UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 1-SA
x SEMIANNUAL REPORT PURSUANT TO REGULATION A
or
¨ SPECIAL FINANCIAL REPORT PURSUANT TO REGULATION A
For the fiscal semiannual period ended: June 30, 2023
Traccom Inc.
(Exact name of issuer as specified in its charter)
Delaware |
| 83-2462209 |
(State or other jurisdiction of |
| (IRS Employer |
incorporation or organization) |
| Identification No.) |
2013 SkyCrest Dr. #4 |
| 94595 |
(Address of principal executive offices) |
| (Zip code) |
(714) 308-3340
(Registrant’s telephone number, including area code)
Common Stock
(Title of each class of securities issued pursuant to Regulation A)
In this semi-annual report, the term “Traccom,” “we,” “us,” “our,” or “the company” refers to Traccom Inc. a Delaware corporation.
Item 1. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
The Company’s two products are the Basic Tracker and the Remote Patient Monitoring Device (Health Hub). Both products have been fully developed and tested.
The Company’s business model consists of at least two revenue streams. The first is the initial sale of a device / activation, and the second is the recurring annual service revenue from the device. A third potential significant revenue source will come from data mining from the three devices. In the case of data mining, all consumer privacy laws would be adhered to. The Company will begin to develop this revenue source once 25,000 devices are in distribution.
The Traccom Basic Tracker is primarily designed to track the location of airline checked-in luggage.
The Traccom™ Health Hub primarily captures remote patient data monitored in a patient's home. The primary focus of monitoring is to provide the PCP or Pharmacist with an up-to-date real-time status of the patient's overall health. The other area of opportunity that the Company will initially focus on is with Pharmaceutical clinical trials.
The Company’s primary source of working capital since inception has been loans from its management shareholders as well as $30,000 it raised on Indiegog0 as well as $40,757 raised from the sale of 14,308 shares of common stock through its Regulation A+ offering.
The Company had an operating loss of $51,786 and $136,227 as of December 31, 2022 and 2021 respectively. The reduction in the operating loss is primarily due to reduction in public offering expenses, product development, consulting and legal.
On March 10, 2021, we entered into a Master Referral, Commission, and Compensation Agreement (“Compensation Agreement”) with Maverick Technology Group, LLC (“Maverick”). This Agreement was terminated on March 24, 2022.
2
On May 2, 2022, the Company signed a Supply agreement (Letter of Intent) with Diabetic Direct, Inc to supply Diabetic Direct Inc. with the Traccom Health Hub Remote Patient Monitoring product. This Letter of Intent expired on August 31, 2022.
On May 4, 2022, the Company signed a Worldwide Marketing & Selling Agreement with R&R Marketing services, LLC whereby R&R Marketing Services, LLC will oversee all of the marketing and selling of the Traccom Basic Tracker product.
Trends Information
The core elements of our growth strategy include developing a product line with a strong brand awareness. We plan to invest significant resources in product development and marketing, and we anticipate that our operating expenses will continue to increase for the foreseeable future, particularly marketing costs and research and development of new products. These investments are intended to contribute to our long-term growth; however, they may affect our short-term profitability.
Our Company plans to raise funds from its $1.5 million+ Convertible Note PIPE Offering that was initiated in June 2023 from which the proceeds will be used to commence the initial production of the Company’s products.
Results of Operations
For the six months ended June 30, 2022 the company had no revenue compared to the six months ended June 30, 2022, the company had $17,824 revenue.
Total operating expenses for the six months ended June 30, 2023 increased to $89.424 from $41,864 for the six months ended June 30, 2022. The increase in operating expenses occurred because of an increase in product development and filing fees.
As a result of the foregoing, the company generated a net loss for the six months ended June 30, 2023 in the amount of $(89,424) compared to a net loss for the six months ended June 30, 2022 in the amount of $(30,039.
Liquidity and Capital Resources
As of June 30, 2023, the company has cash and cash equivalents of $119. As a result of the company currently generating an operating loss since inception, it has relied upon the cash advances from its current directors and management, as well as funds raised in the Company’s Regulation A offering and a shareholder loan in the amount of $50,000.
For the six months ended June 30, 2023, our directors advanced funds to the company totaling $121,044.
Item 2. | Other Information |
None.
