 2020.
TRANSACTIONS WITH RELATED PERSONS
Described below are any transactions occurring during the eco-friendly product market continues to expand, we expect there to be significant competition from companies similar to ours, as well as from larger and more established companies. Our competitors include:
Bengio Urban Spin-Off Transaction
In connection with the Merger, the Company or has a material interest adverseand Bengio entered into an Assignment and Assumption Agreement dated November 12, 2019, pursuant to which the Company. The Company’s property is notCompany sold 100% of the subject of any pending legal proceedings.
Review, Approval or anyRatification of the Company’s subsidiaries or has a material interest adverse to it or any of its subsidiaries.Transactions with Related Persons
Although we adopted a Code of Ethics, applicablewe still rely on our Board to review related party transactions on an ongoing basis to prevent conflicts of interest. Our Board reviews a transaction in light of the affiliations of the director, officer or employee and the affiliations of such person’s immediate family. Transactions are presented to our principal executive, financial and accounting officers. We doBoard for approval before they are entered into or, if this is not havepossible, for ratification after the transaction has occurred. If our Board finds that a “financial expert” on the board or an audit committee or nominating committee.
Director Independence
The Company is not subject to listing requirements of any national securities exchange or national securities association and, as a result, we arethe Company is not at this time required to have oura board comprised of a majority of “independent directors.“Independent Directors.” We doThe Company does not believe that any of ourthe directors currentlyof the Company meet the definition of “independent” as promulgated by the rules and regulations of the American Stock Exchange.NASDAQ.
EXECUTIVE COMPENSATION
The following table shows, for the twelve months ended December 31, 2020 and December 31, 2019, compensation awarded or paid to, or earned by, our Chief Executive Officer, our Chief Technical Officer, and our Chief Financial Officer:
| SUMMARY COMPENSATION TABLE | |||||||||||||||||||||||||||||||||||
| Name | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | ||||||||||||||||||||||||||
| Atara Dzikowski(1) | 2020 | 100,000 | 0 | 0 | 0 | 0 | 0 | 0 | 100,000 | ||||||||||||||||||||||||||
| (CEO) | 2019 | 100,000 | 0 | 0 | 0 | 0 | 0 | 0 | 100,000 | ||||||||||||||||||||||||||
| David Dahan(2) | 2020 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||
| (CTO) | 2019 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||
| (1) | From January 1, 2018 until the effective date of the Merger, November 12, 2019, Atara Dzikowski served as the CEO of the Delaware company, Samsara Luggage, Inc. |
| (2) | From January 1, 2018 until the effective date of the Merger, November 12, 2019, David Dahan served as CTO of the Delaware company, Samsara Luggage, Inc. |
Employment Contracts
On September 22, 2019 we entered into an employment agreement with Ms. Dzikowski pursuant to which Ms. Dzikowski receives an annual salary of $100,000.
Option/SAR Grants
Samsara does not currently have a stock option plan. No individual grants of stock options, whether or not in tandem with stock appreciation rights known as SARs or freestanding SARs have been made to any executive officer or any Director since inception; accordingly, no stock options have been granted or exercised by any of the officers or Directors since Samsara was founded.
Long-Term Incentive Plans and Awards
The Company does not have any long-term incentive plans that provide compensation intended to serve as incentive for performance. No individual grants or agreements regarding future payouts under non-stock price-based plans have been made to any executive officer or any director or any employee or consultant since Samsara’s inception; accordingly, no future payouts under non-stock price-based plans or agreements have been granted or entered into or exercised by any of the officers or Directors or employees or consultants since Samsara was founded.
Potential Payments upon Termination or Change-in-Control
We currently have not paid any compensationno plans or arrangements in respect of payments to our directors or executive officers in considerationthe event of termination of employment (as a result of resignation, retirement, or change of control) or a change of responsibilities following a change of control.
Retirement Benefits
There are currently no arrangements or plans in which we provide pension, retirement or similar benefits for our Directors and Officers.
Compensation of Directors
We have no arrangement to compensate directors for their services rendered to our Company in their capacity as such. Directors. Directors are not paid for meetings attended. However, we intend to review and consider future proposals regarding board compensation. All travel and lodging expenses associated with corporate matters are reimbursed by us, if and when incurred.
Compensation Committee
We do not have no employment agreements witha separate compensation committee. Instead, our Board reviews and approves executive compensation policies and practices, reviews salaries and bonuses for other officers, administers our stock option plans and other benefit plans, if any, ofand considers other matters that may be brought forth to it.
Risk Management Considerations
We believe that our directors orcompensation policies and practices for our employees, including our executive officers. Weofficers, do not create risks that are reasonably likely to have no pension, health, annuity, bonus, insurance, stock options, profit sharing or similar benefit plans.
BENEFICIAL OWNERSHIP OF CERTAIN BENEFICIAL OWNERSPRINCIPAL STOCKHOLDERS, OFFICERS AND MANAGEMENTDIRECTORS
As of August 23, 2021, we had 1,447,955 shares of Common Stock outstanding. The following table lists,sets forth, as of December 3, 2012,August 23, 2021, certain information with respect to the number of shares of common stockbeneficial ownership of our Company that are beneficially ownedCommon Stock by (i) each person or entitystockholder known to our Companyby us to be the beneficial owner of more than 5% of the outstanding common stock; (ii) each executive officer and director5 percent of our Company;Common Stock, as well as by each of our current Directors and (iii) all executive officers, and directorsby all of the Company’s Directors and executive officers as a group. Information relating to beneficial ownership of common stock by our principal shareholders and management is based upon information furnished by each person using “beneficial ownership” concepts under the rules of the Securities and Exchange Commission. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or direct the voting of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the Securities and Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest. Except as noted below, each
Each person has sole voting and investment power.
| Name of Beneficial Owner | Number of Shares Owned | Percent | ||||||
| Atara Dzikowski (Director and CEO) | 130,909 | 9.04 | % | |||||
| David Dahan (Director and CTO) | 130,909 | 9.04 | % | |||||
| Directors and officers as a group (2 persons) | 261,818 | 18.08 | % | |||||
Change in Control
We are unaware of any contract or other arrangement the operation of which may at a subsequent date result in a change of control of our common stock issuedCompany.
Securities Authorized for Issuance under Equity Compensation Plans
None.
Long-Term Incentive Plans and outstanding as of December 3, 2012. Awards
We do not have any outstanding options, warrantslong-term incentive plans that provide compensation intended to serve as incentive for performance. No individual grants or agreements regarding future payouts under non-stock price-based plans have been made to any executive officer or any director or any employee or consultant since our inception; accordingly, no future payouts under non-stock price-based plans or agreement s have been granted or entered into or exercised by our officer or director or employees or consultants since we were founded.
Grants of Plan-Based Awards Table
None of our named executive officers received any grants of stock, option awards or other securities exercisable forplan-based awards during the fiscal period ended December 31, 2020. The Company has no activity with respect to these awards.
Options Exercised and Stock Vested Table
None of our named executive officers exercised any stock options, and no restricted stock units if any, held by our named executive officers vested during the fiscal period ended December 31, 2020. The Company has no activity with respect to these awards.
Outstanding Equity Awards at Fiscal Year-End Table
None of our named executive officers had any outstanding stock or convertible intooption awards as of December 31, 2020. The Company has not issued any awards to its named executive officers. The Company and its board may grant awards as it sees fit to its employees as well as key consultants and other outside professionals.
Non-Cumulative Voting
The holders of our shares of our common stock. Unless otherwise indicated,Common Stock do not have cumulative voting rights, which means that the addressholders of each person listed is c/o Darkstar Ventures, Inc., 410 Park Avenue, 15th Floor, New York, New York 10022.
| Name of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class | ||||||
| Chizkyau Lapin | 6,500,000 | 65 | % | |||||
| Israel Povarsky | 0 | - | ||||||
| Directors and officers as a group (2 persons) | 6,500,000 | 65 | % | |||||
Our Bylaws require us to the terms of the escrow agreement with VStock Transfer, LLC, a fee of $2,500 is payable to VStock from the gross proceeds and $500 for each additional closing.
Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended (the “Act" or "Securities Act"“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 Securities Act, and is therefore unenforceable.
EXPERTS
Our financial statements as of and for the years ended December 31, 2020 and December 31, 2019 have been included in this prospectus and in the registration statement have been audited by Wolinetz, Lafazan & Company, P.C., an independent registered public accounting firm, to the extent and for the period set forth in their report appearing elsewhere herein and in the registration statement, and are included in reliance upon suchthe report givenof Ilanit Halperin CPA, and upon the authority of said firm as experts in auditingaccounting and accounting.auditing.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We are a reporting company and file annual, quarterly and current reports, proxy statements and other information with the SEC. We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the securities we are offering under this prospectus. This prospectus does not contain all of the information set forth in the registration statement and the exhibits to the registration statement. For further information with respect to us and the securities we are offering under this prospectus, we refer you to the registration statement and the exhibits and schedules filed as a part of the registration statement. You may read and copy the registration statement, as well as our reports, proxy statements and other information, at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You can request copies of these documents by writing to the SEC and paying a fee for the copying cost. Please call the SEC at 1-800-SEC-0330 for more information about the operation of the Public Reference Room. The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, where our SEC filings are also available. The address of the SEC’s web site is http://www.sec.gov.
SAMSARA LUGGAGE, INC.
INDEX TO FINANCIAL STATEMENTS
SAMSARA LUGGAGE, INC.
CONDENSED BALANCE SHEETS
(U.S. dollars in this prospectus as having prepared or certified anythousands except share and per share data)
| June 30, 2021 | December 31, 2020 | |||||||
| Unaudited | Audited | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | 197 | 54 | ||||||
| Accounts Receivables | - | 4 | ||||||
| Inventory | 97 | 153 | ||||||
| Other current assets | - | - | ||||||
| Total current assets | 294 | 211 | ||||||
| Property and Equipment, net | 4 | 4 | ||||||
| Total assets | 298 | 215 | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Trade payable | 100 | 125 | ||||||
| Accrued Expense | 20 | 74 | ||||||
| Related party payables | 162 | 126 | ||||||
| Convertible notes and short-term loans (Note 3) | 139 | 289 | ||||||
| Fair Value of convertible component in convertible loan, net of discounts and debt issue costs (Note 3) | 641 | 493 | ||||||
| Fair value of warrants issued in convertible loan (Note 3) | 104 | 20 | ||||||
| Total current liabilities | 1,166 | 1,127 | ||||||
| TOTAL LIABILITIES | 1,166 | 1,127 | ||||||
| STOCKHOLDERS’ DEFICIT | ||||||||
| Common stock subscribed | ||||||||
| Common stock, authorized 7,500,000,000 shares, $0.0001 par value; 1,360,881 issued and outstanding as of June 30, 2021 and 786,700 issued and outstanding as of December 31, 2020. | 136 | 78 | ||||||
| Additional paid in capital | 8,528 | 6,385 | ||||||
| Services receivable | (679 | ) | (999 | ) | ||||
| Accumulated deficit | (8,853 | ) | (6,376 | ) | ||||
| Total stockholders’ deficit | (868 | ) | (912 | ) | ||||
| Total liabilities and stockholders’ deficit | 298 | 215 | ||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
SAMSARA LUGGAGE, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(U.S. dollars in thousands except share and per share data)
| Six Months Ended June 30, | Three Months Ended June 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Revenues from sales of products | 184 | 351 | 109 | 330 | ||||||||||||
| Cost of sales of products | 141 | 186 | 104 | 172 | ||||||||||||
| GROSS PROFIT | 43 | 165 | 5 | 158 | ||||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| Research and development expenses | - | 140 | - | 105 | ||||||||||||
| Selling and marketing expenses | 161 | 187 | 100 | 105 | ||||||||||||
| General and administrative | 616 | 524 | 351 | 277 | ||||||||||||
| TOTAL OPERATING EXPENSES | 777 | 851 | 451 | 487 | ||||||||||||
| OPERATING LOSS | (734 | ) | (686 | ) | (446 | ) | (329 | ) | ||||||||
| FINANCING INCOME (EXPENSES) | ||||||||||||||||
| Interest and amortization of issuance cost on note and short-term loan | (94 | ) | (84 | ) | (22 | ) | (51 | ) | ||||||||
| Income in respect of warrants issued and convertible component in convertible loan, net interest expenses | (1,649 | ) | 545 | (1,374 | ) | (7 | ) | |||||||||
| TOTAL FINANCING INCOME (EXPENSES) | (1,743 | ) | 461 | (1,396 | ) | (58 | ) | |||||||||
| NET LOSS | (2,477 | ) | (225 | ) | (1,842 | ) | (387 | ) | ||||||||
| Net loss per basic and diluted share | (2.56 | ) | (0.45 | ) | (1.69 | ) | (0.77 | ) | ||||||||
| Weighted average number of basic and diluted common shares outstanding | 966,289 | 505,134 | 1,090,199 | 505,134 | ||||||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements
SAMSARA LUGGAGE, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(U.S. dollars in thousands)
| Six Months Ended March 31, | ||||||||
| 2021 | 2020 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net loss | (2,477 | ) | (225 | ) | ||||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
| Amortization of services receivable | 320 | 360 | ||||||
| Interest on convertible note and short-term loan and amortization of issuance cost | 62 | 75 | ||||||
| Issuance of shares for services | 70 | - | ||||||
| Expenses in respect of warrants issued and convertible component in convertible loan, net interest expenses | 1,649 | (545 | ) | |||||
| Depreciation | - | 1 | ||||||
| Changes in Operating Assets and Liabilities: | ||||||||
| Inventory | 56 | (48 | ) | |||||
| Accounts recievables | 4 | - | ||||||
| Other current assets | - | 1 | ||||||
| Related parties, net | 36 | 7 | ||||||
| Accounts payable | (5 | ) | (2 | ) | ||||
| Net Cash Used by Operating Activities | (285 | ) | (376 | ) | ||||
| Cash Flows from Financing Activities: | ||||||||
| Proceeds from Convertible loans, net of issuance cost | 628 | 55 | ||||||
| Prepayments of loans | (200 | ) | - | |||||
| Net Cash Provided by Financing Activities | 428 | 55 | ||||||
| Net Increase (Decrease) in Cash | 143 | (321 | ) | |||||
| Cash at Beginning of Period | 54 | 477 | ||||||
| Cash at End of Period | 197 | 156 | ||||||
| Supplemental disclosure of non-cash financing activities | ||||||||
| Cash paid for interest | - | - | ||||||
| Issuance of Common stock due to exercise of converted loans | 1,944 | - | ||||||
| Issuance of Common stock against Accounts Payables | 20 | - | ||||||
The accompanying notes are an integral part of these unaudited condensed financial statements
SAMSARA LUGGAGE, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Amounts in U.S. dollar thousands, except share and per share data)
NOTE 1 – GENERAL
| A. | SAMSARA LUGGAGE, INC. (THE “COMPANY”) |
The Company was incorporated on May 7, 2007 under the name, “Darkstar Ventures, Inc.” under the laws of the State of Nevada. The Company is a global smart luggage and smart travel brand. Samsara Luggage unveiled its Next Generation smart carry-on at the 2020 Consumer Electronics Show (CES). The Next Generation is the first to market a Wi-Fi Hotspot technology for travelers to access a secured network globally. Samsara Luggage also launched Essentials by Samsara, a safety kit providing commuters with a new layer of safety with protective items like facemasks, hand sanitizer, disposable gloves and alcohol wipes. These kits are sold individually and gifted to customers with purchase of the Carry-on Aluminum suitcase or Smart Weekender bag.
During the last quarter of 2020, Samsara launched Sarah & Sam Fashion and Lifestyle Collection. Sarah& Sam is a part of Samsara Direct business model prompted by the travel limitations due to the coronavirus pandemic, leveraging the company’s established digital assets and manufacturing and fulfillment supply chain capabilities to offer additional consumer products that respond to the changing needs of the market.
On November 12, 2019, the Company completed its merger with the Delaware corporation that was previously known as “Samsara Luggage, Inc.” (“Samsara Delaware”) in accordance with the terms of the Merger Agreement and Plan of Merger, dated as of May 10, 2019, (the “Merger Agreement”) by and among the Company, Samsara Delaware, and Avraham Bengio, pursuant to which Samsara Delaware merged with and into the Company, with the Company being the surviving corporation (the “Merger”). Following the completion of the Merger, the business of the Company going forward became the business of Samsara Delaware prior to the Merger, namely, designing, manufacturing, and selling high quality luggage products to meet the evolving needs of frequent travelers and also seeking to present new technologies within the aluminum luggage industry, including an aluminum “smart” suitcase.
The Common Stock listed on the OTC Pink Marketplace, previously trading through the close of business on November 11, 2019 under the ticker symbol “DAVC,” commenced trading on the OTC Pink Marketplace under the ticker symbol “SAML” on November 12, 2019. The Common Stock has a new CUSIP number, 79589J101.
On October 5, 2020 the Board of Directors of the Company has approved, and the holders of a majority of the outstanding shares of our common stock, par value $0.0001 per share (the “Common Stock”), have executed a written consent in lieu of a special meeting approving to amend the Company’s Articles of Incorporation to increase the number of authorized shares of common stock from 5,000,000,000 to 7,500,000,000 (the “Authorized Capital Increase”).
| B. | GOING CONCERN |
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As of June 30, 2021, the Company had approximately $197 in cash and cash equivalents, approximately $872 in deficit of working capital and an accumulated deficit of approximately $8,853. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Company’s ability to continue as a going concern is dependent upon raising capital from financing transactions and revenue from operations. Management anticipates their business will require substantial additional investments that have not yet been secured. Management is continuing in the process of fund raising in the private equity and capital markets as the Company will need to finance future activities. These financial statements do not include any adjustments that may be necessary should the Company be unable to continue as a going concern.
| C. | REVERSE SPLIT |
On March 22, 2021, the Company completed a reverse stock split of its common stock. As a result of the reverse stock split, the following changes have occurred (i) every seven thousand shares of common stock have been combined into one share of common stock; (ii) the number of shares of common stock underlying each common stock option or common stock warrant have been proportionately decreased on a 7,000-for-1 basis, and the exercise price of each such outstanding stock option and common warrant has been proportionately increased on a 7,000 -for-1 basis. Accordingly, all option numbers, share numbers, warrant numbers, share prices, warrant prices, exercise prices and losses per share have been adjusted within these consolidated financial statements, on a retroactive basis, to reflect this prospectus7,000 -for-1 reverse stock split.
SAMSARA LUGGAGE, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Amounts in U.S. dollar thousands, except share and per share data)
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION
Unaudited Interim Financial Statements
The accompanying unaudited financial statements include the accounts of the Company, prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and with the instructions to Form 10-Q and Article 10 of U.S. Securities and Exchange Commission Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the financial statements presented herein have not been audited by an independent registered public accounting firm but include all material adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of the financial condition, results of operations and cash flows for the for six-months ended June 30, 2021. However, these results are not necessarily indicative of results for any other interim period or having givenfor the year ended December 31, 2021. The preparation of financial statements in conformity with GAAP requires the Company to make certain estimates and assumptions for the reporting periods covered by the financial statements. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses. Actual amounts could differ from these estimates.
Certain information and footnote disclosures normally included in financial statements in accordance with generally accepted accounting principles have been omitted pursuant to the rules of the U.S. Securities and Exchange Commission (“SEC”). The accompanying unaudited condensed financial statements should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed with the SEC on March 30, 2021 (the “Annual Report”). For further information, reference is made to the financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
Use of Estimates
The preparation of unaudited condensed financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, certain revenues and expenses, and disclosure of contingent assets and liabilities as of the date of the financial statements. Actual results could differ from those estimates. Estimates are used when accounting for Warrants and Convertible Note and Going Concern.
Derivative and Fair Value of Financial Instruments
Fair value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity instruments and measurement of their fair value for accounting purposes. In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt under ASC 470, the Company will continue its evaluation process of these instruments as derivative financial instruments under ASC 815.
Once determined, derivative liabilities are adjusted to reflect fair value at each reporting period end, with any increase or decrease in the fair value being recorded in results of operations as an opinionadjustment to fair value of derivatives.
Fair value of certain of the Company’s financial instruments including cash, accounts receivable, accounts payable, accrued expenses, notes payables, and other accrued liabilities approximate cost because of their short maturities. The Company measures and reports fair value in accordance with ASC 820, “Fair Value Measurements and Disclosure” defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value measurements.
