We hope you’re enjoying the long weekend with your loved ones. Many high growth stocks pulled back on Thursday, and Friday to some extent – however, valuations still remain elevated. Interestingly, a Financial Times piece on Friday suggested Softbank’s option trading could have been tech stocks higher over the summer.
Canadian Technology Capital Markets & Company News
Montréal payment tech company Nuvei files for IPO on TSX. Montréal-based FinTech company Nuvei has filed to go public on the Toronto Stock Exchange. Nuvei filed a preliminary prospectus for its initial public offering (IPO) on Tuesday. The company, which has developed payment processing technology, has applied to be listed on the TSX under the symbol ‘NVEI.’ Nuvei has 765 employees and services more than 50,000 customers around the world. The decision to go public by the company, which was founded in 2003, follows a successful year of financing. In December, Nuvei raised $358 million in common equity financing, giving it an estimated value at the time of $2.65 billion. The investment was raised mostly from existing shareholders, like Canadian private equity firm Novacap, some of Novacap’s limited partners, as well as Caisse de dépôt et placement du Québec (CDPQ). https://bit.ly/353Ykii
WELL Health (WELL-TSX) to expand into US market with proposed majority stake in US telehealth leader circle medical and announces $23 million offering with group of investors led by Mr. Li Ka-shing. Silicon Valley based Circle Medical is a National US telehealth provider who has delivered virtual primary healthcare services in 35 states in the past 100 days and plans to extend its telehealth services to the majority of the remaining states within the next few months. Circle Medical also owns and operates two California based brick and mortar clinics. Circle Medical has “payer” agreements with most of the major health insurance carriers in the United states. This allows the company’s service to be in-network and accessible by ~200 million Americans who can use the patient-centric Circle Medical “app” anytime for either no cost or a small co-pay. WELL also announces it has received commitments for the sale of $23 million of its common shares as part of a private placement led by Mr. Li Ka-shing to support the deal and WELL’s entrance into the US market. WELL’s US$14 million control investment in Circle Medical includes a subscription of US$5 million worth of shares from Circle Medical’s treasury and stock swap with WELL stock for up to US$9 million. https://bit.ly/3jyVSnJ
Vena Solutions secures US$25 million in financing from CIBC Innovation Banking. The capital comes in the form of a multi-part credit facility. The loan is meant to help support the startup amid the COVID-19 pandemic, with Vena CFO Darrell Cox calling the facility a “very low-cost buffer in uncertain times.” “This facility allows us to further extend our growth and gives us more flexibility.” Cox told BetaKit that this year some of the industries and customers Vena serves were “hard hit” by the COVID-19 pandemic. “That’s had an impact on us,” the CFO stated. The US$25 million from CIBC follows a US$115 million equity financing round that Vena raised in early 2019. JMI Equity led the round, which saw participation from Centana Growth Partners, the firm that led Vena’s US$30 million financing in 2016. Vena’s total venture funding to date totals $150 million. https://bit.ly/2F3BdZY
AutoTech startup Acerta secures US$5 million of new capital in OMERS-led Series A. Acerta Analytics, which uses machine learning to help automakers perform quality control, has announced a US$7 million Series A round led by OMERS Ventures. Two million dollars of that round, however, comes via convertible notes secured in 2018, leaving the AutoTech startup with US$5 million in new capital. https://bit.ly/3lJJW4n
ProNavigator raises $5.6 million to tackle United States insurance market. Kitchener InsurTech startup ProNavigator has closed a $5.6 million financing round to help it increase its presence in the United States. The round includes $3.6 million in equity, co-led by new investor Luge Capital as well as GreenSky Capital and MaRS IAF, which also co-led ProNavigator’s seed. iNovia Capital and the Business Development Bank of Canada (BDC), through its investment matching program, also participated in the round. CIBC Innovation Banking contributed $2 million in debt financing. https://bit.ly/34Vls2b
Police across Canada are using predictive policing algorithms, report finds. Police across Canada are increasingly using controversial algorithms to predict where crimes could occur, who might go missing, and to help them determine where they should patrol, despite fundamental human rights concerns, a new report has found. The report breaks down how police are using or considering the use of algorithms for several purposes including predictive policing, which uses historical police data to predict where crime will occur in the future. Right now in Canada, police are using algorithms to analyze data about individuals to predict who might go missing, with the goal of one day using the technology in other areas of the criminal justice system. Some police services are using algorithms to automate the mass collection and analysis of public data, including social media posts, and to apply facial recognition to existing mugshot databases for investigative purposes. https://bit.ly/31Sjjm5