Item 3. | Financial Statements |
The accompanying semiannual consolidated financial statements are unaudited and have been prepared in accordance with the instructions to Form 1-SA. Therefore, they do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, cash flows, and stockholders’ equity in conformity with accounting principles generally accepted in the United States of America. Except as disclosed herein, there has been no material change in the information disclosed in the notes to the financial statements included in the Company’s Form 1-A for the year ended December 31, 2022. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included, and all such adjustments are of a normal recurring nature. Operating results for the six months ended June 30, 2023 are not necessarily indicative of the results that can be expected for the year ending December 31, 2023.
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SIGNATURE
Pursuant to the requirements of Regulation A, the issuer has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in Walnut Creek, State of California, on August 4, 2023.
Traccom Inc. |
|
|
|
/s/ Harry Steck
Chief Executive Officer; Chief Financial Officer; Director
Pursuant to the requirements of Regulation A, this report has been signed below by the following persons on behalf of the issuer and in the capacities and on the dates indicated.
/s/ Joseph Morgan
Director
/s/ Robert Goldstein
Director
4
Financial Statements |
As of, and for the Six Months Ended June 30, 2023 and 2022 |
UNAUDITED - NO ASSURANCE GIVEN |
Table of Contents | |
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F-1 | |
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F-2 | |
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F-3 | |
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F-4 | |
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5
Balance Sheets
As of June 30, 2023, December 31, 2022 and June 30, 2022
UNAUDITED - NO ASSURANCE GIVEN
|
| Jun 30, 23 |
| Jun 30, 22 |
ASSETS |
|
|
|
|
Current Assets |
|
|
|
|
Checking/Savings |
|
|
|
|
Checking Account |
| 119.11 |
| 368.42 |
Total Checking/Savings |
| 119.11 |
| 368.42 |
Accounts Receivable |
|
|
|
|
Accounts Receivable |
| 0.00 |
| -2,000.00 |
Indiegogo Reserve |
| -0.01 |
| -0.01 |
Total Accounts Receivable |
| -0.01 |
| -2,000.01 |
Other Current Assets |
|
|
|
|
Inventory Asset |
| 2,012.48 |
| 2,012.48 |
Total Other Current Assets |
| 2,012.48 |
| 2,012.48 |
Total Current Assets |
| 2,131.58 |
| 380.89 |
Fixed Assets |
|
|
|
|
Accumulated Depreciation |
| -642.00 |
| -642.00 |
Capitalized Software |
| 125,000.00 |
| 125,000.00 |
Furniture and Equipment |
| 2,457.95 |
| 2,457.95 |
Total Fixed Assets |
| 126,815.95 |
| 126,815.95 |
Other Assets |
|
|
|
|
Petty Cash |
| 0.00 |
| 900.00 |
R&D |
|
|
|
|
Accumulated Depreciation |
| -1,174.00 |
| -1,174.00 |
Total R&D |
| -1,174.00 |
| -1,174.00 |
Total Other Assets |
| -1,174.00 |
| -274.00 |
TOTAL ASSETS |
| 127,773.53 |
| 126,922.84 |
LIABILITIES & EQUITY |
|
|
|
|
Liabilities |
|
|
|
|
Current Liabilities |
|
|
|
|
Accounts Payable |
|
|
|
|
Accounts Payable |
| 22,554.22 |
| 70,057.60 |
Total Accounts Payable |
| 22,554.22 |
| 70,057.60 |
Credit Cards |
|
|
|
|
Wells Fargo Visa |
| 10,206.48 |
| 19,227.25 |
Total Credit Cards |
| 10,206.48 |
| 19,227.25 |
Other Current Liabilities |
|
|
|
|
Customer Deposit |
| 0.00 |
| 5,996.60 |
Loan Payable - Forster Company |
| 50,000.00 |
| 50,000.00 |
Loan Payable - Harry Steck |
| 98,621.21 |
| 18,473.55 |
Loan Payable - Joseph Morgan |
| 264,621.11 |
| 170,225.00 |
Unearned Revenue |
| 29,032.00 |
| 29,032.00 |
Total Other Current Liabilities |
| 442,274.32 |
| 273,727.15 |
Total Current Liabilities |
| 475,035.02 |
| 363,012.00 |
Total Liabilities |
| 475,035.02 |
| 363,012.00 |
Equity |
|
|
|
|
Common Stock (APIC) |
| 42,993.53 |
| 42,993.53 |
Common Stock; $0.00025par value |
| 963.67 |
| 963.67 |
Retained Earnings |
| -301,793.85 |
| -250,006.95 |
Net Income |
| -89,424.84 |
| -30,039.41 |
Total Equity |
| -347,261.49 |
| -236,089.16 |
TOTAL LIABILITIES & EQUITY |
| 127,773.53 |
| 126,922.84 |
The accompanying notes are an integral part of these financial statements.