SAMSARA LUGGAGE, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Amounts in U.S. dollar thousands, except share and per share data)
Fair value, as defined in ASC 820, is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value of an asset should reflect its highest and best use by market participants, principal (or most advantageous) markets, and an in-use or an in-exchange valuation premise. The fair value of a liability should reflect the risk of nonperformance, which includes, among other things, the Company’s credit risk.
Valuation techniques are generally classified into three categories: the market approach; the income approach; and the cost approach. The selection and application of one or more of the techniques may require significant judgment and are primarily dependent upon the validitycharacteristics of the securitiesasset or liability, and the quality and availability of inputs. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. ASC 820 also provides fair value hierarchy for inputs and resulting measurement as follows:
Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities.
Level 2: Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities; and
Level 3: Unobservable inputs for the asset or liability that are supported by little or no market activity, and that are significant to the fair values.
Fair value measurements are required to be disclosed by the Level within the fair value hierarchy in which the fair value measurements in their entirety fall. Fair value measurements using significant unobservable inputs (in Level 3 measurements) are subject to expanded disclosure requirements including a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (i) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings, and a description of where those gains or losses included in earning are reported in the statement of income.
The Company’s financial assets and liabilities that are measured at fair value on a recurring basis by level within the fair value hierarchy are as follows:
| Balance as of June 30, 2021 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| (U.S. dollars in thousands) | ||||||||||||||||
| Liabilities: | ||||||||||||||||
| Fair Value of convertible component in convertible loan, net of discounts and debt issue costs | - | - | 641 | 641 | ||||||||||||
| Fair value of warrants issued in convertible loan | - | - | 104 | 104 | ||||||||||||
| Total liabilities | - | - | 745 | 745 | ||||||||||||
| Balance as of December 31, 2020 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| (U.S. dollars in thousands) | ||||||||||||||||
| Liabilities: | ||||||||||||||||
| Fair Value of convertible component in convertible loan, net of discounts and debt issue costs | - | - | 493 | 493 | ||||||||||||
| Fair value of warrants issued in convertible loan | - | - | 20 | 20 | ||||||||||||
| Total liabilities | - | - | 513 | 513 | ||||||||||||
SAMSARA LUGGAGE, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Amounts in U.S. dollar thousands, except share and per share data)
Recently Issued Accounting Standards
In August 2020, the FASB issued ASU No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging Contracts in Entity s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity s Own Equity. ASU 2020-06 will simplify the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock. Limiting the accounting models results in fewer embedded conversion features being registeredseparately recognized from the host contract as compared with current GAAP. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. ASU 2020-06 also amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. ASU 2020-06 will be effective for public companies for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company is currently evaluating the impact that the adoption of ASU 2020-06 will have on the Company’s consolidated financial statement presentation or disclosures.
Other new pronouncements issued but not effective as of June 30, 2021 are not expected to have a material impact on the Company’s financial statements.
NOTE 3 – CONVERTIBLE NOTES
| A. | On June 5, 2019, the Company entered into a Securities Purchase Agreement (“SPA”) with YAII PN, Ltd. (the “Investor”), pursuant to which the Investor agreed to provide the Company with a convertible loan in the aggregate amount of $1,100,000 in three tranches, and the Company agreed to issue convertible debentures and a warrant to the Investor. |
The first tranche of the convertible debentures in the amount of $200,000 was provided upon other legal mattersexecution of the SPA. The second tranche in the amount of $300,000 was provided on October 23, 2019 upon the Company filing of a Registration Statement on Form S-4 in connection with the registration or offeringMerger with Samsara Delaware. The third tranche in the amount of $600,000 was provided on November 18, 2019 upon consummation of the Merger with Samsara Delaware and the fulfillment of all conditions required for the Merger. The Company incurred issuance cost of $100,000 with connection to those convertible debentures.
Each tranche of the loan will bear interest at an annual rate of ten percent (10%). The principal amount together with the accrued and unpaid interest will be repayable after two years. Each tranche of the loan together with the accrued and unpaid interest (or any portion at the discretion of the Investor) will be convertible at any time six months following the issuance date, into shares of Company’s common stock at a conversion price equal to the lower of $0.003 per share or 80% of the lowest volume-weighted average price (VWAP) of Company’s share during the period of 10 days preceding the conversion date.
SAMSARA LUGGAGE, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Amounts in U.S. dollar thousands, except share and per share data)
(Amounts in U.S. dollar thousands, except share and per share data)
On January 14, 2021 and pursuant to the SPA, YAII exercised its option to convert the Convertible Promissory Note principal in the amount of $50 and the accrued interest in the amount of $4 into 38,303 shares of Common Stock of the Company. The fair market value of the shares was employed on a contingency basis, or had, or$64.
On February 11, 2021 and pursuant to the SPA, YAII exercised its option to convert the Convertible Promissory Note principal in the amount of $55 and the accrued interest in the amount of $3 into 16,713 shares of Common Stock of the Company. The fair market value of the shares was $216.
On April 19, 2021 and pursuant to the SPA, YAII exercised its option to convert the Convertible Promissory Note principal in the amount of $40 and the accrued interest in the amount of $7 into 40,861 shares of Common Stock of the Company. The fair market value of the shares was $62.
On May 12, 2021 and pursuant to the SPA, YAII exercised its option to convert the Convertible Promissory Note principal in the amount of $60 and the accrued interest in the amount of $2 into 44,202 shares of Common Stock of the Company. The fair market value of the shares was $103.
On May 17, 2021 and pursuant to the SPA, YAII exercised its option to convert the Convertible Promissory Note principal in the amount of $65 into 48,316 shares of Common Stock of the Company. The fair market value of the shares was $85.
On May 20, 2021 and pursuant to the SPA, YAII exercised its option to convert the Convertible Promissory Note principal in the amount of $65 into 50,611 shares of Common Stock of the Company. The fair market value of the shares was $171.
On May 21, 2021 and pursuant to the SPA, YAII exercised its option to convert the Convertible Promissory Note principal in the amount of $70 into 54,386 shares of Common Stock of the Company. The fair market value of the shares was $280.
On May 24, 2021, and pursuant to the SPA, YAII exercised its option to convert the Convertible Promissory Note principal in the amount of $70 into 54,407 shares of Common Stock of the Company. The fair market value of the shares was $322.
On May 24, 2021, and pursuant to the SPA, YAII exercised its option to convert the remainder of the Convertible Promissory Note principal in the amount of $15 and accrued interest of $11 into 11,647 shares of Common Stock of the Company. The fair market value of the shares was $68.
As of June 30, 2021 this loan was paid in full.
In accordance with ASC 815-15-25 the conversion feature was considered embedded derivative instruments, and is to receive,be recorded at their fair value as its fair value can be separated from the convertible loan and its conversion is independent of the underlying note value. The Company recorded finance expenses in respect of the convertible component in the convertible loan in the excess amount of the convertible component fair value over the face loan amount. The conversion liability is then marked to market each reporting period with the resulting gains or losses shown in the statements of operations.
The fair value of the convertible component was estimated by third party appraiser using the Monte Carlo Simulation Model to compute the fair value of the derivative and to mark to market the fair value of the derivative at each balance sheet date. The following are the data and assumptions used as of the balance sheet dates:
| December 31, 2020 | ||||
| Common stock price | 1.40 | |||
| Expected volatility | 227.88 | % | ||
| Expected term | 0.43 | |||
| Risk free rate | 0.19 | % | ||
| Forfeiture rate | 0 | % | ||
| Expected dividend yield | 0 | % | ||
| Fair Market Value of Convertible component | $ | 330 | ||
SAMSARA LUGGAGE, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Amounts in U.S. dollar thousands, except share and per share data)
In addition, the Company issued to the Investor a warrant to purchase 13,095 shares of common stock, at an exercise price equal to $21.00. The warrants may be exercised within 5 years from the issuance date by cash payment or through cashless exercise by the surrender of warrants shares having a value equal to the exercise price of the portion of the warrant being exercised.
The Company considered the provisions of ASC 815-40, “Derivatives and Hedging: Contracts in Entity’s Own Equity”, with respect to the detachable Warrants that were issued to the Convertible loan, and determined that as a result of the “cashless exercise” and variable exercise price that would adjust the number of Warrants and the exercise price of the Warrants based on the price at which the Company subsequently issues shares or other equity-linked financial instruments, such Warrants cannot be considered as indexed to the Company’s own stock. Accordingly, the Warrants were recognized as derivative liability at their fair value on initial recognition. In subsequent periods, the Warrants were marked to market with the changes in fair value recognized as financing expense or income in the consolidated statement of operations.
The warrants were estimated by third party appraiser using the Black-Scholes option-pricing model to compute the fair value of the derivative and to mark to market the fair value of the derivative at each balance sheet date. The following are the data and assumptions used as of the balance sheet dates:
| June 30, 2021 | ||||||
| Common stock price | $ | 3,94 | ||||
| Expected volatility | 312 | % | ||||
| Expected term | 2.93 years | |||||
| Risk free rate | 0.45 | % | ||||
| Expected dividend yield | 0 | % | ||||
| Fair Market Value of Warrants | $ | 51 | ||||
| December 31, 2020 | ||||
| Common stock price | 1.40 | |||
| Expected volatility | 227.88 | % | ||
| Expected term | 3.43 years | |||
| Risk free rate | 0.19 | % | ||
| Expected dividend yield | 0 | % | ||
| Fair Market Value of Warrants | $ | 16 | ||
SAMSARA LUGGAGE, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Amounts in U.S. dollar thousands, except share and per share data)
| B. | On September 3, 2020, Samsara Luggage, Inc. (the “Company”) entered into a second Securities Purchase Agreement (“SPA”) with the Investor, pursuant to which the Investor will invest an aggregate amount of $220 in two tranches, and the Company will issue convertible debentures and warrants to the Investor. The first tranche of the convertible debentures in the amount of $150 was provided upon execution of the SPA. The second tranche in the amount of $70 was provided on October 7, 2020. Each tranche of the loan bears interest at an annual rate of ten percent (10%). Each tranche of the investment bears interest at an annual rate of ten percent (10%) and will be repayable after two years. Each tranche of the investment will be convertible at any time into shares of the Company’s Common Stock at a conversion price equal to the lower of (a) $0.003 per share, or (b) 80% of the lowest the daily dollar volume-weighted average price for the Company’s Common Stock during the 10 trading days immediately preceding the conversion date. As part of the transaction, the Company will issue to the Investor warrants to purchase an aggregate of 2,619 shares of Common Stock, at an exercise price equal to $0.003. The term of each warrant is five years from the issue date. Each warrant may be exercised by cash payment or through cashless exercise by the surrender of warrant shares having a value equal to the exercise price of the portion of the warrant being exercised. The Company has undertaken to increase its authorized shares of Common Stock to at least 7,000,000,000 within 90 days of the closing. The SPA and the convertible debentures contain events of default, including, among other things, failure to repay the convertible debentures by the maturity date, and bankruptcy and insolvency events, that could result in the acceleration of the Investor’s right to convert the convertible debentures into shares of common stock. On May 24, 2021, and pursuant to the SPA, YAII exercised its option to convert the Convertible Promissory Note principal in the amount of $50 into 47,247 shares of Common Stock of the Company. The fair market value of the shares was $281. On May 25, 2021, and pursuant to the SPA, YAII exercised its option to convert the Convertible Promissory Note principal in the amount of $80 into 62,138 shares of Common Stock of the Company. The fair market value of the shares was $249. On May 28, 2021, and pursuant to the SPA, YAII exercised its option to convert the Convertible Promissory Note principal in the amount of $70 into 57,837 shares of Common Stock of the Company. The fair market value of the shares was $164. On June 1, 2021, and pursuant to the SPA, YAII exercised its option to convert the remainder of the Convertible Promissory Note principal in the amount of $20 into 15,559 shares of Common Stock of the Company. The fair market value of the shares was $39. |
As of June 30, 2021 this loan was paid in full.
In accordance with ASC 815-15-25 the conversion feature was considered embedded derivative instruments, and is to be recorded at their fair value as its fair value can be separated from the convertible loan and its conversion is independent of the underlying note value. The Company recorded finance expenses in respect of the convertible component in the convertible loan in the excess amount of the convertible component fair value over the face loan amount. The conversion liability is then marked to market each reporting period with the resulting gains or losses shown in the statements of operations.
The fair value of the convertible component was estimated by third party appraiser using the Monte Carlo Simulation Model to compute the fair value of the derivative and to mark to market the fair value of the derivative at each balance sheet dates:
| December 31, 2020 | ||||
| Common stock price | 1.39 | |||
| Expected volatility | 227.38 | % | ||
| Expected term | 1.67 | |||
| Risk free rate | 0.12 | % | ||
| Forfeiture rate | 0 | % | ||
| Expected dividend yield | 0 | % | ||
| Fair Market Value of Convertible component | $ | 157 | ||
SAMSARA LUGGAGE, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Amounts in U.S. dollar thousands, except share and per share data)
In addition, the Company issued to the Investor a warrant to purchase 2,619 shares of common stock, at an exercise price equal to $21.00. The warrants may be exercised within 5 years from the issuance date by cash payment or through cashless exercise by the surrender of warrants shares having a value equal to the exercise price of the portion of the warrant being exercised.
The Company considered the provisions of ASC 815-40, “Derivatives and Hedging: Contracts in Entity’s Own Equity”, with respect to the detachable Warrants that were issued to the Convertible loan, and determined that as a result of the “cashless exercise” and variable exercise price that would adjust the number of Warrants and the exercise price of the Warrants based on the price at which the Company subsequently issues shares or other equity-linked financial instruments, such Warrants cannot be considered as indexed to the Company’s own stock. Accordingly, the Warrants were recognized as derivative liability at their fair value on initial recognition. In subsequent periods, the Warrants were marked to market with the changes in fair value recognized as financing expense or income in the consolidated statement of operations.
The warrants were estimated by third party appraiser using the Black-Scholes option-pricing model to compute the fair value of the derivative and to mark to market the fair value of the derivative at each balance sheet dates:
The following are the data and assumptions used as of the balance sheet dates:
| June 30, 2021 | ||||
| Common stock price | $ | 3.94 | ||
| Expected volatility | 312 | % | ||
| Expected term | 4.18 | |||
| Risk free rate | 0.70 | % | ||
| Expected dividend yield | 0 | % | ||
| Fair Market Value of Warrants | $ | 10 | ||
| December 31, 2020 | ||||
| Common stock price | 1.39 | |||
| Expected volatility | 227.88 | % | ||
| Expected term | 4.68 | |||
| Risk free rate | 0.19 | % | ||
| Expected dividend yield | 0 | % | ||
| Fair Market Value of Warrants | $ | 4 | ||
SAMSARA LUGGAGE, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Amounts in U.S. dollar thousands, except share and per share data)
| C. | On June 26, 2020, the Company entered into a Securities Purchase Agreement (“SPA”) with Power Up Lending Group Ltd. (the “Investor”), pursuant to which the Investor agreed to provide the Company with an initial investment in the form of a convertible loan in the principal amount of $67 (the “Initial Investment”). The SPA contemplates additional financing of up to $925 in the aggregate, subject to the agreement of both parties. The funds are expected to be used to finance the Company’s working capital needs. |
The convertible loan will bear interest at an annual rate of eight percent (8%) with a maturity date of June 25, 2021 (the “Maturity Date”). The loan will be convertible after six months into shares of the Company’s common stock at a conversion price equal to seventy-five percent (75%) of the average of the lowest trading price for the Company’s common stock during the twenty (20) trading day period prior to the conversion date. The Company agreed to an original issue discount of $9 and to reimburse the Investor for its costs in the amount of $3. Accordingly, the net proceeds to the Company from the Initial Investment amounted to $55.
The SPA and the convertible note contain events of default, including, among other things, failure to repay the loan amount by the Maturity Date, and bankruptcy and insolvency events, that could result in the acceleration of the Investor’s right to convert the loan amount into shares of common stock.
On January 11, 2021 and pursuant to the SPA, Power-up exercised its option to convert the Convertible Promissory Note principal in the amount of $ 7 and the accrued interest in the amount of $ 1 into 7,448 shares of Common Stock of the Company.
As of June 30, 2021 this loan was paid in full.
| D. | On April 6, 2021, the Company entered into a third Securities Purchase Agreement (“SPA”) with YAII PN, Ltd. (the “Investor”), pursuant to which the Investor agreed to provide the Company with a convertible loan in the aggregate amount of $150 and the Company agreed to issue convertible debentures and a warrant to the Investor. The loan will bear interest at an annual rate of ten percent (10%) and will be repayable after two years. The investment will be convertible at any time into shares of the Company’s Common Stock at a conversion price equal to the lower of (a) $3.46, or (b) 80% of the lowest the daily dollar volume-weighted average price for the Company’s Common Stock during the 10 trading days immediately preceding the conversion date. |
In accordance with ASC 815-15-25 the conversion feature was considered embedded derivative instruments, and is to be recorded at their fair value as its fair value can be separated from the convertible loan and its conversion is independent of the underlying note value. The Company recorded finance expenses in respect of the convertible component in the convertible loan in the excess amount of the convertible component fair value over the face loan amount. The conversion liability is then marked to market each reporting period with the resulting gains or losses shown in the statements of operations.
The fair value of the convertible component was estimated by third party appraiser using the Monte Carlo Simulation Model to compute the fair value of the derivative and to mark to market the fair value of the derivative at each of the issuance and balance sheet dates:
The following are the data and assumptions used as of the issuance date:
| April 6, 2021 | ||||
| Common stock price | $ | 1.97 | ||
| Expected volatility | 322 | % | ||
| Expected term | 2.00 | |||
| Risk free rate | 0.16 | % | ||
| Forfeiture rate | 0 | % | ||
| Expected dividend yield | 0 | % | ||
| Fair Market Value of Convertible component | $ | 156 | ||
SAMSARA LUGGAGE, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Amounts in U.S. dollar thousands, except share and per share data)
The following are the data and assumptions used as of the balance sheet date:
| June 30, 2021 | ||||
| Common stock price | $ | 3.94 | ||
| Expected volatility | 312 | % | ||
| Expected term | 1.77 | |||
| Risk free rate | 0.21 | % | ||
| Forfeiture rate | 0 | % | ||
| Expected dividend yield | 0 | % | ||
| Fair Market Value of Convertible component | $ | 220 | ||
As part of the transaction, the Company issued to the Investor warrants to purchase an aggregate of 10,838 shares of Common Stock, at an exercise price equal to $3.46. The term of each warrant is five years from the issue date. Each warrant may be exercised by cash payment or through cashless exercise by the surrender of warrant shares having a value equal to the exercise price of the portion of the warrant being exercised.