Global Markets: IPOs, Venture Capital, M&A
SoftBank unmasked as ‘Nasdaq whale’ that stoked tech rally. SoftBank is the “Nasdaq whale” that has bought billions of dollars’ worth of US equity derivatives in a move that stoked the fevered rally in big tech stocks before a sharp pullback on Thursday, according to people familiar with the matter. The Japanese conglomerate has been snapping up options in tech stocks during the past month in huge amounts, contributing to the largest trading volumes in contracts linked to individual companies in at least 10 years, these people said. One banker described it as a “dangerous” bet. The aggressive move into the options market marks a new chapter for the investment powerhouse, which in recent years has made huge bets on privately held technology start-ups through its US$100bn Vision Fund. After the coronavirus market tumult hit those bets hard, the company established an asset management unit for public investments using capital contributed by its founder Masayoshi Son. Now it has also made a splash in trading derivatives linked to some of those new investments, which has shocked market veterans. “These are some of the biggest trades I’ve seen in 20 years of doing this,” said one derivatives-focused US hedge fund manager. “The flow is huge.” https://bit.ly/2Z8EMFv
Jack Ma’s US$30 billion Ant IPO could push tech fundraising to highest level since dot-com bubble’s peak. Ant Group’s upcoming initial public offering could bring tech IPO proceeds to the highest level since the dot-com bubble’s 1999 summit. The company — an affiliate to billionaire Jack Ma’s Alibaba empire — is targeting a valuation of US$225 billion and could raise roughly US$30 billion in the stock sale. Should demand for Ant’s IPO hold strong, the debut would push global first-time stock offerings by tech companies above US$57 billion, according to data collected by Bloomberg. The previous record was set in 1999, when investor interest in new tech stock offerings drove US$62 billion worth of IPO proceeds. That year represented the peak of the dot-com era, before fledgling tech stocks tumbled at the turn of the century. By 2001, tech IPOs brought in less than US$10 billion. https://bit.ly/3gM9ryr
Reid Hoffman, Mark Pincus join SPAC boom. LinkedIn co-founder Reid Hoffman has partnered with Zynga founder Mark Pincus to form Reinvent Technology Partners, the latest in a series of new special-purpose acquisition companies, also known as blank-check companies. SPACs, which exist for the sole purpose of raising capital from investors to acquire a business, have exploded in popularity. These reverse mergers offer aging ‘unicorn’s or other private tech businesses another way of going public. Hoffman and Pincus plan to raise US$600 million to acquire a late-stage technology business, according to an SEC filing. In their SPAC prospectus, the pair outline a “need for a new, additional type of venture capital that helps companies at scale pursue innovation.” More than 75 SPACs have raised roughly US$30 billion so far this year, according to website SPACInsider. Successful SPACs, such as Virgin Galactic’s reverse merger led by former Facebook executive Chamath Palihapitiya, have propelled a number of individuals to form their own blank-check companies. The growing list includes Eventbrite co-founder and Uber investor Kevin Hartz, former House speaker Paul Ryan and Casper CEO Philip Krim.
Airbnb turns down Ackman, for now. Hedge fund manager Bill Ackman’s blank-check company has been looking for hot private tech firms to take public with its US$4 billion in capital. One of its targets, Airbnb, apparently isn’t interested. Ackman’s Pershing Square Tontine Holdings approached Airbnb to take the travel firm public this year. But those talks have broken off, Bloomberg reported. Instead, Airbnb plans to go forward with a traditional IPO. It’s not clear why wasn’t Airbnb interested in tying up with the SPAC. But the disinterest may highlight some of SPACs’ limitations, including the possibility for more dilution and outsized investor control compared to an IPO.
Dating app Bumble preparing for an IPO above US$6 billion. Dating app Bumble is preparing for an initial public offering (IPO), and could seek a valuation of US$6 billion to US$8 billion, Bloomberg News reported on Tuesday, citing people familiar with the matter. Bumble’s IPO could come early next year, the report said, adding that no plans had been finalised and the timing of the IPO could change.