F-1
Statement of Operations
For the Six Months Ended June 30, 2023 and 2022
UNAUDITED - NO ASSURANCE GIVEN
|
| Jan - Jun 23 |
| Jan - Jun 22 |
Ordinary Income/Expense |
|
|
|
|
Income |
|
|
|
|
Consulting Service |
| 0.00 |
| 17,824.68 |
Sales - Devices |
| 0.00 |
| 0.00 |
Total Income |
| 0.00 |
| 17,824.68 |
Cost of Goods Sold |
|
|
|
|
Cost of Goods Sold |
| 0.00 |
| 6,000.00 |
Total COGS |
| 0.00 |
| 6,000.00 |
Gross Profit |
| 0.00 |
| 11,824.68 |
Expense |
|
|
|
|
Banking Service Charges |
|
|
|
|
Bank Account Fees |
| 30.00 |
| 367.45 |
Banking Service Charges - Other |
| 579.55 |
| 350.00 |
Total Banking Service Charges |
| 609.55 |
| 717.45 |
Charitable Contributions |
| 0.00 |
| 190.70 |
Dues, Subscriptions, Filing Fee |
| 20,237.35 |
| 2,089.82 |
Interest Expense |
| 1,463.59 |
| 2,023.57 |
Marketing |
|
|
|
|
Trade Shows |
| 0.00 |
| 2,500.00 |
Total Marketing |
| 0.00 |
| 2,500.00 |
Office Supplies |
| 21.95 |
| 301.49 |
Postage |
| 0.00 |
| 40.03 |
Product Development |
| 40,000.00 |
| 0.00 |
Professional Fees |
|
|
|
|
Accounting |
| 0.00 |
| 550.00 |
Consulting |
| 0.00 |
| 17,144.68 |
Legal |
| 10,591.25 |
| 2,000.00 |
Total Professional Fees |
| 10,591.25 |
| 19,694.68 |
Public Offering Expenses |
| 16,501.15 |
| 12,369.43 |
Travel Expense |
|
|
|
|
Airfare |
| 0.00 |
| 599.80 |
Ground Transportation |
| 0.00 |
| 329.32 |
Lodging |
| 0.00 |
| 713.78 |
Meals |
| 0.00 |
| 294.02 |
Total Travel Expense |
| 0.00 |
| 1,936.92 |
Total Expense |
| 89,424.84 |
| 41,864.09 |
Net Ordinary Income |
| -89,424.84 |
| -30,039.41 |
Net Income |
| -89,424.84 |
| -30,039.41 |
The accompanying notes are an integral part of these financial statements.
F-2
Statement of Stockholders' Equity (Deficit)
For the Six Months Ended June 30, 2023 and the Year Ended December 31, 2022
UNAUDITED - NO ASSURANCE GIVEN
|
| Opening |
| Yearly |
| Total |
Balance, December 31, 2022 |
| $(257,836) |
| $- |
| $(257,836) |
Net Income for the period ending June 30, 2023 |
| - |
| (89,425) |
| (89,425) |
Equity Contributions (Distributions) |
| - |
|
|
|
|
Balance, June 30, 2023 |
| $(257,836) |
| $(89,425) |
| $(347,261) |
The accompanying notes are an integral part of these financial statements.
F-3
Statement of Cash Flows
For the Six Months Ended June 30, 2023 and 2022
UNAUDITED - NO ASSURANCE GIVEN
| Jan - Jun 23 |
OPERATING ACTIVITIES |
|
Net Income | -89,424.84 |
Adjustments to reconcile Net Income |
|
Accounts Payable | -72,787.56 |
Wells Fargo Visa | -8,519.61 |
Loan Payable - Harry Steck | 76,323.44 |
Loan Payable - Joseph Morgan | 94,396.11 |
Net cash provided by Operating Activities | -12.46 |
Net cash increase for period | -12.46 |
Cash at beginning of period | 131.57 |
Cash at end of period | 119.11 |
The accompanying notes are an integral part of these financial statements.
F-4