The warrants were estimated by third party appraiser using the Black-Scholes option-pricing model to compute the fair value of the derivative and to mark to market the fair value of the derivative at each of the issuance and balance sheet dates:
The following are the data and assumptions used as of the issuance date:
| April 6 2021 | |||||
| Common stock price | $ | 1.97 | |||
| Expected volatility | 322 | % | |||
| Expected term | 5.00 | ||||
| Risk free rate | 0.88 | % | |||
| Expected dividend yield | 0 | % | |||
| Fair Market Value of Warrants | $ | 21 | |||
The following are the data and assumptions used as of the balance sheet dates:
| June 30, 2021 | ||||
| Common stock price | $3.94 | |||
| Expected volatility | 312.2 | % | ||
| Expected term | 4.77 | |||
| Risk free rate | 0.82 | % | ||
| Expected dividend yield | 0 | % | ||
| Fair Market Value of Warrants | $ | 43 | ||
| E. | On June 7, 2021, Samsara Luggage, Inc. (the “Company”) entered into a fourth Securities Purchase Agreement (“SPA”) with the Investor, pursuant to which the Investor will invest an aggregate amount of $1,250 in three tranches, and the Company will issue convertible debentures and warrants to the Investor, in which each traunch is convertible into shares of the Company’s common stock, par value $0.0001 (the “Common Stock”). The first traunch in the principal amount of $500 was issued on June 7, 2021. The second traunch in the principal amount of $500 will be issued within one (1) business day following the filing of a registration statement on Form S-1 (the “Registration Statement”) under the Securities Act of 1933, as amended, registering the Conversion Shares issuable upon conversion of the Convertible Debentures with the Securities and Exchange Commission (the “SEC”). The third traunch in the principal amount of $250 will be issued within one (1) business day following the Registration Statement having been declared effective by the SEC. |
SAMSARA LUGGAGE, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Amounts in U.S. dollar thousands, except share and per share data)
The Convertible Debentures bear interest at a rate of 10% per annum (15% on default) and have a maturity date of one (1) year. The Convertible Debentures provide a conversion right, in which any portion of the principal amount of the Convertible Debentures, together with any accrued but unpaid interest, may be converted into the Company’s Common Stock at a conversion price equal to 80% of the lowest volume weighted average price of the Company’s Common Stock during the ten (10) trading days immediately preceding the date of conversion, subject to adjustment. The Convertible Debentures may not be converted into common stock to the extent such conversion would result in the Investor beneficially owning more than 9.99% of the Company’s outstanding Common Stock (the “Beneficial Ownership Limitation”); provided, however, that the Beneficial Ownership Limitation may be waived by the Investor upon not less than 65 days’ prior notice to the Company. The Convertible Debentures provide the Company with a redemption right, pursuant to which the Company, upon fifteen (15) business days’ prior notice to the Investor, may redeem, in whole or in part, outstanding principal and interest at a redemption price equal to the principal amount being redeemed plus a redemption premium equal to 5% of the outstanding principal amount being redeemed plus outstanding and accrued interest; however, the Investor shall have fifteen (15) business days after receipt of the Company’s redemption notice to elect to convert all or any portion of the Convertible Debentures, subject to the Beneficial Ownership Limitation. In connection with the offering,Securities Purchase Agreement, the Company executed a substantialregistration rights agreement (the “Registration Rights Agreement”) pursuant to which it is required to file the Registration Statement with the SEC for the resale of the Conversion Shares. Pursuant to the Registration Rights Agreement, the Company is required to meet certain obligations with respect to, among other things, the timeliness of the filing and effectiveness of the Registration Statement. The Company is obligated to file the Registration Statement no later than 45 days after the First Closing Date and to have it declared effective by the SEC no later than 105 days after filing (the “Registration Obligations”).
In accordance with ASC 815-15-25 the conversion feature was considered embedded derivative instruments, and is to be recorded at their fair value as its fair value can be separated from the convertible loan and its conversion is independent of the underlying note value. The Company recorded finance expenses in respect of the convertible component in the convertible loan in the excess amount of the convertible component fair value over the face loan amount. The conversion liability is then marked to market each reporting period with the resulting gains or losses shown in the statements of operations.
The fair value of the convertible component was estimated by third party appraiser using the Monte Carlo Simulation Model to compute the fair value of the derivative and to mark to market the fair value of the derivative at each balance sheet dates:
The following are the data and assumptions used as of the issuance date:
| June 7, 2021 | ||||
| Common stock price | $ | 6.33 | ||
| Expected volatility | 359 | % | ||
| Expected term | 1.00 | |||
| Risk free rate | 0.05 | % | ||
| Forfeiture rate | 0 | % | ||
| Expected dividend yield | 0 | % | ||
| Fair Market Value of Convertible component | $ | 423 | ||
The following are the data and assumptions used as of the balance sheet date:
| June 30, 2021 | ||||
| Common stock price | $ | 3.94 | ||
| Expected volatility | 359 | % | ||
| Expected term | 0.94 | |||
| Risk free rate | 0.07 | % | ||
| Forfeiture rate | 0 | % | ||
| Expected dividend yield | 0 | % | ||
| Fair Market Value of Convertible component | $ | 421 | ||
SAMSARA LUGGAGE, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Amounts in U.S. dollar thousands, except share and per share data)
The following table presents the changes in fair value of the level 3 liabilities for the period ended June 30, 2021:
| Warrants | Convertible component | |||||||
| (U.S. dollars in thousands) | ||||||||
| Outstanding at December 31, 2020 | 20 | 493 | ||||||
| Fair value converted | - | (484 | ) | |||||
| Fair value of issued level 3 liability | 21 | 578 | ||||||
| Changes in fair value | 63 | 54 | ||||||
| Outstanding at June 30, 2021 | 104 | 641 | ||||||
NOTE 4 – RELATED PARTY TRANSACTIONS
Related party balances as of June 30, 2021 and December 31, 2020 consisted of the following:
Related Parties Payable
| June 30, 2021 | December 31, 2020 | |||||||
| (U.S. dollars in thousands) | ||||||||
| Related Parties Payable due to management fee | 162 | 126 | ||||||
General and Administrative Expenses
| For the Period Ended June 30, | ||||||||
| 2021 | 2020 | |||||||
| (U.S. dollars in thousands) | ||||||||
| Management Fee | 50 | 50 | ||||||
SAMSARA LUGGAGE, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Amounts in U.S. dollar thousands, except share and per share data)
NOTE 5 – STOCKHOLDERS’ EQUITY
Common Stock
The following summarizes the Common Stock activity for the six months ended June 30, 2021:
| Summary of common stock activity for the six months ended June 30, 2021 | Outstanding shares | |||
| Balance, December 31, 2020 | 786,700 | |||
| Shares issued due to conversion of Notes. | 549,675 | |||
| Shares issued for services | 21,658 | |||
| Roundup shares due to reverse split. | 2,848 | |||
| Balance, June 30, 2021 | 1,360,881 | |||
On January 14, 2021 and pursuant to the SPA, YAII exercised its option to convert the second Convertible Promissory Note principal in the amount of $50and the accrued interest direct or indirect, in our company or anythe amount of $4 into 38,303 shares of Common Stock of the Company. The fair market value of the shares was $64.
On January 21, 2021, the Company issued 7,383 shares of its parents or subsidiaries. NorCommon Stock pursuant to a service Agreement between the Company and a service provider. The fair market value of the shares was any such person connected with our company or any$20.
On February 11, 2021 and pursuant to the SPA, YAII exercised its option to convert the second Convertible Promissory Note principal in the amount of $55 and the accrued interest in the amount of $4 into 16,713 shares of Common Stock of the Company. The fair market value of the shares was $216.
On March 22, 2021, the Company completed a reverse stock split of its parentscommon stock. As a result of the reverse stock split, the following changes have occurred (i) every seven thousand shares of common stock have been combined into one share of common stock; (ii) the number of shares of common stock underlying each common stock option or subsidiaries ascommon stock warrant have been proportionately decreased on a promoter, managing or7,000-for-1 basis, and the exercise price of each such outstanding stock option and common warrant has been proportionately increased on a 7,000 -for-1 basis. Accordingly, all option numbers, share numbers, warrant numbers, share prices, warrant prices, exercise prices and losses per share have been adjusted within these consolidated financial statements, on a retroactive basis, to reflect this 7,000 -for-1 reverse stock split.
On March 23, 2021, the Company issued 2,849 shares of its Common Stock due to a reverse split rounding up differences.
On April 19, 2021 and pursuant to the SPA, YAII exercised its option to convert the Convertible Promissory Note principal underwriter, voting trustee, director, officer, or employee.in the amount of $40 and the accrued interest in the amount of $7into 40,861 shares of Common Stock of the Company. The fair market value of the shares was $62.
SAMSARA LUGGAGE, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Amounts in U.S. dollar thousands, except share and per share data)
On May 12, 2021 and pursuant to the SPA, YAII exercised its option to convert the Convertible Promissory Note principal in the amount of $60 and the accrued interest in the amount of $2 into 44,202 shares of Common Stock of the Company. The fair market value of the shares was $103.
On May 17, 2021 and pursuant to the SPA, YAII exercised its option to convert the Convertible Promissory Note principal in the amount of $65 into 48,316 shares of Common Stock of the Company. The fair market value of the shares was $85.
On May 20, 2021 and pursuant to the SPA, YAII exercised its option to convert the Convertible Promissory Note principal in the amount of $65 into 50,611 shares of Common Stock of the Company. The fair market value of the shares was $171.
On May 21, 2021 and pursuant to the SPA, YAII exercised its option to convert the Convertible Promissory Note principal in the amount of $70 into 54,386 shares of Common Stock of the Company. The fair market value of the shares was $280.
On May 24, 2021, and pursuant to the SPA, YAII exercised its option to convert the Convertible Promissory Note principal in the amount of $70 into 54,407 shares of Common Stock of the Company. The fair market value of the shares was $322.
On May 24, 2021, and pursuant to the SPA, YAII exercised its option to convert the remainder of the Convertible Promissory Note principal in the amount of $15 and accrued interest of $10 into 11,647 shares of Common Stock of the Company. The fair market value of the shares was $68.
On May 24, 2021, and pursuant to the SPA, YAII exercised its option to convert the Convertible Promissory Note principal in the amount of $50 into 47,247 shares of Common Stock of the Company. The fair market value of the shares was $281.
On May 25, 2021, and pursuant to the SPA, YAII exercised its option to convert the Convertible Promissory Note principal in the amount of $80 into 62,138 shares of Common Stock of the Company. The fair market value of the shares was $249.
On May 28, 2021, and pursuant to the SPA, YAII exercised its option to convert the Convertible Promissory Note principal in the amount of $70 into 57,837 shares of Common Stock of the Company. The fair market value of the shares was $164.
On June 1, 2021, and pursuant to the SPA, YAII exercised its option to convert the remainder of the Convertible Promissory Note principal in the amount of $20 into 15,559 shares of Common Stock of the Company. The fair market value of the shares was $39.
On June 14, 2021, the Company issued 14,275 shares of its Common Stock pursuant to a service Agreement between the Company and a service provider. The fair market value of the shares was $70.
SAMSARA LUGGAGE, INC.
INDEX TO FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF
SAMSARA LUGGAGE, INC.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Darkstar Ventures,Samsara Luggage, Inc. (a Development Stage Company) (“the Company”(the “Company”) as of JulyDecember 31, 20122020 and 2011, and2019, the related statements of operations and comprehensive loss, changes in stockholders’ equity (deficiency)deficit and cash flows for each of the two years in the period ended JulyDecember 31, 2012,2020 and 2019, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for the year in the period May 8, 2007 (inception)ended December 31, 2020 and 2019, in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1E to Julythe financial statements, the Company has not yet generated material revenues from its operations to fund its activities and is therefore dependent upon external sources for financing its operations. As of December 31, 2012. 2020, the Company has incurred accumulated deficit of $6,376 thousands and negative operating cash flows. These factor among others, as discussed in Note 1E to the financial statements raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans concerning these matters are also described in Note 1E to the financial statements. The financial statements do not include any adjustments that might result from the outcome of’ these uncertainties. This matter is also described in the “Critical Audit Matters” section of our report.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on thesethe Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our auditsaudit in accordance with the standards of the Public Company Accounting Oversight Board (United States).PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included considerationAs part of our audit, we are required to obtain an understanding 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. Also, an
Our audit includesincluded performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supportingregarding the amounts and disclosures in the financial statements, assessingstatements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement presentation.statements. We believe that our audits provideaudit provides a reasonable basis for our opinion.
Critical audit matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, referredtaken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to above present fairly, in all material respects, the financial position of Darkstar Ventures, Inc. at July 31, 2012 and 2011, and the results of its operations and its cash flows for each of the two years in the period ended July 31, 2012, and the period May 8, 2007 (inception) to July 31, 2012 in conformity with accounting principles generally accepted in the United States of America.which they relate.
Going concern assessment
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 21E to the consolidated financial statements, the Company has not yet generated material revenues from its operations to fund its activities and is therefore dependent upon external sources for financing its operations. As of December 31, 2020, the Company has incurred accumulated deficit of $6,376 thousands and negative operating cash flows. These factor among others, as discussed in Note 1E to the financial statements the Company is a development stage company, had no revenues and has incurred a cumulative net loss since inception. In addition, the Company has a working capital deficiency and stockholders’ deficiency at July 31, 2012. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans regarding thoseconcerning these matters are also described in Note 2. 1E to the financial statements. This matter is also described in the “Emphasis of Matter – Going Concern” section of our report.
We identified management’s assumptions used to assess the Company’s ability to continue as a going concern as a critical audit matter due to inherent complexities and uncertainties related to the Company’s Management’s plans. Auditing these assumptions involved especially challenging auditor judgment due to the nature and extent of audit evidence and effort required to address these matters.
The primary procedures we performed to address this critical audit matter included the following:
| ■ | Assessing the reasonableness of key assumptions underlying management’s forecast operating cash flows, including revenue growth and gross margin assumptions and evaluating the reasonableness of management’s forecast operating cash flows |
| ■ | Evaluating the probability that the Company will be able to reduce other operating expenditures if required |
| ■ | Assessing management’s plans in the context of other audit evidence obtained during the audit to determine whether it supported or contradicted the conclusions reached by management |
| ■ | Assessing the effect of events and agreement signed after balance sheet date. |
Fair value measurement of Level 3 liabilities
As discussed in Notes 2 and 3 to the consolidated financial statements, do not include any adjustments that might resultthe Company entered into several Convertible Loan Agreements and in accordance with ASC 815-15-25, the conversion feature was considered an embedded derivative instrument, and is to be recorded at its fair value as its fair value can be separated from the outcomeconvertible loan and its conversion is independent of this uncertainty.the underlying note value. The Company recorded finance expenses in respect of the convertible component in the convertible loan in the excess amount of the convertible component fair value over the face loan amount.
The fair value of the convertible component was estimated by third party appraiser using the Black-Scholes option pricing model, to compute the fair value of the derivative and to mark to market the fair value of the derivative at each balance sheet date. Under accounting principles generally accepted in the United States of America, these convertible component are generally classified as Level 3 convertible component.
We identified Level 3 convertible component as a critical audit matter because of the complex proprietary models and unobservable inputs management uses to estimate the fair value. This evaluation required a high degree of auditor judgment and an increased extent of effort, including the need to involve our internal valuation specialists who possess significant quantitative and modeling expertise, to audit and evaluate the appropriateness of these models and inputs.
Our audit procedures related to the complex proprietary models and unobservable inputs used by management to estimate the fair value of Level 3 convertible component included the following, among others:
| ● | We assessed the consistency by which management has applied significant unobservable valuation assumptions. |
| ● | With the assistance of our internal valuation specialists, we evaluated the appropriateness of the valuation methodologies and techniques used in determining the fair value of Level 3 convertible component. Also, we evaluated the appropriateness of estimates of the key inputs used in determining the fair value of the Level 3 convertible component |
/s/ Halperin Ilanit.
Certified Public Accountants (Isr.)
Tel Aviv, Israel
March 30, 2021
We have served as the Company’s auditor since 2019
SAMSARA LUGGAGE, INC.
BALANCE SHEETS
| December 31, 2020 | December 31, 2019 | |||||||
| (U.S. dollars in thousands, except per share data) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | 54 | 477 | ||||||
| Accounts Receivables | 4 | - | ||||||
| Inventory | 153 | 125 | ||||||
| Other current assets | - | 14 | ||||||
| Total current assets | 211 | 616 | ||||||
| Property and Equipment, net | 4 | 5 | ||||||
| Total assets | 215 | 621 | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable | 125 | 26 | ||||||
| Other current liabilities | 74 | 57 | ||||||
| Related party payables | 126 | 105 | ||||||
| Convertible notes and short-term loans (Note 3) | 289 | 250 | ||||||
| Fair Value of convertible component in convertible loan, net of discounts and debt issue costs (Note 3) | 493 | 1,053 | ||||||
| Fair value of warrants issued in convertible loan (Note 3) | 20 | 319 | ||||||
| Total current liabilities | 1,127 | 1,810 | ||||||
| TOTAL LIABILITIES | 1,127 | 1,810 | ||||||
| STOCKHOLDERS’ DEFICIT (Note 4) | ||||||||
| Common stock subscribed | ||||||||
| Common stock, authorized 7,500,000,000 shares, $0.0001 par value as of December 31, 2020 and 5,000,000,000 shares, $0.0001 par value as of December 31, 2019, respectively; 786,700 issued and outstanding as of December 31, 2020 and 505,134 issued and outstanding as of December 31, 2019. | 78 | 50 | ||||||
| Additional paid in capital | 6,385 | 5,670 | ||||||
| Services receivable | (999 | ) | (1,673 | ) | ||||
| Accumulated deficit | (6,376 | ) | (5,236 | ) | ||||
| Total stockholders’ deficit | (912 | ) | (1,189 | ) | ||||
| Total liabilities and stockholders’ deficit | 215 | 621 | ||||||
| July 31, | ||||||||
| 2012 | 2011 | |||||||
| Current Assets: | $ | 746 | $ | 18,327 | ||||
| Total Current Assets | 746 | 18,327 | ||||||
| Total Assets | $ | 746 | $ | 18,327 | ||||
| Current Liabilities: | ||||||||
| Accounts Payable | $ | 11,082 | $ | - | ||||
| Note Payable | 17,200 | - | ||||||
| Total Current Liabilities | 28,282 | - | ||||||
| Commitments and Contingencies | ||||||||
| Stockholders’ Equity (Deficiency): | ||||||||
| Preferred Stock, $.0001 par value, 5,000,000 shares authorized, | ||||||||
| none issued and outstanding | - | - | ||||||
| Common Stock, $.0001 par value; 500,000,000 shares authorized, | ||||||||
| 10,000,000 shares issued and outstanding | 1,000 | 1,000 | ||||||
| Additional Paid-In Capital | 34.650 | 34.650 | ||||||
| Deficit Accumulated During the Development Stage | (63,186 | ) | (17,323 | ) | ||||
| Total Stockholders’ Equity (Deficiency) | (27,536 | ) | 18,327 | |||||
| Total Liabilities and Stockholders’ Equity (Deficiency) | $ | 746 | $ | 18,327 | ||||
The accompanying notes are an integral part of these financial statements.statements
SAMSARA LUGGAGE, INC.
STATEMENTS OF COMPREHENSIVE LOSS
| Year Ended December 31, | ||||||||
| 2020 | 2019 | |||||||
| (U.S. dollars in thousands, except per share data) | ||||||||
| Revenues from sales of products | 468 | 649 | ||||||
| Cost of sales | 285 | 525 | ||||||
| GROSS PROFIT | 183 | 124 | ||||||
| OPERATING EXPENSES | ||||||||
| Research and development expenses | 222 | 168 | ||||||
| Selling and marketing expenses | 328 | 438 | ||||||
| General and administrative (Note 5) | 1,086 | 1,425 | ||||||
| TOTAL OPERATING EXPENSES | 1,636 | 2,031 | ||||||
| OPERATING LOSS | (1,453 | ) | (1,907 | ) | ||||
| FINANCING INCOME (EXPENSES) | ||||||||
| Interest on convertible loan and convertible note | (510 | ) | (314 | ) | ||||
| Income (expenses) in respect of warrants issued and convertible component in convertible loan, net interest expenses (Note 3) | 823 | (921 | ) | |||||
| TOTAL FINANCING INCOME (EXPENSE) | 313 | (1,235 | ) | |||||
| NET LOSS | (1,140 | ) | (3,142 | ) | ||||
| Basic and Diluted net loss per share | (2.07 | ) | (6.72 | ) | ||||
| Weighted average number of basic and diluted common shares outstanding | 550,521 | 467,521 | ||||||
For the Year Ended July 31,2012 | For the Year Ended July 31,2011 | For the Period May 8, 20072012 | ||||||||||
| Net Revenues | $ | - | $ | - | $ | - | ||||||
| Costs and Expenses: | ||||||||||||
| Professional Fees | 31,366 | 10,000 | 41,366 | |||||||||
| Consulting Fees | 9,167 | - | 9,167 | |||||||||
| Web Site Development | - | 5,000 | 5,000 | |||||||||
| General and Administrative Expenses | 5,188 | 2,323 | 7,511 | |||||||||
| Total Costs and Expenses | 45,721 | 17,323 | 63,044 | |||||||||
| Operating Loss | (45,721 | ) | (17,323 | ) | (63,044 | ) | ||||||
| Other Income (Expense): | ||||||||||||
| Interest Expense | (142 | ) | - | (142 | ) | |||||||
| Total Other Income (Expense) | (142 | ) | - | (142 | ) | |||||||
| Net Loss | $ | (45,863 | ) | $ | (17,323 | ) | $ | (63,186 | ||||
| Basic and Diluted Loss Per Share | $ | (.00 | ) | $ | (.01 | ) | ||||||
| Weighted Average Common Shares Outstanding | 10,000,000 | 1,964,384 | ||||||||||
The accompanying notes are an integral part of these financial statements.statements
| Deficit | ||||||||||||||||||||
| Accumulated | ||||||||||||||||||||
| Common Stock | Additional Paid-In | During the Development | ||||||||||||||||||
| Shares | Amount | Capital | Stage | Total | ||||||||||||||||
| Balance , May 8, 2007 | - | $ | - | $ | - | $ | - | $ | - | |||||||||||
| Balance , July 31, 2007 | - | - | - | - | - | |||||||||||||||
| Balance , July 31, 2008 | - | - | - | - | - | |||||||||||||||
| Balance , July 31, 2009 | - | - | - | - | - | |||||||||||||||
| Balance , July 31, 2010 | - | - | - | - | - | |||||||||||||||
| Common Stock Issued to Founder at $.0001 | ||||||||||||||||||||
| Per Share, May 1, 2011 | 6,500,000 | 650 | - | - | 650 | |||||||||||||||
| Common Stock Issued to Private Investors | ||||||||||||||||||||
| at $.01 Per Share, June 28 , 2011 | 3,500,000 | 350 | 34,650 | - | 35,000 | |||||||||||||||
| Net Loss for the Year Ended July 31, 2011 | - | - | - | (17,323 | ) | (17,323 | ) | |||||||||||||
| Balance, July 31, 2011 | 10,000,000 | 1,000 | 34,650 | (17,323 | ) | 18,327 | ||||||||||||||
| Net Loss for the Year Ended July 31, 2012 | - | - | - | (45,863 | ) | (45,863 | ) | |||||||||||||
| Balance, July 31, 2012 | 10,000,000 | $ | 1,000 | $ | 34,650 | $ | (63,186 | ) | $ | (27,536 | ) | |||||||||
SAMSARA LUGGAGE, INC.
STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
(U.S. dollars in thousands, except share and per share data)
| Common Stock | Additional Paid-in | Service | Accumulated | Stockholders’ | ||||||||||||||||||||
| Shares (*) | Amount | Capital | Receivables | Deficit | Deficit | |||||||||||||||||||
| Balance December 31, 2019 | 505,134 | 50 | 5,670 | (1,673 | ) | (5,236 | ) | (1,189 | ) | |||||||||||||||
| Issuance of shares due to conversion of Notes | 281,566 | 28 | 715 | - | - | 743 | ||||||||||||||||||
| Amortization of services | - | - | - | 674 | - | 674 | ||||||||||||||||||
| Net loss | -- | - | - | - | (1,140 | ) | (1,140 | ) | ||||||||||||||||
| Balance December 31, 2020 | 786,700 | 78 | 6,385 | (999 | ) | (6,376 | ) | (912 | ) | |||||||||||||||
| Balance December 31, 2018 | 369,929 | 37 | 2,676 | (908 | ) | (2,094 | ) | (289 | ) | |||||||||||||||
| Issuance of common stock, net of issuance cost | 32,738 | 3 | 497 | - | - | 500 | ||||||||||||||||||
| Issued of Warrants for services | - | - | 1,940 | (1,940 | ) | - | ||||||||||||||||||
| Shares Issuance of common stock for conversion of convertible note | 9,988 | 1 | 566 | - | - | 567 | ||||||||||||||||||
| Effect of Reverse Capitalization | 92,479 | 9 | (9 | ) | - | |||||||||||||||||||
| Amortization of services | - | - | -- | 1,175 | - | 1,175 | ||||||||||||||||||
| Net loss | -- | - | --- | - | (3,142 | ) | (3,142 | ) | ||||||||||||||||
| Balance December 31, 2019 | 505,134 | $ | 50 | $ | 5,670 | $ | (1,673 | ) | $ | (5,236 | ) | $ | (1,189 | ) | ||||||||||
The accompanying notes are an integral part of these financial statements.statements
For the Year Ended | For the Year Ended | For the Period May 8, 2007 | ||||||||||
July 31, 2012 | July 31, 2011 | July 31, 2012 | ||||||||||
| Cash Flows from Operating Activities: | ||||||||||||
| Net Loss | $ | (45,863 | ) | $ | (17,323 | ) | $ | (63,186 | ) | |||
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities: | ||||||||||||
| Changes in Assets and Liabilities: | ||||||||||||
| Increase in Accounts Payable | 11,082 | - | 11,082 | |||||||||
| Net Cash Used in Operating Activities | (34,781 | ) | (17,323 | ) | (52,104 | ) | ||||||
| Cash Flows from Investing Activities: | - | - | - | |||||||||
| Cash Flows from Financing Activities: | ||||||||||||
| Proceeds from Borrowings | 17,200 | - | 17,200 | |||||||||
| Proceeds from Sale of Common Stock | - | 35,650 | 35,650 | |||||||||
| Net Cash Provided by Financing Activities | 17,200 | 35,650 | 52,850 | |||||||||
| Increase (Decrease) in Cash | (17,581 | ) | 18,327 | 746 | ||||||||
| Cash – Beginning of Period | 18,327 | - | - | |||||||||
| Cash – End of Period | $ | 746 | $ | 18,327 | $ | 746 | ||||||
| Supplemental Disclosures of Cash Flow Information: | ||||||||||||
| Interest Paid | $ | - | $ | - | $ | - | ||||||
| Income Taxes Paid | $ | - | $ | - | $ | - | ||||||
SAMSARA LUGGAGE, INC.
STATEMENTS OF CASH FLOWS
| For the Year Ended December 31, | ||||||||
| 2020 | 2019 | |||||||
| (In thousands) | ||||||||
| Cash Flows from Operating Activities: | ||||||||
| Net loss | $ | (1,140 | ) | $ | (3,142 | ) | ||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
| Amortization of services receivable | 674 | 1,175 | ||||||
| Interest on convertible note and short-term loan | 584 | 258 | ||||||
| Expenses in respect of warrants issued and convertible component in convertible loan, net interest expenses | (823 | ) | 921 | |||||
| Depreciation | 1 | 1 | ||||||
| Changes in Operating Assets and Liabilities: | ||||||||
| Inventory | (28 | ) | 58 | |||||
| Accounts Receivables | (4 | ) | - | |||||
| Other current assets | 14 | 36 | ||||||
| Accounts payable | 99 | 26 | ||||||
| Management fee due to Related party, net | 21 | 16 | ||||||
| Other accounts payables | - | 11 | ||||||
| Deferred revenue | (12 | ) | (460 | ) | ||||
| Net Cash Used by Operating Activities | (614 | ) | (1,100 | ) | ||||
| Cash Flows from Investment Activities: | ||||||||
| Purchase of Property and Equipment | - | (6 | ) | |||||
| Net Cash Used by Financing Activities | - | (6 | ) | |||||
| Cash Flows from Financing Activities: | ||||||||
| Repayments of Convertible note from related parties | - | (56 | ) | |||||
| Proceeds from loan received | 191 | 50 | ||||||
| Repayments of convertible notes, net of issuance cost of $100 | - | 1,000 | ||||||
| Repayments of long-term loans | - | (40 | ) | |||||
| Proceeds from issuance of shares, net of issuance cost | - | 500 | ||||||
| Net Cash Provided by Financing Activities | 191 | 1,454 | ||||||
| Net Increase (Decrease) in Cash | (423 | ) | 348 | |||||
| Cash at Beginning of Period | 477 | 129 | ||||||
| Cash at End of Period | $ | 54 | $ | 477 | ||||
| Supplemental disclosure of cash flow information | ||||||||
| Cash paid for interest | $ | - | $ | 58 | ||||
| Cash paid for income taxes | $ | - | $ | - | ||||
| Supplemental disclosure of non-cash financing activities | ||||||||
| Common stock issued for conversion of convertible note | $ | 223 | $ | 567 | ||||
The accompanying notes are an integral part of these financial statements.statements
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - Summary of Significant Accounting Policies
| A. | Samsara Luggage, Inc. (the “Company”) was incorporated on May 7, 2007 under the name, “Darkstar Ventures, Inc.” under the laws of the State of Nevada. From the date of its formation until May 2011, the Company did not have any business activity except for the development of its website and locating companies through which it could offer products. Once its proprietary website was officially launched in July 2011, the Company engaged in the business of marketing eco-friendly health and wellness products, such as air and water filtration systems, organic baby products, and eco-friendly beds and linens through affiliate marketing arrangements. On May 14, 2015, the founder of the Company, Chizkiyau Lapin, sold all of his shares of common stock of the Company, then constituting 51% of the issued and outstanding shares of common stock of the Company, to Mr. Avraham Bengio. In April 2016, the Company began to focus, through its wholly-owned Israeli subsidiary, Bengio Urban Renewal Ltd. (“Bengio Urban Renewal”), in the area of real estate development, particularly on the urban renewal market in Israel. |
| B. | Reverse Stock Split |
On March 23, 2021, the Company completed a reverse stock split of its outstanding common stock. As a result of the reverse stock split, the following changes have occurred (i) every seven thousand shares of common stock have been combined into one share of common stock; (ii) the number of shares of common stock underlying each common stock option or common stock warrant have been proportionately decreased on a 7,000-for-1 basis, and the exercise price of each such outstanding stock option and common warrant has been proportionately increased on a 7,000 -for-1 basis. Accordingly, all option numbers, share numbers, warrant numbers, share prices, warrant prices, exercise prices and losses per share have been adjusted within these consolidated financial statements, on a retroactive basis, to reflect this 7,000 -for-1 reverse stock split.
| C. | Merger Transaction |
On November 12, 2019, the Company completed its merger with the Delaware corporation that was previously known as “Samsara Luggage, Inc.” (“Samsara Delaware”) in accordance with the terms of the Merger Agreement and Plan of Merger, dated as of May 10, 2019, (the “Merger Agreement”) by and among the Company, Samsara Delaware, and Avraham Bengio, pursuant to which Samsara Delaware merged with and into the Company, with the Company being the surviving corporation (the “Merger”). Following the completion of the Merger, the business of the Company going forward became the business of Samsara Delaware prior to the Merger, namely, designing, manufacturing, and selling high quality luggage products to meet the evolving needs of frequent travelers and also seeking to present new technologies within the aluminum luggage industry, including an aluminum “smart” suitcase.
The Company filed (1) Articles of Merger with the Secretary of State of the State of Nevada.
In connection with the Merger, the Company and Avraham Bengio entered into an Assignment and Assumption Agreement pursuant to which the collectibilityCompany sold 100% of those amounts. Provisions for discountsthe issued and rebates to customers, estimated returns and allowance, and other adjustments will be provided for in the same period the related sales are recorded.
At the effective time of the Merger, each share of common stock of Samsara Delaware, $0.0001 par value, was converted into the right to receive 0.065 shares of the Company’s common stock, such that the shareholders of Samsara Delaware were issued new shares of the Company representing approximately 80% of the issued and outstanding shares of the Company’s common stock following the completion of the Merger. The exchange rate was determined through arms’-length negotiations between the Company and Samsara Delaware.
SAMSARA LUGGAGE, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - Summary– ORGANIZATION AND DESCRIPTION OF BUSINESS (cont.)
Immediately after the Merger, assuming the issuance of Significant Accounting Policies
The computation of loss per share is based on the weighted average number of common shares outstanding during the period presented. Diluted loss per common share is the sametransaction was accounted for as basic loss per common share as there are no potentially dilutive securities outstanding (options and warrants).
The Common Stock listed on the OTC Pink Marketplace, previously trading through the close of business on November 11, 2019 under the ticker symbol “DAVC,” commenced trading on the OTC Pink Marketplace under the ticker symbol “SAML” on November 12, 2019. The Common Stock has a new CUSIP number, 79589J101. On August 24, 2021, the Company’s Common Stock began listing on the OTCQB.
On November 13, 2019, the Board of Directors of the Company amended Section 3 of Article VII of the bylaws of the Company to change the fiscal year end-date of the Company from July 31 to December 31.
| D. | On October 5, 2020 the Board of Directors of the Company has approved, and the holders of a majority of the outstanding shares of our common stock, par value $0.0001 per share (the “Common Stock”), have executed a written consent in lieu of a special meeting approving to amend the Company’s Articles of Incorporation to increase the number of authorized shares of common stock from 5,000,000,000 to 7,500,000,000 (the “Authorized Capital Increase”). |
| E. | GOING CONCERN |
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As of December 31, 2020, the Company had approximately $54 in cash and cash equivalents, approximately $916 in deficit of working capital, a stockholders’ deficiency of approximately $912 and an accumulated deficit of approximately $6,376. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Company’s ability to continue as a going concern is dependent upon raising capital from financing transactions and revenue from operations. Management anticipates their business will require substantial additional investments that have not yet been secured. Management is continuing in the process of fund raising in the private equity and capital markets as the Company will need to finance future activities. These financial statements do not include any adjustments that may be necessary should the Company be unable to continue as a going concern.
SAMSARA LUGGAGE, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION
The financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“‘US GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. As applicable to the financial statements, the most significant estimates and assumptions relate to the measurement of Convertible Note and Going Concern.
Functional currency
The functional currency of the Company is the US dollar (“US$”), which is the currency of the primary economic environment in which the operations of the Company are conducted.
Cash and cash equivalents
Cash equivalents are short-term highly liquid investments which include short term bank deposits (up to three months from date of deposit), that are not restricted as to withdrawals or use that are readily convertible to cash with maturities of three months or less as of the date acquired.
Inventory
Inventories are valued at the lower of cost or net realizable value. Cost of raw and packaging materials, purchased products, manufactured finished products and products in process are determined on the average cost basis. The Company regularly reviews its inventories for impairment and reserves are established when necessary.
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation and amortization. The Company provides for depreciation and amortization using the straight-line method over the estimated useful lives of the related assets, which range from three to five years.Maintenance and repair costs are expensed as they are incurred while renewals and improvements which extend the useful life of an asset are capitalized. At the time of retirement or disposal of property and equipment, the cost and related accumulated depreciation and amortization are removed from the accounts and any resulting gain or loss is reflected in the consolidated results of operations.
Derivative Liabilities and Fair Value of Financial Instruments
Fair value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity instruments and measurement of their fair value for accounting purposes. In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt under ASC 470, the Company will continue its evaluation process of these instruments as derivative financial instruments under ASC 815.
Once determined, derivative liabilities are adjusted to reflect fair value at each reporting period end, with any increase or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives.
SAMSARA LUGGAGE, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION (cont.)
Fair value of certain of the Company’s financial instruments including cash, accounts receivable, account payable, accrued expenses, notes payables, and other accrued liabilities approximate cost because of their short maturities. The Company measures and reports fair value in accordance with ASC 820, “Fair Value Measurements and Disclosure” defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value investments.
Fair value, as defined in ASC 820, is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value of an asset should reflect its highest and best use by market participants, principal (or most advantageous) markets, and an in-use or an in-exchange valuation premise. The fair value of a liability should reflect the risk of nonperformance, which includes, among other things, the Company’s credit risk.
Valuation techniques are generally classified into three categories: the market approach; the income approach; and the cost approach. The selection and application of one or more of the techniques may require significant judgment and are primarily dependent upon the characteristics of the asset or liability, and the quality and availability of inputs. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. ASC 820 also provides fair value hierarchy for inputs and resulting measurement as follows:
Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities.
Level 2: Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities; and
Level 3: Unobservable inputs for the asset or liability that are supported by little or no market activity, and that are significant to the fair values.
Fair value measurements are required to be disclosed by the Level within the fair value hierarchy in which the fair value measurements in their entirety fall. Fair value measurements using significant unobservable inputs (in Level 3 measurements) are subject to expanded disclosure requirements including a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings, and a description of where those gains or losses included in earning are reported in the statement of income.
The Company records a debt discount related to the issuance of convertible debts that have conversion features at adjustable rates. The debt discount for the convertible instruments is recognized and measured by allocating a portion of the proceeds as an increase in additional paid-in capital and as a reduction to the carrying amount of the convertible instrument equal to the fair value of the conversion features. The debt discount will be accreted by recording additional non-cash gains and losses related to the change in fair values of derivative liabilities over the life of the convertible notes.
SAMSARA LUGGAGE, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION (cont.)
The Company’s financial assets and liabilities that are measured at fair value on a recurring basis by level within the fair value hierarchy are as follows:
| Balance as of December 31, 2020 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| (U.S. dollars in thousands) | ||||||||||||||||
| Liabilities: | ||||||||||||||||
| Fair Value of convertible component in convertible loan, net of discounts and debt issue costs | - | - | 493 | 493 | ||||||||||||
| Fair value of warrants issued in convertible loan | - | - | 20 | 20 | ||||||||||||
| Total liabilities | - | -- | 513 | 513 | ||||||||||||
| Balance as of December 31, 2019 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| (U.S. dollars in thousands) | ||||||||||||||||
| Liabilities: | ||||||||||||||||
| Fair Value of convertible component in convertible loan, net of discounts and debt issue costs | - | - | 1,053 | 1,053 | ||||||||||||
| Fair value of warrants issued in convertible loan | - | - | 319 | 319 | ||||||||||||
| Total liabilities | - | -- | 1,372 | 1,372 | ||||||||||||
Revenue recognition
Revenues are recognized when delivery has occurred and there is persuasive evidence of an agreement, the fee is fixed or determinable and collection of the related receivables is reasonably assured, and no further obligations exist. Revenues from sales of products are recognized when title and risk and rewards for the products are transferred to the customer.
Research and development expenses
Research and development expenses are charged to operations as incurred.
Income Taxes
Income taxes are accounted for under the assets and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. Use of net operating loss carry forwards for income tax purposes may be limited by Internal Revenue Code section 382 if a change of ownership occurs.
Net Loss Per Basic and Diluted Common Share
Basic loss per ordinary share is computed by dividing the loss for the period applicable to ordinary shareholders, by the weighted average number of shares of common stock outstanding during the period. Securities that may participate in dividends with the shares of common stock (such as the convertible preferred) are considered in the computation of basic loss per share under the two-class method. However, in periods of net loss, only the convertible preferred shares are considered, since such shares have a contractual obligation to share in the losses of the Company. In computing diluted loss per share, basic loss per share is adjusted to reflect the potential dilution that could occur upon the exercise of potential shares. Accordingly, in periods of net loss, no potential shares are considered
SAMSARA LUGGAGE, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION (cont.)
Stock-Based Compensation
Share-based payments awarded to consultants (non-employees) are accounted for in accordance with ASC Topic 505-50, “Equity-Based Payments to Non-Employees”. However, when the Company grants to non-employees a fully vested, nonforfeitable equity instrument, such grants are measured based on the fair value of the award at the date of grant. When the fully vested, nonforfeitable equity instruments are granted for services to be received in future periods, the measured cost is recognized as an increase to stockholders’ equity at the measurement date with an offsetting amount as a deduction from stockholders’ equity within the caption “Services receivable”. Such amount is subsequently amortized to the statement of operations over the term of the services as an operating expense, as if the Company has paid periodic payments of cash for the services received from such service provider.
Recently Issued Accounting Standards
In June 2016, the FASB issued an ASU that supersedes the existing impairment model for most financial assets to a current expected credit loss model. The new guidance requires an entity to recognize an impairment allowance equal to its current estimate of all contractual cash flows the entity does not expect to collect. The Company adopted this guidance effective January 1, 2020, with no material impact on its consolidated financial statements
In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments. This guidance replaces the current incurred loss impairment methodology. Under the new guidance, on initial recognition and at each reporting period, an entity is required to recognize an allowance that reflects its current estimate of credit losses expected to be incurred over the life of the financial instrument based on historical experience, current conditions and reasonable and supportable forecasts.
The guidance became effective on January 1, 2020, including interim periods within that year and requires a modified retrospective transition approach through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. Under the modified retrospective method of adoption, prior year reported results are not restated. The Company has performed its analysis of the impact on its financial instruments that are within the scope of this guidance and has concluded that there was no material impact to its consolidated financial statements.
In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU No. 2018-13”) as part of the FASB’s broader disclosure framework project. ASU No. 2018-13 removes, modifies and adds certain disclosures, providing greater focus on requirements that clearly communicate the most important information to the users of the financial statements with respect to fair value measurements. The adoption of ASU No. 2018-13 as of January 1, 2020 did not have a material impact on the Company’s consolidated financial statements.
