ITEM 2.01 COMPLETION OF ACQUISITION OF DISPOSITION OF ASSETS
The information set forth above in Item 1.01 of this Current Report on Form 8-K is incorporated herein by this reference. As a result of the Share Exchange Agreement, (i) our principal business became the business of Analog Nest, which is more fully described below, and (ii) Analog Nest became our wholly owned operating subsidiary.
FORM 10 DISCLOSURE
As disclosed elsewhere in this report, we completed a Share Exchange Agreement with Analog Nest Technologies, Inc. (the "
Transaction
") and Item 2.01(f) of Form 8-K states that if the registrant was a shell company, as we were, immediately before the transaction disclosed under Item 2.01, then the registrant must disclose the information that would be required if the registrant were filing a general form for registration of securities on Form 10.
Accordingly, we are providing below the information that would be included in a Form 10 if we were to file a Form 10. Please note that the information provided below relates to the combined enterprises after the closing of the Transaction, except that information relating to periods prior to the date of the Transaction only relates to the Registrant unless otherwise specifically indicated.
ITEM 1. BUSINESS
Corporate History
UpperSolution.com (the Company) was incorporated in the State of Nevada on April 20, 2013 with the principal business objective of creating an independent and unbiased mobile app that enables consumers to find the best cellular rate plan for their need and getting real-time notifications when a new cellular plan is available.
Overview of Analog Nest Technologies
Analog Nest was incorporated in the State of Nevada on September 8, 2017 as a mobile application (“app”) company focused on utility/entertainment apps for Google’s Android and Apple’s iOS platforms. In December 2017, Analog Nest acquired the following apps: Old Fart Booth, Old Fart Booth Pro, Ugly Face Booth, Ugly Santa Booth, Baldy – Bald Photo Booth, Fatty – Make Funny Fat Faces, Slender Man Scary Prank, Anime Booth, Anime Booth Free, Minecart Mayhem, Pimp My Pet, Pimp My Dog, Cavity Detector – Scary Prank, Mustacher, Alex From Target, A Farm Animal Salon, Mustacher Pro, Pimp My Cat, and Animal Dress Up Salon.
Product Lines
Analog Nest operates primarily in the computer/software applications industry and specifically in the development of Android and iOS apps for mobile devices. In the past five years the number of total apps on the Google Play Store has increased from around 200,000 in 2011 to around 1.6 million in 2015 and currently about 2 million apps in the Apple’s App store as well. The Google Play Store and Apple’s App Store are generally referred to herein as an “App Store”.
Analog Nest generates revenue from selling certain apps in the App Stores and from displaying advertisements in certain applications. Approximately eighty percent (80%) of Analog Nest revenue is generated from the sales of Apps and the remaining revenue comes for advertising.
Market Opportunity
With the mobile market still booming, there are billions of mobile devices for which we can offer Apps. Given this large number of available devices, even the smallest App ideas have the potential to generate millions of downloads for its developer.
Competitive Strengths
We believe that the Apps have a solid reputation in the App Stores - some Apps are within the top 1,000 of their categories in the US and also top 10,000 out of all apps on the Google Play Store. We believe that our Apps are for most part unique with solid source codes. Many of the other apps on the market are copycat apps, as opposed to a majority of Analog Nest Apps which are original and unique in their region. We attempt to distinguish the Apps by providing prompt customer services.
Customers and Marketing
Analog Nest has an aggregate of approximately nine million downloads of its Apps from users around the globe, with the US taking the majority of that share.
So far no specific marketing for our Apps has been done. Due to the high ranking and ratings of the Apps, the optimized app store app descriptions, the user's acquisition is done either directly through play store search or via deep linking from within the other Apps in the portfolio. Having a large portfolio of Apps helps drive more downloads, since each App can serve ads for the other Apps on the portfolio.
With the introduction of Google’s Universal app campaigns a new marketing opportunity has been given to the app vendors to better target audiences through the Google Ad network in an efficient and cost effective way.