Wish files ‘confidentially’ for public offering of stock. Wish.com said Monday that it has “confidentially” submitted a draft registration with the Securities and Exchange Commission related to a proposed public offering of Class A common stock. The shopping site’s offering is expected to take place after the completion of an SEC review. The company is looking to go public at a time that the Renaissance IPO ETF ipo has rallied 29.9% over the past three months, while the S&P 500 spx has gained 15.2%. https://on.mktw.net/32MM6rE
Amazon’s Prime Air can officially begin drone delivery trials in the US. The Federal Aviation Administration (FAA) granted Amazon Prime Air the designation, which allows Amazon to begin its first commercial delivery trials in the US, Bloomberg reports. The company will use the hexagon-shaped next-gen hybrid drone it showed off last year. Amazon has not revealed when or where it will begin its commercial delivery trials, but as Bloomberg points out, it does have test sites in the Northwest and in the nearby Vancouver area. Amazon has also tested drones in the UK. Still, we’re probably a few years away from a commercial drone delivery service. In part because the FAA still needs to define regulations beyond the trial phase. https://engt.co/32Ky8Xd
Uber launches car rentals in the UK for maximum social distancing. Uber announce today that it will soon allow users in the UK to rent cars via its app in a partnership with car rental company CarTrawler. Users will be able to select the new “Uber Rent” option from within the app and then browse available cars for their chosen date and location. Rental cars can then be picked up from the “hundreds” of car hire company pickup locations. The UK launch follows trials in France and Australia. The process works a little differently from Uber’s bike or scooter rentals. Although Uber says you’re technically able to make your booking at the same time as you pick up the vehicle (as you would when renting one of its Jump bikes in the UK), it encourages you to make car reservations at least 24 hours in advance. Rentals can be cancelled up to 48 hours ahead of collection and Uber is promising discounts on rentals of up to 25 percent. Uber recommends you book your car 24 hours in advance. This isn’t the first time Uber has offered car rentals. Back in 2018, it announced a similar scheme in partnership with Getaround in the US, but discontinued the consumer-focused part of the program later that year in favor of focusing on offering rental cars solely for its drivers. https://bit.ly/31Xsf9D
Slack launches the Future Forum to create a better way to work. Slack is launching the Future Forum, a consortium that will help companies make the transformations necessary to thrive in the new economy. The Future Forum is dedicated to the concept that companies need to make a comprehensive shift in how they operate. The upside is phenomenal: diverse teams of talented individuals working together toward a common purpose, able to move fast to capture opportunity and be resilient in the face of challenge. https://bit.ly/3lGSglB
Media, Streaming, Gaming & Sports Betting
Facebook Watch is getting 1.25 billion visitors each month. The company isn’t saying specifically how those numbers have changed during the pandemic (when video services like Netflix have seen dramatic growth), but product lead Paresh Rajwat said there was “a really big surge” at the beginning of lockdown and social distancing, and that the surge has not subsided as society begins to reopen. Facebook Watch launched in 2018. Back in June of last year, the company said that 720 million people were watching at least one minute of Watch content every month. Rajwat noted that while Watch is built on “the social layer of Facebook,” with videos shareable across Facebook’s many products, the views are happening on Watch itself. https://tcrn.ch/2YYfHx5
Stolen Fortnite accounts sold as part of US$1 billion black market. Tens of thousands of Fortnite accounts are being sold online daily in a black market for stolen video-game accounts that generates US$1 billion annually, according to a report from Night Lion Security, which helps companies identify vulnerabilities. Criminals are using automated tools that can check 500 accounts a second to discover if login credentials stolen in various recent data breaches unlock any Fortnite accounts. Some Fortnite accounts have valuable skins — changing the appearance of a player’s avatar — and can sell for thousands of dollars, said Vinny Troia, who runs Night Lion. An average account sells for US$200 to US$250, he said. Hacked accounts from competing games like Roblox, Microsoft Corp.’s Minecraft and Jagex’s RuneScape are popular as well, Troia said. The four games add up to about US$700 million in hacked account sales a year, he estimated, while the rest of video games round off the figure to US$1 billion. “Because of Covid, the demand has gone way up, there’s a general supply issue,” Troia said. https://bloom.bg/31JVIE2
Adtech, Privacy & Regulatory
Apple to delay iOS change roiling mobile ad market. Apple plans to delay the enforcement of a controversial change to its next mobile operating system that would upend how ads are targeted on iPhones and iPads, according to people familiar with the matter. The change in iOS 14, the next version of Apple’s mobile software, will require developers to ask users to share their device’s unique identifier for advertising purposes through a prompt. Many developers and advertisers rely on this identifier, or IDFA, to track the effectiveness of their ad campaigns in mobile apps, particularly for ads that prompt the viewer to download a specific app or game. Experts believe most people will not agree to share their IDFA when asked. https://bit.ly/3boCZ4c