Recently Issued Accounting Pronouncements Not Yet Adopted
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this ASU simplify the accounting for income taxes, eliminates certain exceptions to the general principles in Topic 740 and clarifies certain aspects of the current guidance to improve consistent application among reporting entities. ASU 2019-12 is effective for fiscal years beginning after December 15, 2021 and interim periods within annual periods beginning after December 15, 2022, though early adoption is permitted, including adoption in any interim period for which financial statements have not yet been issued. This standard is not expected to have a material impact to the Company’s consolidated financial statements after evaluation.
SAMSARA LUGGAGE, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION (cont.)
In August 2020, the FASB issued ASU No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging Contracts in Entity s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity s Own Equity. ASU 2020-06 will simplify the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock. Limiting the accounting models results in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. ASU 2020-06 also amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. ASU 2020-06 will be effective for public companies for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company is currently evaluating the impact that the adoption of ASU 2020-06 will have on the Company’s consolidated financial statement presentation or disclosures.
Other new pronouncements issued but not effective as of December 31, 2020 are not expected to have a material impact on the Company’s consolidated financial statements.
In February 2016, the FASB issued a new lease accounting standard, ASU 2016-02 - “Leases”, requiring the recognition of lease assets and liabilities on the balance sheet. This standard is effective starting January 1, 2019. The adoption of ASU 2016-02 is not expected to have a material impact on the Company’s financial statements.
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 “Revenue from Contracts with Customers,” and modified the standard thereafter. The objective of the ASU is to establish a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers that will supersede most current revenue recognition guidance. The basis of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The Company adopted this standard as of January 1, 2018 using the modified retrospective method. See Note 2.H. to the consolidated financial statements for additional details.
On January 5, 2016, the FASB issued ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities. The standard requiring changes to recognition and measurement of certain financial assets and liabilities. The standard primarily affects equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. The Company adopted ASU 2016-01 in the first quarter of 2018 and the impact on its consolidated financial statements was not material.
In November 2016, the FASB issued ASU 2016-18 “Restricted Cash” to provide guidance on the presentation of restricted cash in the statement of cash flows. Currently, the statement of cash flows explained the change in cash and cash equivalents for the period. The ASU requires that the statement of cash flows explain the change in cash, cash equivalents and restricted cash for the period. The ASU is effective for the Company in the first quarter of 2018, with early adoption permitted. The Company did not have a material effect on the statements of cash flows as the Company’s restricted cash is not material.
In June 2018, the FASB issued ASU No. 2018-07 “Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting.” These amendments expand the scope of Topic 718, Compensation – Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. The ASU supersedes Subtopic 505-50, Equity – Equity-Based Payments to Non-Employees. The Company plans to adopt this standard in the first quarter of 2019. ASU 2018-07 is not expected to have an impact on Company’s consolidated financial statements.
In August 2018, the FASB issued ASU 2018-13, “Changes to Disclosure Requirements for Fair Value Measurements,” which will improve the effectiveness of disclosure requirements for recurring and nonrecurring fair value measurements. The standard removes, modifies, and adds certain disclosure requirements and is effective for the Company beginning on January 1, 2020. The Company does not expect that this standard will have a material effect on the Company’s consolidated financial statements.
SAMSARA LUGGAGE, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 3 – CONVERTIBLE NOTES
| A. | On June 5, 2019, the Company entered into a Securities Purchase Agreement (“SPA”) with YAII PN, Ltd. (the “Investor”), pursuant to which the Investor agreed to provide the Company with a convertible loan in the aggregate amount of $1,100,000 in three tranches, and the Company agreed to issue convertible debentures and a warrant to the Investor. |
The first tranche of the convertible debentures in the amount of $200,000 was provided upon execution of the SPA. The second tranche in the amount of $300,000 was provided on October 23, 2019 upon the Company filing of a Registration Statement on Form S-4 in connection with the Merger with Samsara Delaware. The third tranche in the amount of $600,000 was provided on November 18, 2019 upon consummation of the Merger with Samsara Delaware and the fulfillment of all conditions required for the Merger. The Company incurred issuance cost of $100,000 with connection to those convertible debentures.
Each tranche of the loan will bear interest at an annual rate of ten percent (10%). The principal amount together with the accrued and unpaid interest will be repayable after two years. Each tranche of the loan together with the accrued and unpaid interest (or any portion at the discretion of the Investor) will be convertible at any time six months following the issuance date, into shares of Company’s common stock at a conversion price equal to the lower of $0.003 per share or 80% of the lowest volume-weighted average price (VWAP) of Company’s share during the period of 10 days preceding the conversion date.
On December 9, 2019 and pursuant to the SPA, YAII exercised its option to convert the first Convertible Promissory Note principal amount of $200,000 and the accrued interest into 9,988 shares of Common Stock of the Company.
On July 24, 2020 and pursuant to the SPA, YAII exercised its option to convert the second Convertible Promissory Note principal amount of $50,000 and the accrued interest in the amount of $22,684 into 12,979 shares of Common Stock of the Company.
On August 5, 2020 and pursuant to the SPA, YAII exercised its option to convert the second Convertible Promissory Note principal amount of $75,000 and the accrued interest in the amount of $753 into 21,644 shares of Common Stock of the Company.
On August 13, 2020 and pursuant to the SPA, YAII exercised its option to convert the second Convertible Promissory Note principal amount of $75,000 and the accrued interest in the amount of $481 into 21,522 shares of Common Stock of the Company.
On October 12, 2020 and pursuant to the SPA, YAII exercised its option to convert the second Convertible Promissory Note principal in the amount of $50,000 and the accrued interest in the amount of $1,671 into 18,454 shares of Common Stock of the Company.
On November 2, 2020 and pursuant to the SPA, YAII exercised its option to convert the second Convertible Promissory Note principal in the amount of $50,000 and the accrued interest in the amount of $288 into 23,947 shares of Common Stock of the Company.
On November 16, 2020 and pursuant to the SPA, YAII exercised its option to convert the second Convertible Promissory Note principal in the amount of $10,000 and the accrued interest in the amount of $30,323 into 28,802 shares of Common Stock of the Company.
On November 19, 2020 and pursuant to the SPA, YAII exercised its option to convert the second Convertible Promissory Note principal in the amount of $45,000 and the accrued interest in the amount of $159 into 32,256 shares of Common Stock of the Company.
SAMSARA LUGGAGE, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 3 – CONVERTIBLE NOTES (cont.)
On December 17, 2020 and pursuant to the SPA, YAII exercised its option to convert the second Convertible Promissory Note principal in the amount of $45,000 and the accrued interest in the amount of $4,104 into 35,074shares of Common Stock of the Company.
In accordance with ASC 815-15-25 the conversion feature was considered embedded derivative instruments, and is to be recorded at their fair value as its fair value can be separated from the convertible loan and its conversion is independent of the underlying note value. The Company recorded finance expenses in respect of the convertible component in the convertible loan in the excess amount of the convertible component fair value over the face loan amount. The conversion liability is then marked to market each reporting period with the resulting gains or losses shown in the statements of operations.
The fair value of the convertible component was estimated by third party appraiser using the Monte Carlo Simulation Model to compute the fair value of the derivative and to mark to market the fair value of the derivative at each balance sheet date. The following are the data and assumptions used as of the balance sheet dates:
| December 31, 2020 | ||||
| Common stock price | 0.0002 | |||
| Expected volatility | 227.88 | % | ||
| Expected term | 0.43 | |||
| Risk free rate | 0.19 | % | ||
| Forfeiture rate | 0 | % | ||
| Expected dividend yield | 0 | % | ||
| December 31, 2019 | ||||
| Common stock price | 0.0061 | |||
| Expected volatility | 34.35 | % | ||
| Expected term | 1.43 years | |||
| Risk free rate | 1.59 | % | ||
| Forfeiture rate | 0 | % | ||
| Expected dividend yield | 0 | % | ||
In addition, the Company issued to the Investor a warrant to purchase 13,095 shares of common stock, at an exercise price equal to $0.003. The warrants may be exercised within 5 years from the issuance date by cash payment or through cashless exercise by the surrender of warrants shares having a value equal to the exercise price of the portion of the warrant being exercised.
The Company considered the provisions of ASC 815-40, “Derivatives and Hedging: Contracts in Entity’s Own Equity”, with respect to the detachable Warrants that were issued to the Convertible loan, and determined that as a result of the “cashless exercise” and variable exercise price that would adjust the number of Warrants and the exercise price of the Warrants based on the price at which the Company subsequently issues shares or other equity-linked financial instruments, such Warrants cannot be considered as indexed to the Company’s own stock. Accordingly, the Warrants were recognized as derivative liability at their fair value on initial recognition. In subsequent periods, the Warrants were marked to market with the changes in fair value recognized as financing expense or income in the consolidated statement of operations.
SAMSARA LUGGAGE, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 3 – CONVERTIBLE NOTES (cont.)
The warrants were estimated by third party appraiser using the Black-Scholes option-pricing model to compute the fair value of the derivative and to mark to market the fair value of the derivative at each balance sheet date. The following are the data and assumptions used as of the balance sheet dates:
| December 31, 2020 | ||||
| Common stock price | 0.0002 | |||
| Expected volatility | 227.88 | % | ||
| Expected term | 3.43 years | |||
| Risk free rate | 0.19 | % | ||
| Expected dividend yield | 0 | % | ||
| December 31, 2019 | ||||
| Common stock price | 0.0061 | |||
| Expected volatility | 32.55 | % | ||
| Expected term | 4.43 years | |||
| Risk free rate | 1.61 | % | ||
| Expected dividend yield | 0 | % | ||
| B. | On September 3, 2020, Samsara Luggage, Inc. (the “Company”) entered into a second Securities Purchase Agreement (“SPA”) with the “Investor, pursuant to which the Investor will invest an aggregate amount of $220 in two tranches, and the Company will issue convertible debentures and warrants to the Investor. The first tranche of the convertible debentures in the amount of $150 was provided upon execution of the SPA. The second tranche in the amount of $70 was provided on October 7,2020. Each tranche of the loan bears interest at an annual rate of ten percent (10%). Each tranche of the investment bears interest at an annual rate of ten percent (10%) and will be repayable after two years. Each tranche of the investment will be convertible at any time into shares of the Company’s Common Stock at a conversion price equal to the lower of (a) $0.003 per share, or (b) 80% of the lowest the daily dollar volume-weighted average price for the Company’s Common Stock during the 10 trading days immediately preceding the conversion date. As part of the transaction, the Company will issue to the Investor warrants to purchase an aggregate of 2,619 shares of Common Stock, at an exercise price equal to $0.003. The term of each warrant is five years from the issue date. Each warrant may be exercised by cash payment or through cashless exercise by the surrender of warrant shares having a value equal to the exercise price of the portion of the warrant being exercised. The Company has undertaken to increase its authorized shares of Common Stock to at least 7,000,000,000 within 90 days of the closing. The SPA and the convertible debentures contain events of default, including, among other things, failure to repay the convertible debentures by the maturity date, and bankruptcy and insolvency events, that could result in the acceleration of the Investor’s right to convert the convertible debentures into shares of common stock. |
In accordance with ASC 815-15-25 the conversion feature was considered embedded derivative instruments, and is to be recorded at their fair value as its fair value can be separated from the convertible loan and its conversion is independent of the underlying note value. The Company recorded finance expenses in respect of the convertible component in the convertible loan in the excess amount of the convertible component fair value over the face loan amount. The conversion liability is then marked to market each reporting period with the resulting gains or losses shown in the statements of operations.
The fair value of the convertible component was estimated by third party appraiser using the Monte Carlo Simulation Model to compute the fair value of the derivative and to mark to market the fair value of the derivative at each balance sheet date.
SAMSARA LUGGAGE, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 3 – CONVERTIBLE NOTES (cont.)
The following are the data and assumptions used as of September 3, 2020:
| September 3, 2020 | ||||
| Common stock price | 0.0011 | |||
| Expected volatility | 177.1 | % | ||
| Expected term | 2.00 | |||
| Risk free rate | 0.12 | % | ||
| Forfeiture rate | 0 | % | ||
| Expected dividend yield | 0 | % | ||
The following are the data and assumptions used as of the balance sheet date:
| December 31, 2020 | ||||
| Common stock price | 0.002 | |||
| Expected volatility | 227.38 | % | ||
| Expected term | 1.67 | |||
| Risk free rate | 0.12 | % | ||
| Forfeiture rate | 0 | % | ||
| Expected dividend yield | 0 | % | ||
In addition, the Company issued to the Investor a warrant to purchase 2,619 shares of common stock, at an exercise price equal to $0.003. The warrants may be exercised within 5 years from the issuance date by cash payment or through cashless exercise by the surrender of warrants shares having a value equal to the exercise price of the portion of the warrant being exercised.
The Company considered the provisions of ASC 815-40, “Derivatives and Hedging: Contracts in Entity’s Own Equity”, with respect to the detachable Warrants that were issued to the Convertible loan, and determined that as a result of the “cashless exercise” and variable exercise price that would adjust the number of Warrants and the exercise price of the Warrants based on the price at which the Company subsequently issues shares or other equity-linked financial instruments, such Warrants cannot be considered as indexed to the Company’s own stock. Accordingly, the Warrants were recognized as derivative liability at their fair value on initial recognition. In subsequent periods, the Warrants were marked to market with the changes in fair value recognized as financing expense or income in the consolidated statement of operations.
The warrants were estimated by third party appraiser using the Black-Scholes option-pricing model to compute the fair value of the derivative and to mark to market the fair value of the derivative at each balance sheet date.
SAMSARA LUGGAGE, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 3 – CONVERTIBLE NOTES (cont.)
The following are the data and assumptions used as of September 3, 2020:
| September, 2020 | ||||
| Common stock price | 0.0011 | |||
| Expected volatility | 177.10 | % | ||
| Expected term | 5.00 | |||
| Risk free rate | 0.24 | % | ||
| Expected dividend yield | 0 | % | ||
The following are the data and assumptions used as of the balance sheet date:
| December 31, 2020 | ||||
| Common stock price | 0.002 | |||
| Expected volatility | 227.88 | % | ||
| Expected term | 4.68 | |||
| Risk free rate | 0.19 | % | ||
| Expected dividend yield | 0 | % | ||
| C. | On June 26, 2020, the Company entered into a Securities Purchase Agreement (“SPA”) with Power Up Lending Group Ltd. (the “Investor”), pursuant to which the Investor agreed to provide the Company with an initial investment in the form of a convertible loan in the principal amount of $67 (the “Initial Investment”). The SPA contemplates additional financing of up to $925 in the aggregate, subject to the agreement of both parties. The funds are expected to be used to finance the Company’s working capital needs. |
The convertible loan will bear interest at an annual rate of eight percent (8%) with a maturity date of June 25, 2021 (the “Maturity Date”). The loan will be convertible after six months into shares of the Company’s common stock at a conversion price equal to seventy-five percent (75%) of the average of the lowest trading price for the Company’s common stock during the twenty (20) trading day period prior to the conversion date. The Company agreed to an original issue discount of $9 and to reimburse the Investor for its costs in the amount of $3. Accordingly, the net proceeds to the Company from the Initial Investment amounted to $55.
The SPA and the convertible note contain events of default, including, among other things, failure to repay the loan amount by the Maturity Date, and bankruptcy and insolvency events, that could result in the acceleration of the Investor’s right to convert the loan amount into shares of common stock.
On December 28, 2020 and pursuant to the SPA, Power- Up exercised its option to convert the second Convertible Promissory Note principal in the amount of $38,100 into 36,286 shares of Common Stock of the Company.
On December 31, 2020 and pursuant to the SPA, Power- Up exercised its option to convert the second Convertible Promissory Note principal in the amount of $23,100 into 22,000 shares of Common Stock of the Company.
SAMSARA LUGGAGE, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 3 – CONVERTIBLE NOTES (cont.)
The fair value of the convertible component was estimated by third party appraiser using the Monte Carlo Simulation Model to compute the fair value of the derivative and to mark to market the fair value of the derivative at each balance sheet date. The following are the data and assumptions used as of the balance sheet date:
| December 30, 2020 | ||||
| Common stock price | 0.002 | |||
| Expected volatility | 274.38 | % | ||
| Expected term | 0.48 | |||
| Risk free rate | 0.09 | % | ||
| Forfeiture rate | 0 | % | ||
| Expected dividend yield | 0 | % | ||
The following table presents the changes in fair value of the level 3 liabilities for the year ended December 31, 2019 and as of December 31, 2020:
| Warrants | Convertible component | |||||||
| (U.S. dollars in thousands) | ||||||||
| Outstanding at December 31, 2019 | 319 | 1,053 | ||||||
| Fair value converted | (20 | ) | (151 | ) | ||||
| Fair value of issued level 3 liability | 8 | 127 | ||||||
| Changes in fair value | (287 | ) | (536 | ) | ||||
| Outstanding at December 31, 2020 | 20 | 493 | ||||||
| D. | On August 22, 2018 the Company (through a related company) entered into a Secured Loan and Service Agreement with an affiliated entity of Moshe Zuk (hereunder “Zuk”) for the finance of the ongoing working capital of the Company, according to which Zuk granted the Company a loan in the amount of $200,000. The loan bears a monthly interest at a rate of 2% paid quarterly and calculated daily. The loan was guaranteed by the Company and by one of its shareholders. |
In addition, Zuk granted the Company a credit line of up to $300,000 per year. The credit line shall bear a monthly interest of 1.5% of the utilized credit line. As of the date of this financial statements, the Company has not utilized such line of credit.
In addition, the Company issued Zuk 395,500 shares of common stock of the Company representing 7% of the issued and outstanding shares of the Company on a fully diluted basis, and warrants to purchase 169,500 shares of common stock of the Company representing 3% of the issued and outstanding shares of the Company on a fully diluted basis, against payment of $50,000. The Company estimated the fair value of such shares and warrants at a total of $334,000 of which $215,000 and $119,000 were recorded for interest expenses for the years ended December 31, 2019 and 2018, respectively.
On December 31, 2018, the balance of the Zuk loan, net of the unamortized portion of the Zuk shares and options, amounted to $7,000 and was presented in Other Current Assets.
| E. | On March 24, 2019, the Company entered into a Convertible Loan Agreement with Moshe Zuk (the “Lender”). Under the agreement, the Lender provided the Company with a loan in the amount of fifty thousand dollars ($50,000). The Company undertook to repay the loan principal, plus annual interest of 12%, within one year. The Lender may convert the loan plus interest into shares of the Company’s common stock at a price per share based on the lower of (a) a discount of twenty percent (20%) to the valuation of the Company at the Company’s first financing round, or (b) a one million-dollar ($1,000,000) valuation. |
SAMSARA LUGGAGE, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 4 – STOCKHOLDERS’ EQUITY
Common Stock
On November 12, 2019, the Company completed its merger with the Samsara Delaware in accordance with the terms of the Merger Agreement and Plan of Merger, dated as of May 10, 2019 by and among the Company, Samsara Delaware, and Avraham Bengio, pursuant to which Samsara Delaware merged with and into the Company, with the Company being the surviving corporation (the “Merger”). Following the completion of the Merger, the Company filed (1) Articles of Merger with the Secretary of State of the State of Nevada in which the Company amended its Articles of Incorporation to change the Company’s name to “Samsara Luggage, Inc.” effective as of November 12, 2019; and (2) a Certificate of Amendment with the Secretary of State of the State of Nevada in which the Company increased the number of authorized shares of common stock of the Company from 2,000,000,000 shares of common stock to 5,000,000,000 shares of common stock effective as of November 12, 2019.
On October 5, 2020 the Board of Directors of the Company has approved, and the holders of a majority of the outstanding shares of our common stock, par value $0.0001 per share (the “Common Stock”), have executed a written consent in lieu of a special meeting approving to amend the Company’s Articles of Incorporation to increase the number of authorized shares of common stock from 5,000,000,000 to 7,500,000,000 (the “Authorized Capital Increase”).
Common Stock Activity During the Years Ended December 31, 2020
At the effective time of the Merger, each share of common stock of Samsara, $0.0001 par value, was converted into the right to receive 0.065 shares of the Company’s common stock, such that the shareholders of Samsara Delaware were issued new shares of the Company representing approximately 80% of the issued and outstanding shares of the Company’s common stock following the completion of the Merger. The exchange rate was determined through arms’-length negotiations between the Company and Samsara Delaware. Immediately after the Merger, assuming the issuance of all of the merger consideration, there were approximately3,236,851,080 shares of Common Stock outstanding, of which (i) the former stockholders of Samsara Delaware owned 2,589,506,080 shares, representing approximately 80% of the outstanding shares of Common Stock; and (ii) the Company’s stockholders immediately prior to the Merger own 92,478 shares, representing approximately 20% of the outstanding shares of Common Stock.