Using Google’s Universal app campaigns, the goal is to target 1 million new installs or downloads in the next 12 months. To achieve this number of installs a marketing budget of at least $100,000 USD will be required to generate a lot of installs on a cost per install (CPI) basis.
Competition
The app industry is highly competitive, with low barriers to entry and we expect more companies to enter the sector and a wider range of apps to be introduced. In addition, we have limited experience in developing apps for mobile and other platforms and our ability to succeed on those platforms is uncertain. As we continue to devote resources to developing apps for those platforms, we will face significant competition from established companies and new-comers.
Regulatory Matters
Google and Apple are responsible for regulating their respective app stores. Their stringent rules and guidelines make it so that app developers are mostly shielded from government regulatory bodies as each app goes through a manual approval process before being published on the store. If Google or Apple believe that such app could be in breach of any laws, they simply do not approve it.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy our reports or other filings made with the SEC at the SEC's Public Reference Room, located at 100 F Street, N.W., Washington, DC 20549. You can obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. You can also access these reports and other filings electronically on the SEC's web site,
www.sec.gov
.
In addition, certain of our SEC filings, including our annual reports on Form 10-K, our quarterly reports on Form 10-Q and current reports on Form 8-K, and amendments to these reports, can be viewed and printed from the Company’s profile page on otcmarkets.com
as soon as
reasonably practicable after filing with the SEC.
Government Regulation
We are subject to a variety of laws in the United States and abroad, including laws regarding consumer protection, intellectual property, export and national security, that are continuously evolving and developing. The scope and interpretation of the laws that are or may be applicable to us are often uncertain and may be conflicting, particularly laws outside the United States. For example, laws relating to the liability of providers of online services for activities of their users and other third parties are currently being tested by a number of claims, including actions based on invasion of privacy and other torts, unfair competition, copyright and trademark infringement, and other theories based on the nature and content of the materials searched, the ads posted or the content provided by users.
Item 1A. Risk Factors.
Risks Related to Our Business
If we are unable to maintain a good relationship with Apple and Google, our business will suffer.
Google Play Store and Apple App Store are our primary distribution, marketing, promotion and payment platform for our Apps. We expect to generate substantially all of our revenue through those platforms for the foreseeable future. Any deterioration in our relationship with Google or Apple would harm our business and adversely affect the value of our stock.
We are subject to Google's and Apple’s standard terms and conditions for application developers, which govern the promotion, distribution and operation of games and other applications on their platform.
Our business would be harmed if:
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Google or Apple discontinues or limits access to its platform by us and other app developers;
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Google or Apple removes one of our revenue-producing Apps from their store
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Google or Apple modifies its terms of service or other policies, including fees charged to, or other restrictions on, us or other application developers, or change how the personal information of its users is made available to application developers on the their platform or shared by users from Google and Apple's strong brand recognition and large user base.
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If Google or Apple lose their market position or otherwise fall out of favor with Internet users, we would need to identify alternative channels for marketing, promoting and distributing our Apps, which would consume substantial resources and may not be effective. In addition, Google and Apple have broad discretion to change their terms of service and other policies with respect to us and other developers, and those changes may be unfavorable to us.
We operate in a new and rapidly changing industry, which makes it difficult to evaluate our business and prospects.
Mobile apps, from which we expect to derive all of our revenue, is a relatively new and rapidly evolving industry. The growth of the mobile app industry and the level of demand and market acceptance of our Apps are subject to a high degree of uncertainty. Our future operating results will depend on numerous factors affecting the mobile app industry, many of which are beyond our control, including:
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changes in consumer demographics and public tastes, and preferences;
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the availability and popularity of other forms of entertainment;
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the worldwide growth of personal computer, broadband internet and mobile device users, and the rate of any such growth; and
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general economic conditions, particularly economic conditions adversely affecting discretionary consumer spending.
