assetentities(ASST) - 2022 Q4 - Annual Report

Target Audience and Market Strategy - The company targets "Generation Z" users, who are increasingly seeking financial services despite lacking financial literacy, with a focus on video and social media education [58]. - The company launched its REALTY Discord server in May 2022 to attract a more diverse subscriber base interested in real estate alternatives [59]. - The company expects to increase sales and revenues through the expansion of its AE.360.DDM service and various Discord servers, leveraging social media campaigns and SEO strategies [60]. - The AE.360.DDM service is anticipated to grow through SEO, Facebook Ads, and targeted outreach, with an online marketing campaign initiated in February 2023 [63]. - The company faces competition from various Discord servers, including WallStreetBets with approximately 563,000 members and Eagle Investors with around 260,000 members as of March 2023 [65][66]. Company Structure and Personnel - The company has seven full-time employees and 28 independent contractors, with plans to hire up to 50 additional independent contractors for Discord-based services [74]. - The company operates under remote-first principles and maintains a good relationship with its personnel, who are not represented by labor unions [74]. - The company was formed as a general partnership on August 1, 2020, and transitioned to a California LLC on October 20, 2020, before incorporating as a Nevada corporation on March 9, 2022 [87]. - Following the merger on March 28, 2022, Asset Entities Inc. acquired the business of California LLC, with AEH holding 97.56% of the total issued shares [87]. Stock Structure and IPO - The company has a dual-class stock structure, with Class A Common Stock entitled to ten votes per share and Class B Common Stock entitled to one vote per share [90]. - Prior to the IPO, AEH controlled approximately 97.3% of the voting power with 8,385,276 shares of Class A Common Stock and 2,364,724 shares of Class B Common Stock outstanding [91]. - After the IPO, as of the report date, there are 5,275,724 shares of Class B Common Stock issued and outstanding, with non-officer stockholders owning approximately 4.3% of total voting power [91]. - The company conducted private placements of Class B Common Stock, issuing 750,000 shares at $1.00 per share for a total of $750,000 [95]. - The private placement shares were subject to lockup provisions for 365 days, which have since been fully waived [95]. - The Company raised total gross proceeds of $7,500,000 from the IPO, with net proceeds of approximately $6.6 million after deductions [99]. - The IPO shares were sold at an IPO price of $4.65, which is 93% of the public offering price of $5.00 per share [99]. - The Company granted Boustead a 45-day over-allotment option to purchase an additional 225,000 shares, representing 15% of the IPO shares [99]. - The Representative's Warrant allows Boustead to purchase 105,000 shares at an exercise price of $6.25 per share, which is 125% of the public offering price [99]. - The Company plans to use the net proceeds for corporate infrastructure, marketing, and expansion of its social influencer network, "SiN" [100]. - Approximately 78.0% of the common stock is subject to a lock-up agreement for 12 months, with other percentages locked for 9 and 6 months [105]. - The Registration Statement registered for resale a total of 1,500,000 shares of Class B Common Stock, with a maximum aggregate offering price of $8,625,000 [108]. Regulatory Environment - The company is subject to evolving laws and regulations affecting online business, including the California Consumer Privacy Act and the General Data Protection Regulation [79]. - The company may need to register as an investment adviser if it does not qualify for the "publisher's exclusion," which could impose significant regulatory burdens [86]. - If deemed an investment adviser, the company would be subject to fiduciary duties, record-keeping requirements, and administrative oversight by the SEC [86]. - The company intends to operate in a manner that avoids inadvertently becoming subject to the regulatory requirements under the Investment Advisers Act [85]. Financial Outlook - The company does not anticipate that recently issued accounting pronouncements will materially impact its financial statements [313].