On November 12, 2019, the Company issued 32,738 shares of its Common Stock in gross consideration of $500,000 pursuant to a serios securities purchase agreements from April 2019.
On December 9, 2019, and pursuant to the YAII Convertible Promissory Note, YAII exercised its option to convert the first Convertible Promissory Note in the amount of $210,000 into 9,988 shares of Common Stock of the Company.
On July 23, 2020 and pursuant to the SPA, YAII exercised its option to convert the second Convertible Promissory Note principal amount and unpaid interest of $72,000 and the accrued interest into 12,979 shares of Common Stock of the Company.
On August 5, 2020 and pursuant to the SPA, YAII exercised its option to convert the second Convertible Promissory Note principal amount of $75,000 into 21,644 shares of Common Stock of the Company.
On August 13, 2020 and pursuant to the SPA, YAII exercised its option to convert the second Convertible Promissory Note principal amount of $75,000 into 21,552 shares of Common Stock of the Company.
On October 12, 2020 and pursuant to the SPA, YAII exercised its option to convert the second Convertible Promissory Note principal in the amount of $50,000 and the accrued interest in the amount of $1,671 into 18,454 shares of Common Stock of the Company.
SAMSARA LUGGAGE, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 4 – STOCKHOLDERS’ EQUITY (cont.)
On November 2, 2020 and pursuant to the SPA, YAII exercised its option to convert the second Convertible Promissory Note principal in the amount of $50,000 and the accrued interest in the amount of $288 into 23,947 shares of Common Stock of the Company.
On November 13, 2020 and pursuant to the SPA, YAII exercised its option to convert the second Convertible Promissory Note principal in the amount of $200,000 and the accrued interest in the amount of $23,000 into 28,572 shares of Common Stock of the Company.
On November 16, 2020 and pursuant to the SPA, YAII exercised its option to convert the second Convertible Promissory Note principal in the amount of $10,000 and the accrued interest in the amount of $30,323 into 28,802 shares of Common Stock of the Company.
On November 19, 2020 and pursuant to the SPA, YAII exercised its option to convert the second Convertible Promissory Note principal in the amount of $45,000 and the accrued interest in the amount of $159 into 32,256 shares of Common Stock of the Company.
On December 17, 2020 and pursuant to the SPA, YAII exercised its option to convert the second Convertible Promissory Note principal in the amount of $45,000 and the accrued interest in the amount of $4,104 into 35,074 shares of Common Stock of the Company
On December 28, 2020 and pursuant to the SPA, Power- Up exercised its option to convert the second Convertible Promissory Note principal in the amount of $38,100 into 36,286 shares of Common Stock of the Company.
On December 31, 2020 and pursuant to the SPA, Power- Up exercised its option to convert the second Convertible Promissory Note principal in the amount of $23,100 into 22,000 shares of Common Stock of the Company.
NOTE 5 – GENERAL AND ADMINISTRATIVE EXPENSES
| Year ended December 31, | Year ended December 31, | |||||||
| 2020 | 2019 | |||||||
| (U.S. dollars in thousands) | ||||||||
| Professional fees | 193 | 359 | ||||||
| Share based compensation | 687 | 883 | ||||||
| Management fees | 100 | 100 | ||||||
| Other expenses | 106 | 83 | ||||||
| 1,086 | 1,425 | |||||||
SAMSARA LUGGAGE, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 6 – INCOME TAXES
On December 22, 2017, the U.S. enacted new tax reform legislation which reduced the corporate tax rate to 21% effective for tax year beginning January 1, 2018. Under ASC 740, the effects of new tax legislation are recognized in the period which includes the enactment date. As a result, the deferred tax assets and liabilities existing on the enactment date must be revalued to reflect the rate at which these deferred balances will reverse. The corresponding adjustment would generally affect the Income Tax Expense (Benefit) shown on the financial statements. However, since the company has a full valuation allowance applied against all of its deferred tax asset, there is no impact to the Income Tax Expense for the year ending December 31, 2020.
IRC Section 382 potentially limits the utilization of NOLs and tax credits when there is a greater than 50% change of ownership. The Company has not performed an analysis under IRC 382 related to changes in ownership, which could place certain limits on the company’s ability to fully utilize its NOLs and tax credits. The Company’s has added a note to its financial statements to disclose that there may be some limitations and that an analysis has not been performed. In the interim, the Company has placed a full valuation allowance on its NOLs and other deferred tax items.
We recognized income tax benefits of $0 during the years ended December 31, 2020 and 2019. When it is more likely than not that a tax asset will not be realized through future income the Company must allow for this future tax benefit. We provided a full valuation allowance on the net deferred tax asset, consisting of net operating loss carry forwards, because management has determined that it is more likely than not that we will not earn income sufficient to realize the deferred tax assets during the carry forward period. Effective December 22, 2017 a new tax bill was signed into law that reduced the federal income tax rate for corporations from 35% to 21%.
The Company has not taken a tax position that, if challenged, would have a material effect on the financial statements for the years ended December 2020 or 2019 applicable under FASB ASC 740. We did not recognize any adjustment to the liability for uncertain tax position and therefore did not record any adjustment to the beginning balance of accumulated deficit on the balance sheet. All tax returns for the Company remain open.
Reconciliation between the theoretical tax expense, assuming all income is taxed at the statutory tax rate applicable to income of the Company and the actual tax expense as reported in the Statement of Operations, is as follows:
| Year ended December 31, | ||||||||
| 2020 | 2019 | |||||||
| (U.S. dollars in thousands) | ||||||||
| Loss before taxes, as reported in the statements of operations | $ | 1,140 | $ | 3,142 | ||||
| Federal and State statutory rate | 21 | % | 21 | % | ||||
| Theoretical tax benefit on the above amount at federal statutory tax rate | 239 | 660 | ||||||
| Share-based compensation | (144 | ) | (247 | ) | ||||
| Losses and other items for which a valuation allowance Was provided or benefit from loss carry forward | (95 | ) | (413 | ) | ||||
| Actual tax income (expense) | - | - | ||||||
| 2020 | 2019 | |||||||
| U.S. dollars in thousands | ||||||||
| Deferred tax assets: | ||||||||
| Net operating loss carry-forward | $ | 651 | $ | 499 | ||||
| Valuation allowance | (651 | ) | (499 | ) | ||||
| $ | $ | - | ||||||
SAMSARA LUGGAGE, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 6 – INCOME TAXES (cont.)
A valuation allowance is provided when it is more likely than not that some portion of the deferred tax asset will not be realized. Management has determined, based on its recurring net losses, lack of a commercially viable product and limitations under current tax rules, that a full valuation allowance is appropriate.
| U.S. dollars in thousands | ||||
| Valuation allowance, December 31, 2019 | $ | 499 | ||
| Increase | 152 | |||
| Valuation allowance, December 31, 2020 | $ | 651 | ||
The net federal operating loss carry forward will begin expire in 2039. This carry forward may be limited upon the consummation of a business combination under IRC Section 382.
NOTE 7 – RELATED PARTY TRANSACTIONS
Related Parties Payable
| December 31, 2020 | December 31, 2019 | |||||||
| (U.S. dollars in thousands) | ||||||||
| Related Parties Payable due to management fee | 126 | 105 | ||||||
General and Administrative Expenses
| For the Year Ended December 31, | ||||||||
| 2020 | 2019 | |||||||
| (U.S. dollars in thousands) | ||||||||
| Management Fee | 100 | 100 | ||||||
NOTE 8 – SUBSEQUENT EVENTS
On January 11, 2021 and pursuant to the SPA, Power-up exercised its option to convert the Convertible Promissory Note principal in the amount of $6 and the accrued interest in the amount of $2 into 7,448 shares of Common Stock of the Company.
SAMSARA LUGGAGE, INC.
INDEX TO FINANCIAL STATEMENTS
SAMSARA LUGGAGE, INC.
CONDENSED BALANCE SHEETS
(U.S. dollars in thousands except share and per share data)
| March 31, 2021 | December 31, 2020 | |||||||
| Unaudited | Audited | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | 8 | 54 | ||||||
| Accounts Receivables | 4 | 4 | ||||||
| Inventory | 135 | 153 | ||||||
| Other current assets | - | |||||||
| Total current assets | 147 | 211 | ||||||
| Property and Equipment, net | 4 | 4 | ||||||
| Total assets | 151 | 215 | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Trade payable | 143 | 125 | ||||||
| Accrued Expense | 95 | 74 | ||||||
| Related party payables | 151 | 126 | ||||||
| Convertible notes and short-term loans (Note 3) | 326 | 289 | ||||||
| Fair Value of convertible component in convertible loan, net of discounts and debt issue costs (Note 3) | 484 | 493 | ||||||
| Fair value of warrants issued in convertible loan (Note 3) | 32 | 20 | ||||||
| Total current liabilities | 1,231 | 1,127 | ||||||
| TOTAL LIABILITIES | 1,231 | 1,127 | ||||||
| STOCKHOLDERS’ DEFICIT | ||||||||
| Common stock subscribed | ||||||||
| Common stock, authorized 7,500,000,000 shares, $0.0001 par value; 859,395 issued and outstanding as of March 31, 2021 and 786,700 issued and outstanding as of December 31, 2020. | 86 | 78 | ||||||
| Additional paid in capital | 6,685 | 6,385 | ||||||
| Services receivable | (840 | ) | (999 | ) | ||||
| Accumulated deficit | (7,011 | ) | (6,376 | ) | ||||
| Total stockholders’ deficit | (1,080 | ) | (912 | ) | ||||
| Total liabilities and stockholders’ deficit | 151 | 215 | ||||||
The accompanying notes are an integral part of these unaudited condensed financial statements
SAMSARA LUGGAGE, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(U.S. dollars in thousands except share and per share data)
| Three Months Ended March 31, | ||||||||
| 2021 | 2020 | |||||||
| Revenues from sales of products | 75 | 21 | ||||||
| Cost of sales of products | 37 | (14 | ) | |||||
| GROSS PROFIT | 38 | 7 | ||||||
| OPERATING EXPENSES | ||||||||
| Research and development expenses | - | 35 | ||||||
| Selling and marketing expenses | 61 | 82 | ||||||
| General and administrative | 265 | 247 | ||||||
| TOTAL OPERATING EXPENSES | 326 | 364 | ||||||
| OPERATING LOSS | (288 | ) | (357 | ) | ||||
| FINANCING INCOME (EXPENSES) | ||||||||
| Interest and amortization of issuance cost on note and short-term loan | (28 | ) | (33 | ) | ||||
| Income (expenses) in respect of warrants issued and convertible component in convertible loan, net interest expenses | (319 | ) | 552 | |||||
| TOTAL FINANCING INCOME (EXPENSES) | (347 | ) | 519 | |||||
| NET INCOME (LOSS) | (635 | ) | 162 | |||||
| Net loss per basic and diluted share | (0.76 | ) | 0.32 | |||||
| Weighted average number of basic and diluted common shares outstanding | 841,003 | 505,134 | ||||||
The accompanying notes are an integral part of these unaudited condensed financial statements
SAMSARA LUGGAGE, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(U.S. dollars in thousands)
| Three Months Ended March 31, | ||||||||
| 2021 | 2020 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net Income (loss) | (635 | ) | 162 | |||||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
| Amortization of services receivable | 159 | 161 | ||||||
| Interest on convertible note and short-term loan and amortization of issuance cost | 30 | 33 | ||||||
| Expenses in respect of warrants issued and convertible component in convertible loan, net interest expenses | 319 | (552 | ) | |||||
| Depreciation and amortization expense | - | 1 | ||||||
| Changes in Operating Assets and Liabilities: | ||||||||
| Inventory | 18 | (22 | ) | |||||
| Other current assets | - | 7 | ||||||
| Related parties, net | 25 | - | ||||||
| Accounts payable | 38 | - | ||||||
| Other Accounts payable | - | (15 | ) | |||||
| Net Cash Used by Operating Activities | (46 | ) | (120 | ) | ||||
| Cash Flows from Financing Activities: | ||||||||
| Proceeds from loans payable | - | 50 | ||||||
| Net Cash Provided by Financing Activities | - | 50 | ||||||
| Net Decrease in Cash | (46 | ) | (70 | ) | ||||
| Cash at Beginning of Period | 54 | 129 | ||||||
| Cash at End of Period | 8 | 59 | ||||||
| Supplemental disclosure of non-cash financing activities | ||||||||
| Cash paid for interest | - | - | ||||||
| Common stock issued for conversion of convertible note and accrued interest | 121 | - | ||||||
| Common stock issued against accounts payables | 20 | - | ||||||
The accompanying notes are an integral part of these unaudited condensed financial statements
SAMSARA LUGGAGE, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Amounts in U.S. dollar thousands, except share and per share data)
NOTE 1 – GENERAL
| A. | Samsara Luggage, Inc. (the “Company”) |
The Company was incorporated on May 7, 2007 under the name, “Darkstar Ventures, Inc.” under the laws of the State of Nevada. The Company is a global smart luggage and smart travel brand. Samsara Luggage unveiled its Next Generation smart carry-on at the 2020 Consumer Electronics Show (CES). The Next Generation is the first to market a Wi-Fi Hotspot technology for travelers to access a secured network globally. Samsara Luggage also launched Essentials by Samsara, a safety kit providing commuters with a new layer of safety with protective items like facemasks, hand sanitizer, disposable gloves and alcohol wipes. These kits are sold individually and gifted to customers with purchase of the Carry-on Aluminum suitcase or Smart Weekender bag. During the last quarter of 2020, Samsara launched Sarah & Sam Fashion and Lifestyle Collection. Sarah& Sam is a part of Samsara Direct business model prompted by the travel limitations due to the coronavirus pandemic, leveraging the company’s established digital assets and manufacturing and fulfillment supply chain capabilities to offer additional consumer products that respond to the changing needs of the market.
| B. | Merger Transaction |
On November 12, 2019, the Company completed its merger with the Delaware corporation that was previously known as “Samsara Luggage, Inc.” (“Samsara Delaware”) in accordance with the terms of the Merger Agreement and Plan of Merger, dated as of May 10, 2019, (the “Merger Agreement”) by and among the Company, Samsara Delaware, and Avraham Bengio, pursuant to which Samsara Delaware merged with and into the Company, with the Company being the surviving corporation (the “Merger”). Following the completion of the Merger, the business of the Company going forward became the business of Samsara Delaware prior to the Merger, namely, designing, manufacturing, and selling high quality luggage products to meet the evolving needs of frequent travelers and also seeking to present new technologies within the aluminum luggage industry, including an aluminum “smart” suitcase.
The Common Stock listed on the OTC Pink Marketplace, previously trading through the close of business on November 11, 2019 under the ticker symbol “DAVC,” commenced trading on the OTC Pink Marketplace under the ticker symbol “SAML” on November 12, 2019. The Common Stock has a new CUSIP number, 79589J101. On August 24, 2021, the Company’s Common Stock began listing on the OTCQB.
On October 5, 2020 the Board of Directors of the Company has approved, and the holders of a majority of the outstanding shares of our common stock, par value $0.0001 per share (the “Common Stock”), have executed a written consent in lieu of a special meeting approving to amend the Company’s Articles of Incorporation to increase the number of authorized shares of common stock from 5,000,000,000 to 7,500,000,000 (the “Authorized Capital Increase”).
| C. | GOING CONCERN |
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As of March 31, 2021, the Company had approximately $8 in cash and cash equivalents, approximately $1,084 in deficit of working capital, a stockholders’ deficiency of approximately $1,080 and an accumulated deficit of approximately $7,011. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Company’s ability to continue as a going concern is dependent upon raising capital from financing transactions and revenue from operations. Management anticipates their business will require substantial additional investments that have not yet been secured. Management is continuing in the process of fund raising in the private equity and capital markets as the Company will need to finance future activities. These financial statements do not include any adjustments that may be necessary should the Company be unable to continue as a going concern.
| D. | REVERSE SPLIT |
On March 22, 2021, the Company completed a reverse stock split of its common stock. As a result of the reverse stock split, the following changes have occurred (i) every seven thousand shares of common stock have been combined into one share of common stock; (ii) the number of shares of common stock underlying each common stock option or common stock warrant have been proportionately decreased on a 7,000-for-1 basis, and the exercise price of each such outstanding stock option and common warrant has been proportionately increased on a 7,000 -for-1 basis. Accordingly, all option numbers, share numbers, warrant numbers, share prices, warrant prices, exercise prices and losses per share have been adjusted within these consolidated financial statements, on a retroactive basis, to reflect this 7,000 -for-1 reverse stock split.
SAMSARA LUGGAGE, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Amounts in U.S. dollar thousands, except share and per share data)
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION
Unaudited Interim Financial Statements
The accompanying unaudited financial statements include the accounts of the Company, prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and with the instructions to Form 10-Q and Article 10 of U.S. Securities and Exchange Commission Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the financial statements presented herein have not been audited by an independent registered public accounting firm but include all material adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of the financial condition, results of operations and cash flows for the for three-months ended March 31, 2021. However, these results are not necessarily indicative of results for any other interim period or for the year ended December 31, 2021. The preparation of financial statements in conformity with GAAP requires the Company to make certain estimates and assumptions for the reporting periods covered by the financial statements. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses. Actual amounts could differ from these estimates.
Certain information and footnote disclosures normally included in financial statements in accordance with generally accepted accounting principles have been omitted pursuant to the rules of the U.S. Securities and Exchange Commission (“SEC”). The accompanying unaudited condensed financial statements should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed with the SEC on March 30, 2021 (the “Annual Report”). For further information, reference is made to the financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
Use of Estimates
The preparation of unaudited condensed financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosurescertain revenues and expenses, and disclosure of contingent assets and liabilities atas of the date of the financial statements, and the reported amount of revenues and expenses during the reported period.statements. Actual results could differ from those estimates.
Derivative and Fair Value Measurements
Fair value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity instruments and measurement of their fair value measurementsfor accounting purposes. In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt under ASC 470, the Company will continue its evaluation process of these instruments as derivative financial instruments under ASC 815.
Once determined, derivative liabilities are adjusted to reflect fair value at each reporting period end, with any increase or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives.
Fair value of certain of the Company’s financial instruments including cash, accounts receivable, accounts payable, accrued expenses, notes payables, and other accrued liabilities approximate cost because of their short maturities. The Company measures and reports fair value in accordance with ASC 820, “Fair Value Measurements and Disclosure” defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value measurements.
SAMSARA LUGGAGE, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Amounts in U.S. dollar thousands, except share and per share data)
Fair value, as defined in ASC 820, is the exchange price that would be received forto sell an asset or paid to transfer a liability (an exit price) in the principal or the most advantageous market for the asset or liability in an orderly transaction between market participants onat the measurement date. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact, and (iv) willing to transact. The guidance describes a fair value hierarchy based onof an asset should reflect its highest and best use by market participants, principal (or most advantageous) markets, and an in-use or an in-exchange valuation premise. The fair value of a liability should reflect the levelsrisk of inputs, ornonperformance, which includes, among other things, the first twoCompany’s credit risk.
Valuation techniques are considered observablegenerally classified into three categories: the market approach; the income approach; and the last unobservable, thatcost approach. The selection and application of one or more of the techniques may berequire significant judgment and are primarily dependent upon the characteristics of the asset or liability, and the quality and availability of inputs. Valuation techniques used to measure fair value which areunder ASC 820 must maximize the following:
Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities.
Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quotedQuoted prices for similar assets or liabilities;liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active,active; inputs other than quoted prices that are observable for the asset or otherliability; and inputs that are observablederived principally from or corroborated by observable market data orfor substantially the full term of the assets or liabilities.liabilities; and
Level 3: Unobservable inputs for the asset or liability that are supported by little or no market activity, and that are significant to the fair values.
Fair value measurements are required to be disclosed by the Level within the fair value hierarchy in which the fair value measurements in their entirety fall. Fair value measurements using significant unobservable inputs (in Level 3 measurements) are subject to expanded disclosure requirements including a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (i) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings, and a description of where those gains or losses included in earning are reported in the statement of income.