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Our ability to plan for app development, distribution and promotional activities will be significantly affected by our ability to anticipate and adapt to relatively rapid changes in the tastes and preferences of our current and potential users. New and different types of entertainment may increase in popularity at the expense of mobile apps. A decline in the popularity of apps in general, or our Apps in particular, would harm our business and prospects.
We have a new business model and a short operating history, which makes it difficult to evaluate our prospects and future financial results and may increase the risk that we will not be successful.
We began operations in the mobile apps business in 2017, and we have a short operating history and a new business model, which makes it difficult to effectively assess our future prospects.
Our growth depends on our ability to consistently launch new apps that achieve significant popularity. Each of our Apps requires significant engineering, marketing and other resources to develop, launch and sustain via regular upgrades. Our ability to successfully launch, sustain and expand apps and attract and retain a user-base largely will depend on our ability to:
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anticipate and effectively respond to changing app interests and preferences
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anticipate or respond to changes in the competitive landscape
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effectively market new apps and enhancements to our existing users and new users
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minimize launch delays and cost overruns on new apps
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minimize downtime and other technical difficulties
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If our Apps do not maintain their popularity, our results of operations could be harmed.
In addition to creating new apps that are attractive to a significant number of users, we must extend the life of our existing Apps, in particular our most successful Apps. For an App to remain popular, we must constantly enhance, expand or upgrade it with new features users find useful. Such constant enhancement requires the investment of significant resources, particularly with older Apps, and such costs on average have increased. We may not be able to successfully enhance, expand or upgrade our current Apps.
Our Apps target a specific market, and may be negatively impacted by updates to the Android and Apple platform and unfavorable reviews, which could harm our business and results of operations
.
Because our Apps are very specific on what they can do there is potential for them to be serving too narrow of a market. Another risk posed to our Apps are updates to the Android and Apple platform, which could render some of our Apps or their features obsolete. In addition, negative reviews or ratings by app users could lower the number of downloads of our Apps. Each of the foregoing could harm our business and results of operations.
Any failure or significant interruption in our network could impact our operations and harm our business.
Our technology infrastructure is critical to the performance of our Apps and to user satisfaction. Our Apps run on a complex distributed system, or what is commonly known as cloud computing. This system is operated by third parties that we do not control and which would require significant time to replace. We expect this dependence on third parties to continue.
Security breaches, computer viruses and computer hacking attacks could harm our business and results of operations.
Security breaches, computer malware and computer hacking attacks have become more prevalent in our industry, and may occur on our systems in the future. Any security breach caused by hacking, which involves efforts to gain unauthorized access to information or systems, or to cause intentional malfunctions or loss or corruption of data, software, hardware or other computer equipment, and the inadvertent transmission of computer viruses could harm our business, financial condition and operating results.
There are low barriers to entry in the app industry, and competition is intense.
The app industry is highly competitive, with low barriers to entry and we expect more companies to enter the sector and a wider range of apps to be introduced. In addition, we have limited experience in developing apps for mobile and other platforms and our ability to succeed on those platforms is uncertain. As we continue to devote resources to developing apps for those platforms, we will face significant competition from established companies and new-comers.
We may in the future be, subject to intellectual property disputes, which are costly to defend and could require us to pay significant damages and could limit our ability to use certain technologies in the future.
We may face allegations that we have infringed the trademarks, copyrights, patents and other intellectual property rights of third parties, including from our competitors, non-practicing entities and former employers of our personnel. Patent and other intellectual property litigation may be protracted and expensive, and the results are difficult to predict. As the result of any court judgment or settlement we may be obligated to cancel the launch of a new App, stop offering an App or certain features of an App, pay royalties or significant settlement costs, purchase licenses or modify our Apps and features while we develop substitutes.
Programming errors or flaws in our Apps could harm our reputation or decrease market acceptance of our Apps, which would harm our operating results.
Our Apps may contain errors, bugs, flaws or corrupted data, and these defects may only become apparent after their launch, particularly as we launch new Apps and rapidly release new features to existing Apps under tight time constraints. We believe that if our users have a negative experience with our Apps, they may be less inclined to continue or resume using them or recommend our Apps to other potential users. Undetected programming errors, App defects and data corruption can disrupt our operations, adversely affect the experience of our users.
The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain qualified board members.
We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Act, the listing requirements of the OTC Markets and other applicable securities rules and regulations. Compliance with these rules and regulations has increased and may continue to increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources. The Exchange Act requires, among other things, that we file annual, quarterly and current reports with respect to our business and operating results.
We also expect that being a public company, subject to these rules and regulations, will make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of our board of directors and qualified executive officers.
We have a limited operating history and if we are not successful in growing our business, then we may have to scale back or even cease our business operations.
We have a limited operating history and must be considered an emerging business. Analog Nest Technologies’ operations will be subject to all the risks inherent in the establishment of an emerging business and the uncertainties arising from the absence of a significant operating history. We may be unable to operate on a profitable basis. Potential investors should be aware of the difficulties normally encountered by emerging business enterprises that is trying to achieve growth. If our business plan is not successful, and we are not able to operate profitably, investors may lose some or all of their investment in Analog Nest Technologies.
The loss of one or more of our key personnel, or our failure to attract and retain other highly qualified personnel in the future, could harm our business.
As we continue to grow, we cannot guarantee we will be able to attract the personnel we need to maintain our competitive position. If we do not succeed in attracting, hiring and integrating excellent personnel, or retaining and motivating existing personnel, we may be unable to grow effectively.
We may need to raise additional funds in the future to achieve our current business strategy and our inability to obtain funding will cause our business to fail.
We may need to raise additional funds through public or private debt or equity sales in order to fund our future operations and fulfill our business plan in the future. These financings may not be available when needed. Even if these financings are available, they may be on terms that we deem unacceptable or are materially adverse to your interests with respect to dilution of book value, dividend preferences, liquidation preferences, or other terms. Our inability to obtain financing could have an adverse effect on our ability to implement our current business plan and develop our properties and products, and as a result, could require us to diminish or suspend our operations and possibly cease our existence.
Other Risks
Broker-dealers may be discouraged from effecting transactions in our shares because they are considered penny stocks.
Rules 15g-1 through 15g-9 promulgated under the Securities Exchange Act of 1934, as amended, impose sales practice and disclosure requirements on NASD broker-dealers who make a market in "penny stocks". A penny stock generally includes any non-NASDAQ equity security that has a market price of less than $5.00 per share. NASD broker-dealers who act as market makers for our shares generally facilitate purchases and sales of our shares. The additional sales practice and disclosure requirements imposed upon broker-dealers may discourage broker-dealers from effecting transactions in our shares, which could severely limit the market liquidity of the shares and impede the sale of our shares in the secondary market.
Under the penny stock regulations, a broker-dealer selling penny stock to anyone other than an established customer or "accredited investor" (generally, an individual with net worth in excess of $1,000,000 or an annual income exceeding $200,000, or $300,000 together with his or her spouse) must make a special suitability determination for the purchaser and must receive the purchaser's written consent to the transaction prior to sale, unless the broker-dealer or the transaction is otherwise exempt.
In addition, the penny stock regulations require the broker-dealer to deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt. A broker-dealer is also required to disclose commissions payable to the broker-dealer and the registered representative and current quotations for the securities. Finally, a broker-dealer is required to send monthly statements disclosing recent price information with respect to the penny stock held in a customer's account and information with respect to the limited market in penny stocks.
The Financial Industry Regulatory Authority (“FINRA”) sales practice requirements may also limit your ability to buy and sell our common stock, which could depress the price of our shares
.
FINRA has adopted rules that require broker-dealers to have reasonable grounds for believing that an investment is suitable for a customer before recommending that investment to the customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status and investment objectives, among other things. Under interpretations of these rules, FINRA believes that there is a high probability such speculative low-priced securities will not be suitable for at least some customers. Thus, FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our shares, have an adverse effect on the market for our shares, and thereby depress our share price.