The Company’s financial assets and liabilities that are measured at fair value on a recurring basis by level within the fair value hierarchy are as follows:
| Balance as of March 31, 2021 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| (U.S. dollars in thousands) | ||||||||||||||||
| Liabilities: | ||||||||||||||||
| Fair Value of convertible component in convertible loan, net of discounts and debt issue costs | - | - | 484 | 484 | ||||||||||||
| Fair value of warrants issued in convertible loan | - | - | 32 | 32 | ||||||||||||
| Total liabilities | - | - | 516 | 516 | ||||||||||||
| Balance as of December 31, 2020 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| (U.S. dollars in thousands) | ||||||||||||||||
| Liabilities: | ||||||||||||||||
| Fair Value of convertible component in convertible loan, net of discounts and debt issue costs | - | - | 493 | 493 | ||||||||||||
| Fair value of warrants issued in convertible loan | - | - | 20 | 20 | ||||||||||||
| Total liabilities | - | - | 513 | 513 | ||||||||||||
SAMSARA LUGGAGE, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Amounts in U.S. dollar thousands, except share and per share data)
Recently Issued Accounting Standards
In June 2016, the FASB issued an ASU that supersedes the existing impairment model for most financial assets to a current expected credit loss model. The new guidance requires an entity to recognize an impairment allowance equal to its current estimate of all contractual cash flows the entity does not expect to collect. The Company adopted this guidance effective January 1, 2020, with no material impact on its consolidated financial statements
In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments. This guidance replaces the current incurred loss impairment methodology. Under the new guidance, on initial recognition and at each reporting period, an entity is required to recognize an allowance that reflects its current estimate of credit losses expected to be incurred over the life of the financial instrument based on historical experience, current conditions and reasonable and supportable forecasts.
The guidance became effective on January 1, 2020, including interim periods within that year and requires a modified retrospective transition approach through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. Under the modified retrospective method of adoption, prior year reported results are not restated. The Company has performed its analysis of the impact on its financial instruments that are within the scope of this guidance and has concluded that there was no material impact to its consolidated financial statements.
In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure
Framework — Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU No. 2018-13”) as part of the FASB’s broader disclosure framework project. ASU No. 2018-13 removes, modifies and adds certain disclosures, providing greater focus on requirements that clearly communicate the most important information to the users of the financial statements with respect to fair value measurements. The adoption of ASU No. 2018-13 as of January 1, 2020 did not have a material impact on the Company’s consolidated financial statements.
Recently Issued Accounting Pronouncements Not Yet Adopted
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this ASU simplify the accounting for income taxes, eliminates certain exceptions to the general principles in Topic 740 and clarifies certain aspects of the current guidance to improve consistent application among reporting entities. ASU 2019-12 is effective for fiscal years beginning after December 15, 2021 and interim periods within annual periods beginning after December 15, 2022, though early adoption is permitted, including adoption in any interim period for which financial statements have not yet been issued. This standard is not expected to have a material impact to the Company’s consolidated financial statements after evaluation.
In August 2020, the FASB issued ASU No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging Contracts in Entity s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity s Own Equity. ASU 2020-06 will simplify the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock. Limiting the accounting models results in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. ASU 2020-06 also amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. ASU 2020-06 will be effective for public companies for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company is currently evaluating the impact that the adoption of ASU 2020-06 will have on the Company’s consolidated financial statement presentation or disclosures.
Other new pronouncements issued but not effective as of March 31, 2021 are not expected to have a material impact on the Company’s consolidated financial statements.
SAMSARA LUGGAGE, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Amounts in U.S. dollar thousands, except share and per share data)
NOTE 3 – CONVERTIBLE NOTES
| A. | On June 5, 2019, the Company entered into a Securities Purchase Agreement (“SPA”) with YAII PN, Ltd. (the “Investor”), pursuant to which the Investor agreed to provide the Company with a convertible loan in the aggregate amount of $1,100,000 in three tranches, and the Company agreed to issue convertible debentures and a warrant to the Investor. |
The first tranche of the convertible debentures in the amount of $200,000 was provided upon execution of the SPA. The second tranche in the amount of $300,000 was provided on October 23, 2019 upon the Company filing of a Registration Statement on Form S-4 in connection with the Merger with Samsara Delaware. The third tranche in the amount of $600,000 was provided on November 18, 2019 upon consummation of the Merger with Samsara Delaware and the fulfillment of all conditions required for the Merger. The Company incurred issuance cost of $100,000 with connection to those convertible debentures.
Each tranche of the loan will bear interest at an annual rate of ten percent (10%). The principal amount together with the accrued and unpaid interest will be repayable after two years. Each tranche of the loan together with the accrued and unpaid interest (or any portion at the discretion of the Investor) will be convertible at any time six months following the issuance date, into shares of Company’s common stock at a conversion price equal to the lower of $0.003 per share or 80% of the lowest volume-weighted average price (VWAP) of Company’s share during the period of 10 days preceding the conversion date.
On December 9, 2019 and pursuant to the SPA, YAII exercised its option to convert the first Convertible Promissory Note principal amount of $200,000 and the accrued interest into 9,988 shares of Common Stock of the Company.
On July 24, 2020 and pursuant to the SPA, YAII exercised its option to convert the second Convertible Promissory Note principal amount of $50,000 and the accrued interest in the amount of $22,684 into 12,979 shares of Common Stock of the Company.
On August 5, 2020 and pursuant to the SPA, YAII exercised its option to convert the second Convertible Promissory Note principal amount of $75,000 and the accrued interest in the amount of $753 into 21,644 shares of Common Stock of the Company.
On August 13, 2020 and pursuant to the SPA, YAII exercised its option to convert the second Convertible Promissory Note principal amount of $75,000 and the accrued interest in the amount of $481 into 21,522 shares of Common Stock of the Company.
On October 12, 2020 and pursuant to the SPA, YAII exercised its option to convert the second Convertible Promissory Note principal in the amount of $50,000 and the accrued interest in the amount of $1,671 into 18,454 shares of Common Stock of the Company.
On November 2, 2020 and pursuant to the SPA, YAII exercised its option to convert the second Convertible Promissory Note principal in the amount of $50,000 and the accrued interest in the amount of $288 into 23,947 shares of Common Stock of the Company.
On November 16, 2020 and pursuant to the SPA, YAII exercised its option to convert the second Convertible Promissory Note principal in the amount of $10,000 and the accrued interest in the amount of $30,323 into 28,802 shares of Common Stock of the Company.
On November 19, 2020 and pursuant to the SPA, YAII exercised its option to convert the second Convertible Promissory Note principal in the amount of $45,000 and the accrued interest in the amount of $159 into 32,256 shares of Common Stock of the Company.
On December 17, 2020 and pursuant to the SPA, YAII exercised its option to convert the second Convertible Promissory Note principal in the amount of $45,000 and the accrued interest in the amount of $4,104 into 35,074 shares of Common Stock of the Company.
On January 14, 2021 and pursuant to the SPA, YAII exercised its option to convert the second Convertible Promissory Note principal in the amount of $50,000 and the accrued interest in the amount of $3,625 into 38,303 shares of Common Stock of the Company.
SAMSARA LUGGAGE, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Amounts in U.S. dollar thousands, except share and per share data)
On February 11, 2021 and pursuant to the SPA, YAII exercised its option to convert the second Convertible Promissory Note principal in the amount of $55,000 and the accrued interest in the amount of $3,496 into 16,713 shares of Common Stock of the Company.
In accordance with ASC 815-15-25 the conversion feature was considered embedded derivative instruments, and is to be recorded at their fair value as its fair value can be separated from the convertible loan and its conversion is independent of the underlying note value. The Company recorded finance expenses in respect of the convertible component in the convertible loan in the excess amount of the convertible component fair value over the face loan amount. The conversion liability is then marked to market each reporting period with the resulting gains or losses shown in the statements of operations.
The fair value of the assets or liabilities.
| March 31, 2021 | ||||
| Common stock price | 2.20 | |||
| Expected volatility | 349.98 | % | ||
| Expected term | 0.18 | |||
| Risk free rate | 0.01 | % | ||
| Forfeiture rate | 0 | % | ||
| Expected dividend yield | 0 | % | ||
| Fair Market Value of Convertible component | $ | 308 | ||
| December 31, 2020 | ||||
| Common stock price | 1.40 | |||
| Expected volatility | 227.88 | % | ||
| Expected term | 0.43 | |||
| Risk free rate | 0.19 | % | ||
| Forfeiture rate | 0 | % | ||
| Expected dividend yield | 0 | % | ||
| Fair Market Value of Convertible component | $ | 330 | ||
In addition, the Company hadissued to the Investor a working capital deficiencywarrant to purchase 13,095 shares of common stock, at an exercise price equal to $21.00. The warrants may be exercised within 5 years from the issuance date by cash payment or through cashless exercise by the surrender of warrants shares having a value equal to the exercise price of the portion of the warrant being exercised.
The Company considered the provisions of ASC 815-40, “Derivatives and stockholders’ deficiencyHedging: Contracts in Entity’s Own Equity”, with respect to the detachable Warrants that were issued to the Convertible loan, and determined that as a result of $27,536the “cashless exercise” and variable exercise price that would adjust the number of Warrants and the exercise price of the Warrants based on the price at July 31, 2012. These factors raise substantial doubt aboutwhich the Company subsequently issues shares or other equity-linked financial instruments, such Warrants cannot be considered as indexed to the Company’s abilityown stock. Accordingly, the Warrants were recognized as derivative liability at their fair value on initial recognition. In subsequent periods, the Warrants were marked to continuemarket with the changes in fair value recognized as financing expense or income in the consolidated statement of operations.
SAMSARA LUGGAGE, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Amounts in U.S. dollar thousands, except share and per share data)
The warrants were estimated by third party appraiser using the Black-Scholes option-pricing model to compute the fair value of the derivative and to mark to market the fair value of the derivative at each balance sheet date. The following are the data and assumptions used as of the balance sheet dates:
| March 31, 2021 | |||
| Common stock price | 2.20 | ||
| Expected volatility | 251.36% | ||
| Expected term | 3.18 years | ||
| Risk free rate | 0.4% | ||
| Expected dividend yield | 0% | ||
| Fair Market Value of Warrants | $27 |
| December 31, 2020 | |||
| Common stock price | 1.40 | ||
| Expected volatility | 227.88% | ||
| Expected term | 3.43 years | ||
| Risk free rate | 0.19% | ||
| Expected dividend yield | 0% | ||
| Fair Market Value of Warrants | $16 |
| B. | On September 3, 2020, Samsara Luggage, Inc. (the “Company”) entered into a second Securities Purchase Agreement (“SPA”) with the “Investor, pursuant to which the Investor will invest an aggregate amount of $220 in two tranches, and the Company will issue convertible debentures and warrants to the Investor. The first tranche of the convertible debentures in the amount of $150 was provided upon execution of the SPA. The second tranche in the amount of $70 was provided on October 7, 2020. Each tranche of the loan bears interest at an annual rate of ten percent (10%). Each tranche of the investment bears interest at an annual rate of ten percent (10%) and will be repayable after two years. Each tranche of the investment will be convertible at any time into shares of the Company’s Common Stock at a conversion price equal to the lower of (a) $0.003 per share, or (b) 80% of the lowest the daily dollar volume-weighted average price for the Company’s Common Stock during the 10 trading days immediately preceding the conversion date. As part of the transaction, the Company will issue to the Investor warrants to purchase an aggregate of 2,619 shares of Common Stock, at an exercise price equal to $0.003. The term of each warrant is five years from the issue date. Each warrant may be exercised by cash payment or through cashless exercise by the surrender of warrant shares having a value equal to the exercise price of the portion of the warrant being exercised. The Company has undertaken to increase its authorized shares of Common Stock to at least 7,000,000,000 within 90 days of the closing. The SPA and the convertible debentures contain events of default, including, among other things, failure to repay the convertible debentures by the maturity date, and bankruptcy and insolvency events, that could result in the acceleration of the Investor’s right to convert the convertible debentures into shares of common stock. |
In accordance with ASC 815-15-25 the conversion feature was considered embedded derivative instruments, and is to be recorded at their fair value as its fair value can be separated from the convertible loan and its conversion is independent of the underlying note value. The Company recorded finance expenses in respect of the convertible component in the convertible loan in the excess amount of the convertible component fair value over the face loan amount. The conversion liability is then marked to market each reporting period with the resulting gains or losses shown in the statements of operations.
The fair value of the convertible component was estimated by third party appraiser using the Monte Carlo Simulation Model to compute the fair value of the derivative and to mark to market the fair value of the derivative at each balance sheet dates:
SAMSARA LUGGAGE, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Amounts in U.S. dollar thousands, except share and per share data)
The following are the data and assumptions used as of the balance sheet date:
| March 31, 2021 | ||||
| Common stock price | 2.20 | |||
| Expected volatility | 251.36 | % | ||
| Expected term | 1.42 | |||
| Risk free rate | 0.12 | % | ||
| Forfeiture rate | 0 | % | ||
| Expected dividend yield | 0 | % | ||
| Fair Market Value of Convertible component | $ | 176 | ||
| December 31, 2020 | ||||
| Common stock price | 1.39 | |||
| Expected volatility | 227.38 | % | ||
| Expected term | 1.67 | |||
| Risk free rate | 0.12 | % | ||
| Forfeiture rate | 0 | % | ||
| Expected dividend yield | 0 | % | ||
| Fair Market Value of Convertible component | $ | 157 | ||
In addition, the Company issued to the Investor a warrant to purchase 2,619 shares of common stock, at an exercise price equal to $21.00. The warrants may be exercised within 5 years from the issuance date by cash payment or through cashless exercise by the surrender of warrants shares having a value equal to the exercise price of the portion of the warrant being exercised.
The Company considered the provisions of ASC 815-40, “Derivatives and Hedging: Contracts in Entity’s Own Equity”, with respect to the detachable Warrants that were issued to the Convertible loan, and determined that as a going concern.
The warrants were estimated by third party appraiser using the Black-Scholes option-pricing model to compute the fair value of the derivative and to mark to market the fair value of the derivative at each balance sheet dates:
The following are the data and assumptions used as of the balance sheet dates:
| March 31, 2021 | ||||
| Common stock price | 2.20 | |||
| Expected volatility | 251.36 | % | ||
| Expected term | 4.43 | |||
| Risk free rate | 0.19 | % | ||
| Expected dividend yield | 0 | % | ||
| Fair Market Value of Warrants | $ | 5 | ||
| December 31, 2020 | ||||
| Common stock price | 1.39 | |||
| Expected volatility | 227.88 | % | ||
| Expected term | 4.68 | |||
| Risk free rate | 0.19 | % | ||
| Expected dividend yield | 0 | % | ||
| Fair Market Value of Warrants | $ | 4 | ||
SAMSARA LUGGAGE, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Amounts in U.S. dollar thousands, except share and would, therefore, have a material adverse effect on its business. Furthermore, there can be no assurance that any such required funds, if available, will be available on attractive terms or that they will not have a significant dilutive effect on the Company’s existing stockholders.per share data)
| C. | On June 26, 2020, the Company entered into a Securities Purchase Agreement (“SPA”) with Power Up Lending Group Ltd. (the “Investor”), pursuant to |
The convertible loan will bear interest at an annual rate of eight percent (8%) with a maturity date of June 25, 2021 (the “Maturity Date”). The loan will be convertible after six months into shares of the Company’s common stock at a conversion price equal to seventy-five percent (75%) of the average of the lowest trading price for the Company’s common stock during the twenty (20) trading day period prior to the conversion date. The Company agreed to an original issue discount of $9 and to reimburse the Investor for its costs in the amount of $3. Accordingly, the net proceeds to the Company from the Initial Investment amounted to $55.
The SPA and the convertible note contain events of default, including, among other things, failure to repay the loan amount by the Maturity Date, and bankruptcy and insolvency events, that could result in the acceleration of the Investor’s right to convert the loan amount into shares of common stock.
On December 28, 2020 and pursuant to the SPA, Power- Up exercised its option to convert the second Convertible Promissory Note principal in the amount of $38,100 into 36,286 shares of Common Stock of the Company.
On December 31, 2020 and pursuant to the SPA, Power- Up exercised its option to convert the second Convertible Promissory Note principal in the amount of $23,100 into 22,000 shares of Common Stock of the Company.
On January 11, 2021 and pursuant to the SPA, Power-up exercised its option to convert the Convertible Promissory Note principal in the amount of $ 7 and the accrued interest in the amount of $ 1 into 7,448 shares of Common Stock of the Company.
The following table presents the changes in fair value of the level 3 liabilities for the period ended March 31, 2021:
| Warrants | Convertible component | |||||||
| (U.S. dollars in thousands) | ||||||||
| Outstanding at December 31, 2020 | 20 | 493 | ||||||
| Fair value converted | - | (149 | ) | |||||
| Fair value of issued level 3 liability | - | - | ||||||
| Changes in fair value | 12 | 140 | ||||||
| Outstanding at December 31, 2021 | 32 | 484 | ||||||
| D. | On August 22, 2018 the Company (through a related company) entered into a Secured Loan and Service Agreement with an affiliated entity of Moshe Zuk (hereunder “Zuk”) for the finance of the ongoing working capital of the Company, according to which Zuk granted the Company a loan in the amount of $200,000. The loan bears a monthly interest at a rate of 2% paid quarterly and calculated daily. The loan was guaranteed by the Company and by one of its shareholders. In addition, Zuk granted the Company a credit line of up to $300,000 per year. The credit line shall bear a monthly interest of 1.5% of the utilized credit line. As of the date of these financial statements, the Company has not utilized such line of credit. |
| E. | On March 24, 2019, the Company entered into a Convertible Loan Agreement with Moshe Zuk (the “Lender”). Under the agreement, the Lender provided the Company with a loan in the amount of fifty thousand dollars ($50,000). The Company undertook to repay the loan principal, plus annual interest of 12%, within one year. The Lender may convert the loan plus interest into shares of the Company’s common stock at a price per share based on the lower of (a) a discount of twenty percent (20%) to the valuation of the Company at the Company’s first financing round, or (b) a one million-dollar ($1,000,000) valuation. |
SAMSARA LUGGAGE, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Amounts in U.S. dollar thousands, except share and per share data)
NOTE 4 – RELATED PARTY TRANSACTIONS
Related party balances at March 31, 2021 and December 31, 2020 consisted of the following:
Related Parties Payable
| March 31, 2021 | December 31, 2020 | |||||||
| (U.S. dollars in thousands) | ||||||||
| Related Parties Payable due to management fee | 151 | 126 | ||||||
General and Administrative Expenses
| For the Period Ended March 31, | ||||||||
| 2021 | 2020 | |||||||
| (U.S. dollars in thousands) | ||||||||
| Management Fee | 25 | 25 | ||||||
SAMSARA LUGGAGE, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Amounts in U.S. dollar thousands, except share and per share data)
NOTE 5 – STOCKHOLDERS’ EQUITY
Common Stock
The following summarizes the Common Stock activity for the three months ended March 31, 2021:
| Summary of common stock activity for the three months ended March 31, 2021 | shares | |||
| Balance, December 31, 2020 | 786,700 | |||
| Shares issued due to conversion of Notes. | 62,464 | |||
| Shares issued for services | 7,383 | |||
| Roundup shares due to reverse split. | 2,849 | |||
| Balance, March 31, 2021 | 859,395 | |||
On January 14, 2021 and pursuant to the SPA, YAII exercised its option to convert the second Convertible Promissory Note principal in the amount of $50,000 and the accrued interest in the amount of $3,625 into 38,303 shares of Common Stock of the Company. The fair market value of the shares was $64.
On January 21, 2021, the Company issued 7,383 shares of its Common Stock pursuant to a service Agreement between the Company and Contingenciesa service provider. The fair market value of the shares was $20.
On February 11, 2021 and pursuant to the SPA, YAII exercised its option to convert the second Convertible Promissory Note principal in the amount of $55,000 and the accrued interest in the amount of $3,496 into 16,713 shares of Common Stock of the Company. The fair market value of the shares was $216.
On March 22, 2021, the Company completed a reverse stock split of its common stock. As a result of the reverse stock split, the following changes have occurred (i) every seven thousand shares of common stock have been combined into one share of common stock; (ii) the number of shares of common stock underlying each common stock option or common stock warrant have been proportionately decreased on a 7,000-for-1 basis, and the exercise price of each such outstanding stock option and common warrant has been proportionately increased on a 7,000-for-1 basis. Accordingly, all option numbers, share numbers, warrant numbers, share prices, warrant prices, exercise prices and losses per share have been adjusted within these consolidated financial statements, on a retroactive basis, to reflect this 7,000-for-1 reverse stock split.
On March 23, 2021, the Company issued 2,849 shares of its Common Stock due to a reverse split rounding up differences.
SAMSARA LUGGAGE, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(Amounts in U.S. dollar thousands, except share and per share data)
NOTE 6 – SUBSEQUENT EVENTS
On September 1, 2011April 6, 2021, the Company entered into a one-year consulting agreementSecurities Purchase Agreement (“SPA”) with First Line Capital, LLC ("First Line"YAII PN, Ltd. (the “Investor”) under, pursuant to which First Line willthe Investor agreed to provide certain businessthe Company with a convertible loan in the aggregate amount of $150, and corporate development servicesthe Company agreed to issue convertible debentures and a warrant to the Company forInvestor. The loan will bear interest at an annual consulting feerate of $10,000 payable on each August 31ten percent (10%) and will be repayable after two years. The investment will be convertible at any time into shares of the Company’s Common Stock at a conversion price equal to the lower of (a) $3.46, or (b) 80% of the lowest the daily dollar volume-weighted average price for the Company’s Common Stock during the 10 trading days immediately preceding the conversion date. As part of the transaction, the Company issued to the Investor warrants to purchase an aggregate of 10,838 shares of Common Stock, at an exercise price equal to $3.46. The term of each warrant is five years from the agreement beginning on August 31, 2012. The agreement will automatically renew for successive one-year terms unless terminatedissue date. Each warrant may be exercised by either party at least 10 days priorcash payment or through cashless exercise by the surrender of warrant shares having a value equal to the endexercise price of the then current term. Asportion of July 31, 2012 accrued consultants fees amounted to $9,167.the warrant being exercised.
PROSPECTUS
Samsara Luggage, Inc.
361,596 Shares of Common Stock
[[♦] [♦], 2021]
Until [[♦], 2021] (the 90th day after the Company had available net-operating loss carryforwards for Federal tax purposesdate of approximately $63,000, whichthis prospectus), all dealers that buy, sell or trade our common stock, whether or not participating in this offering, may be applied against future taxable income, ifrequired to deliver a prospectus. This delivery requirement is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to unsold allotments or subscriptions.
No dealer, salesperson or other individual has been authorized to give any through 2031. Certain significant changesinformation or to make any representations not contained in ownershipthis prospectus in connection with the offering covered by this prospectus. If given or made, such information or representations must not be relied upon as having been authorized by us. This prospectus does not constitute an offer to sell, or a solicitation of an offer to buy the offered securities in any jurisdiction where, or to any person to whom, it is unlawful to make any such offer or solicitation. Neither the delivery of this prospectus nor any offer or sale made hereunder shall, under any circumstances, create an implication that there has not been any change in the facts set forth in this prospectus or in our affairs since the date hereof.
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
| ITEM 13. | OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. |
The table below itemizes the expenses payable by the registrant in connection with the registration and issuance of the Company may restrictsecurities being registered hereunder, other than underwriting discounts and commissions. All amounts except the future utilization of these tax loss carryforwards.
| Securities and Exchange Commission Registration Fee | $ | 117.56 | ||
| Legal Fees and Expenses | $ | 45,000 | ||
| Accountants’ Fees and Expenses | $ | 5,000 | ||
| Transfer agent and registrar’s fees and expenses | $ | 8,350 | ||
| Miscellaneous Expenses | $ | 8,500 | ||
| Total | $ | 66,967.56 |
| ITEM 14. | INDEMNIFICATION OF DIRECTORS AND OFFICERS. |
Our officers and directors are indemnified under Nevada law. Our Amended and Restated Articles of Incorporation and our Bylaws are silent as to director and officer indemnification other than to allow such indemnification to the greatest extent permitted by Nevada law.
Section 78.138 of the Company orally agreedNevada Revised Statutes provides that a director or officer will not be personally liable to lend fundsthe corporation and its stockholders unless it is proven that (i) the director’s or officer’s acts or omissions constituted a breach of his fiduciary duties, and (ii) such breach involved intentional misconduct, fraud or a knowing violation of the law. The provisions of the Nevada Revised Statutes with respect to
Section 78.7502 of the Nevada Revised Statutes permits a corporation to indemnify a present or former director, officer, employee or agent of the corporation, or of another entity or enterprise for which such person is or was serving in such capacity at the request of the corporation, who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, except an action by or in the event funds are required for the operationsright of the Company overcorporation, against expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement actually and reasonably incurred in connection therewith, arising by reason of such person’s service in such capacity if such person (i) is not liable pursuant to Section 78.138 of the next 12 months.
Section 78.751 of the Nevada Revised Statutes permits any discretionary indemnification under Section 78.7502 of the Nevada Revised Statutes, unless ordered by a preference paymentcourt or advanced to a director or officer by the corporation in accordance with the Nevada Revised Statutes, to be made by a corporation only as authorized in each specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the event of any liquidation, dissolution or winding-up ofcircumstances. Such determination must be made (1) by the Company before any payment is made to the holders of the common stock. Furthermore,stockholders, (2) by the board of directors could issue preferredby majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding, (3) if a majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding so orders, by independent legal counsel in a written opinion, or (4) if a quorum consisting of directors who were not parties to the action, suit or proceeding cannot be obtained, by independent legal counsel in a written opinion.
II-1
| ITEM 15. | SALES OF UNREGISTERED SECURITIES IN PAST THREE YEARS. |
Since January 1, 2018, the registrant made the following issuances of its unregistered securities as described below. All share amounts have been retroactively adjusted to give effect to the reverse stock with voting and other rights that could adversely affect the voting powersplit of 7000-for-1 of the holders of the common stock.registrant’s Common Stock effected on March 22, 2021.
| ASSETS | ||||||||
| July 31, 2012 | October 31, 2012 | |||||||
| (Unaudited) | ||||||||
| Current Assets: | ||||||||
| Cash and Cash Equivalents | $ | 746 | $ | 973 | ||||
| Total Current Assets | 746 | 973 | ||||||
| Total Assets | $ | 746 | $ | 973 | ||||
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY | ||||||||
| Current Liabilities: | ||||||||
| Accounts Payable | $ | 11,082 | $ | 22,562 | ||||
| Note Payable | 17,200 | 19,200 | ||||||
| Total Current Liabilities | 28,282 | 41,762 | ||||||
| Commitments and Contingencies | ||||||||
| Stockholders’ Deficiency: | ||||||||
| Preferred Stock, $.0001 par value; 5,000,000 shares authorized, | ||||||||
| None issued and outstanding | - | - | ||||||
| Common Stock, $.0001 par value; 500,000,000 shares authorized, | ||||||||
| 10,000,000 shares issued and outstanding | 1,000 | 1,000 | ||||||
| Additional Paid-In Capital | 34,650 | 34,650 | ||||||
| Deficit Accumulated During the Development Stage | (63,186 | ) | (76,439 | ) | ||||
| Total Stockholders’ Deficiency | (27,536 | ) | (40,789 | ) | ||||
| Total Liabilities and Stockholders’ Deficiency | $ | 746 | $ | 973 | ||||
| For the Period | ||||||||||||
| For the Quarter Ended | May 8, 2007 (Inception) to | |||||||||||
| October 31, | October 31, | |||||||||||
| 2012 | 2011 | 2012 | ||||||||||
| Net Revenues | $ | - | $ | - | $ | - | ||||||
| Costs and Expenses: | ||||||||||||
| Professional Fees | 9,938 | 13,854 | 51,304 | |||||||||
| Consulting Fees | 2,500 | - | 11,667 | |||||||||
| Web Site Development | - | - | 5,000 | |||||||||
| General and Administrative Expenses | 174 | - | 7,685 | |||||||||
| Total Costs and Expenses | 12,612 | 13,854 | 75,656 | |||||||||
| Operating Loss | (12,612 | ) | (13,854 | ) | (75,656 | ) | ||||||
| Other Income (Expense) | ||||||||||||
| Interest Expense | (641 | ) | - | (783 | ) | |||||||
| Total Other Income (Expense) | (641 | ) | - | (783 | ) | |||||||
| Net Loss | $ | (13,253 | ) | $ | (13,854 | ) | $ | (76,439 | ) | |||
| Basic and Diluted Loss Per Share | $ | (.00 | ) | $ | (.00 | ) | ||||||
| Weighted Average Common Shares Outstanding | 10,000,000 | 10,000,000 | ||||||||||
| Deficit | ||||||||||||||||||||
| Accumulated | ||||||||||||||||||||
| Common Stock | Additional Paid-In | During the Development | ||||||||||||||||||
| Shares | Amount | Capital | Stage | Total | ||||||||||||||||
| Balance, August 1, 2012 | 10,000,000 | $ | 1,000 | $ | 34,650 | $ | (63,186 | ) | $ | (27,536 | ) | |||||||||
| Net Loss for the Quarter Ended October 31, 2012 | - | - | - | (13,253 | ) | (13,253 | ) | |||||||||||||
| Balance, October 31, 2012 | 10,000,000 | $ | 1,000 | $ | 34,650 | $ | ( 76,439 | ) | $ | (40,789 | ) | |||||||||
| (5) | On June 5, 2019, the Company entered into a Securities Purchase Agreement (“SPA”) with the Investor, pursuant to which the Investor agreed to provide the Company with a convertible loan in the aggregate amount of $1,100,000 in three tranches, and the Company agreed to issue convertible debentures and a warrant to the Investor. On December 9, 2019 and pursuant to the SPA, YAII exercised its option to convert the first Convertible Promissory Note principal amount of $200,000 and the accrued interest into 9,988 shares of Common Stock of the Company. On July 24, 2020 and pursuant to the SPA, YAII exercised its option to convert the second Convertible Promissory Note principal amount of $50,000 and the accrued interest in the amount of $22,684 into 12,979 shares of Common Stock of the Company. On August 5, 2020 and pursuant to the SPA, YAII exercised its option to convert the second Convertible Promissory Note principal amount of $75,000 and the accrued interest in the amount of $753 into 21,644 shares of Common Stock of the Company. On August 13, 2020 and pursuant to the SPA, YAII exercised its option to convert the second Convertible Promissory Note principal amount of $75,000 and the accrued interest in the amount of $481 into 21,522 shares of Common Stock of the Company. On October 12, 2020 and pursuant to the SPA, YAII exercised its option to convert the second Convertible Promissory Note principal in the amount of $50,000 and the accrued interest in the amount of $1,671 into 18,454 shares of Common Stock of the Company. On November 2, 2020 and pursuant to the SPA, YAII exercised its option to convert the second Convertible Promissory Note principal in the amount of $50,000 and the accrued interest in the amount of $288 into 23,947 shares of Common Stock of the Company. On November 16, 2020 and pursuant to the SPA, YAII exercised its option to convert the second Convertible Promissory Note principal in the amount of $10,000 and the accrued interest in the amount of $30,323 into 28,802 shares of Common Stock of the Company. On November 19, 2020 and pursuant to the SPA, YAII exercised its option to convert the second Convertible Promissory Note principal in the amount of $45,000 and the accrued interest in the amount of $159 into 32,256 shares of Common Stock of the Company. On December 17, 2020 and pursuant to the SPA, YAII exercised its option to convert the second Convertible Promissory Note principal in the amount of $45,000 and the accrued interest in the amount of $4,104 into 35,074 shares of Common Stock of the Company. On January 14, 2021 and pursuant to the SPA, YAII exercised its option to convert the second Convertible Promissory Note principal in the amount of $50,000 and the accrued interest in the amount of $3,625 into 38,303 shares of Common Stock of the Company. On February 11, 2021 and pursuant to the SPA, YAII exercised its option to convert the second Convertible Promissory Note principal in the amount of $55,000 and the accrued interest in the amount of $3,496 into 16,713 shares of Common Stock of the Company. |
| For the Period | ||||||||||||
| For the Quarter Ended | May 8, 2007 (Inception) to | |||||||||||
| October 31, | October 31, | |||||||||||
| 2012 | 2011 | 2012 | ||||||||||
| Cash Flows from Operating Activities: | ||||||||||||
| Net Loss | $ | ( 13,253 | ) | $ | (13,854 | ) | $ | (76,439 | ) | |||
| Adjustments to Reconcile Net Loss to Net Cash | ||||||||||||
| Used in Operating Activities: | ||||||||||||
| Changes in Assets and Liabilities: | ||||||||||||
| Increase in Accounts Payable | 11,480 | 4,334 | 22,562 | |||||||||
| Net Cash Used in Operating Activities | (1,773 | ) | (9,520 | ) | (53,877 | ) | ||||||
| Cash Flows from Investing Activities: | - | - | - | |||||||||
| Cash Flows from Financing Activities: | ||||||||||||
| Proceeds from Borrowings | 2,000 | - | 19,200 | |||||||||
| Proceeds from Sale of Common Stock | - | - | 35,650 | |||||||||
| Net Cash Provided by Financing Activities | 2,000 | - | 54,850 | |||||||||
| Increase (Decrease) in Cash and Cash Equivalents | 227 | (9,520 | ) | 973 | ||||||||
| Cash and Cash Equivalents – Beginning of Period | 746 | 18,327 | - | |||||||||
| Cash and Cash Equivalents – End of Period | $ | 973 | $ | 8,807 | $ | 973 | ||||||
| Supplemental Disclosures of Cash Flow Information: | ||||||||||||
| Interest Paid | $ | - | $ | - | $ | - | ||||||
| Income Taxes Paid | $ | - | $ | - | $ | - | ||||||
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On May 1, 2011 the Company sold 6,500,000 shares of common stock for $650 to the Founder of the Company.
On April 19, 2021 and pursuant to the SPA, YAII exercised its option to convert the Convertible Promissory Note principal in the amount of $40,000 and the accrued interest in the amount of $7,000 into 40,861 shares of Common Stock of the agreement beginning on August 31, 2012. The agreement will automatically renew for successive one-year terms unless terminated by either party at least 10 days priorCompany.
On May 12, 2021 and pursuant to the endSPA, YAII exercised its option to convert the Convertible Promissory Note principal in the amount of $60,000 and the accrued interest in the amount of $2,000 into 44,202 shares of Common Stock of the then current term. As of July 31, 2012Company.
On May 17, 2021 and October 31, 2012, accrued consulting fees amounted to $9,167 and $11,667, respectively.
On May 20, 2021 and pursuant to the completionSPA, YAII exercised its option to convert the Convertible Promissory Note principal in the amount of $65,000 into 48,316 shares of Common Stock of the due diligence investigationCompany.
On May 21, 2021 and pursuant to the SPA, YAII exercised its option to convert the Convertible Promissory Note principal in the amount of both parties, execution$70,000 into 54,386 shares of Common Stock of the Company.
On May 21, 2021, and deliverypursuant to the SPA, YAII exercised its option to convert the Convertible Promissory Note principal in the amount of documentation for$70,000 into 54,386 shares of Common Stock of the transaction, consents fromCompany.
On May 24, 2021, and pursuant to the respective boardsSPA, YAII exercised its option to convert the Convertible Promissory Note principal in the amount of directors$70,000 into 54,407 shares of both companiesCommon Stock of the Company.
On May 24, 2021, and any third partiespursuant to the SPA, YAII exercised its option to convert the remainder of the Convertible Promissory Note principal in the amount of $15,000 and accrued interest of $10,000 into 19,631 shares of Common Stock of the Company.
On June 7, 2020, Samsara Luggage, Inc. (the “Company”) entered into a fourth Securities Purchase Agreement (“SPA”) with the Investor, pursuant to which the Investor will invest an aggregate amount of $1,250,000 in three traunches, and the deliveryCompany will issue convertible debentures and warrants to the Investor, in which each traunch is convertible into shares of audited financial statements by Real Aesthetic. Real Aesthetic agreed not to solicit, negotiate and/or accept any other offer to acquire anythe Company’s common stock, par value $0.0001 (the “Common Stock”). The first traunch in the principal amount of Real Aesthetic’s assets or securities or any$500,000 was issued on June 7, 2021. The second traunch in the principal amount of $500,000 will be issued within one (1) business combinationday following the filing of Real Aesthetic.
| Nature of Expense | Amount | |||
| Accounting fees and expenses | $ | 2,500 | ||
| SEC registration fee | $ | 463.76 | ||
| Legal fees and other expenses | $ | 2,500 | ||
| Total | $ | 5,463.76 | ||
The Convertible Debentures bear interest at a rate of 10% per annum (15% on default) and have a maturity date of one (1) year. The Convertible Debentures provide a conversion right, in which any portion of the SEC such indemnification is against public policy and unenforceable.
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| ITEM 16. | EXHIBITS. |
| * | Filed herewith |
| ** | Previously filed |
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| ITEM 17. | UNDERTAKINGS. |
| A. | RULE 415 OFFERING |
The undersigned Registrantregistrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement to:Registration Statement:
| (i) | To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended; |
| (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 the 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; and |
| (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:
(A) Paragraphs (a)(1)(i) and (a)(1)(ii) of this section do not apply if the registration statement is on Form S-8, and 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 the registration statement; and
(B) Paragraphs (a)(1)(i), (a)(1)(ii), and (a)(1)(iii) of this section do not apply if the registration statement is on Form S-3 or Form F-3 and 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 the registration statement, or is contained in a form of prospectus filed with the SEC pursuant to Rule 424(b) if, inthat is part of the aggregate, the changes in the volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; andstatement.
(2) That, for the purpose of determining any liability under the Securities Act treatof 1933, as amended, each post-effectivesuch post- effective amendment asshall be deemed to be a new registration statement relating to the securities offered herein,therein, and to treat 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 hereby that remainswhich remain unsold at the termination of the offering.
(4) That, for the purpose of determining liability under the Securities Act of 1933, as amended, to any purchaser:
(A) Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the Registration Statement as of the date the filed prospectus was deemed part of and included in the Registration Statement; and
(B) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a Registration Statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by Section 10(a) of the Securities Act of 1933, as amended, shall be deemed to be part of and included in the Registration Statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the Registration Statement relating to the securities in the Registration Statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a Registration Statement or prospectus that is part of the Registration Statement or made in a document incorporated or deemed incorporated by reference into the Registration Statement or prospectus that is part of the Registration Statement will, as to the purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the Registration Statement or prospectus that was part of the Registration Statement or made in any such document immediately prior to such effective date.
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(5) That, for the purpose of determining liability of the undersigned Registrantregistrant under the Securities Act of 1933, as amended, to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned Registrantregistrant pursuant to this registration statement,Registration Statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned Registrantregistrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
| (i) | Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; |
| (ii) | Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; |
| (iii) | The portion of any other free writing prospectuses relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and |
| (iv) | Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. |
(e) The undersigned registrant hereby undertakes to deliver or cause to be delivered with the prospectus, to each person to whom the prospectus is sent or given, the latest annual report to security holders that is incorporated by reference in the prospectus and furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of 1934; and, where interim financial information required to be filed pursuantpresented by Article 3 of Regulation S-X are not set forth in the prospectus, to Rule 424;
(h) Insofar as indemnification for liabilities arising under the Securities Act of 1933, (the “Act”)as amended, may be permitted to our director,directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, above, or otherwise, we havethe registrant has been advised that in the opinion of the SECSecurities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrantregistrant has duly caused this registration statementRegistration Statement to be signed on its behalf by the undersigned, in the city of Jersusalem, Israel,thereunto duly authorized, on December 6, 2012.
| Samsara Luggage, Inc. | |||
| By: | /s/ | Atara Dzikowski | |
| Atara Dzikowski | |||
Chief Financial Officer | |||
Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statementRegistration Statement has been signed by the following persons in the capacities and on the dates indicated. Each person in so signing also makes, constitutes and appoints Atara Dzikowski, his or her true and lawful attorney-in-fact, with full power of substitution, in any and all capacities, to execute and cause to be filed with the Securities and Exchange Commission pursuant to the requirements of the Securities Act of 1933, as amended, any and all amendments and post-effective amendments to this Registration Statement, with exhibits to such registration statements and amendments and other documents in connection therewith, and hereby ratifies and confirms all that said attorney-in-fact or his or her substitute or substitutes may do or cause to be done by virtue hereof.
| /s/ | ||||||
| Atara Dzikowski | ||||||
/s/ | Director | August 27, 2021 | ||||
| David Dahan |
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