AT&T calls for Section 230 reforms. AT&T is urging the Trump administration to modify a critical legal immunity for Internet companies that protects them from lawsuits over user-posted content. The immunity, known as Section 230, allows internet companies to post inaccurate information even though the same content might be considered a violation of libel laws if published by a traditional newspaper or magazine. Trump first proposed restricting the immunity in May after Twitter and Facebook began moderating his posts for breaking their rules on misinformation and glorifying violence. AT&T weighed in on the debate this morning in a corporate blog post. Public comments are due at the Federal Communications Commission Wednesday. AT&T wrote that the legal immunity “should be modified to reduce the gross disparities in legal treatment that have emerged between the dominant online platforms and the traditional purveyors of third-party content, such as book publishers, newspapers, or radio and television businesses.” https://bit.ly/3jAAcYF
Justice Dept. plans to file antitrust charges against Google in coming weeks. The Justice Department plans to bring an antitrust case against Google as soon as this month, after Attorney General William P. Barr overruled career lawyers who said they needed more time to build a strong case against one of the world’s wealthiest, most formidable technology companies, according to five people briefed on internal department conversations. Justice Department officials told lawyers involved in the antitrust inquiry into Alphabet, the parent company of Google and YouTube, to wrap up their work by the end of September, according to three of the people. Most of the 40-odd lawyers who had been working on the investigation opposed the deadline. Some said they would not sign the complaint, and several of them left the case this summer. Some argued this summer in a memo that ran hundreds of pages that they could bring a strong case but needed more time, according to people who described the document. Disagreement persisted among the team over how broad the complaint should be and what Google could do to resolve the problems the government uncovered. The lawyers viewed the deadline as arbitrary. https://nyti.ms/3m0iWxY
Oculus halts headset sales in Germany. A Facebook spokesperson confirmed the news to GamesIndustry.biz, saying, “We are temporarily pausing the sale of Oculus devices to consumers in Germany. We will continue supporting users who already own an Oculus device and we’re looking forward to resuming sales in Germany soon.” The headsets have been pulled pending discussions with German regulators, but Facebook did not specify the issue that had to be resolved before the headsets could be returned to shelves. The Commissioner was particularly skeptical about Facebook imposing that requirement on existing Oculus headset owners. (Facebook said it will stop supporting original Oculus accounts after January 1, 2023.) The regulator was less certain about the legality of applying that requirement to new customers, but said it also might violate German laws against coupling products to services. https://bit.ly/3lJAyxM
Amazon drivers are hanging smartphones in trees to get more work. A strange phenomenon has emerged near Amazon.com Inc. delivery stations and Whole Foods stores in the Chicago suburbs: smartphones dangling from trees. Contract delivery drivers are putting them there to get a jump on rivals seeking orders, according to people familiar with the matter. Someone places several devices in a tree located close to the station where deliveries originate. Drivers in on the plot then sync their own phones with the ones in the tree and wait nearby for an order pickup. The reason for the odd placement, according to experts and people with direct knowledge of Amazon’s operations, is to take advantage of the handsets’ proximity to the station, combined with software that constantly monitors Amazon’s dispatch network, to get a split-second jump on competing drivers. https://bloom.bg/2EZ2uwC
Fintech, Blockchain & Cryptocurrency
ByteDance enters China’s digital payments. TikTok’s owner ByteDance confirmed it is entering the fray for China’s digital payments, a market dominated by tech giants Tencent and Alibaba affiliate Ant Group. ByteDance said that it acquired payment agency UIpay, and gotten a payments license. The acquisition was first reported by Chinese media in 2018, but ByteDance had denied it at the time, saying it was only a UIpay client. ByteDance’s financial services is led by James Tian, a former co-head of technology, media and telecommunications at investment bank China International Capital Corporation. Digital payments and online financial services are dominated by Ant’s Alipay and Tencent’s WeChat Pay. But other Chinese tech giants have launched their own payments services as an alternative option for users as well. For instance, Meituan, JD.com and Didi Chuxing have their own payments available on their apps. https://bit.ly/2F5BYSh
Robinhood faces SEC scrutiny. Popular stock brokerage platform Robinhood is currently being investigated by the Securities and Exchange Commission for selling clients’ stock trade orders to high speed trading firms, according to the Wall Street Journal. The company could face a US$10 million fine from the SEC as a result, the Journal reports. The SEC probe follows a string of issues that have dogged Robinhod over the course of the last few months, including outages that kept users from trading stock options and the suicide of a 20-year-old man who misinterpreted the amount of money he owed the platform. The current probe involves Robinhood’s failure to disclose that the company generated revenue from selling its customers’ stock trades to brokers, a legal but controversial practice among brokerages. The increase in governmental oversight has not deterred investors: in August, the company announced that it had raised a fresh US$200 million in funding, valuing the company at US$11 billion. https://bit.ly/2DvxDYs
Robinhood rise brings setbacks of irate traders, U.S. probes. Over the first half of the year, U.S. consumer protection agencies received more than 400 complaints about Robinhood — roughly four times more than competitors like Charles Schwab Corp. and Fidelity Investments’ brokerage unit. The grievances, obtained via a public records request to the Federal Trade Commission, depict novice investors in over their heads, struggling to understand why they’ve lost money on stock options or had shares liquidated to pay off margin loans. Among the setbacks highlighted in the documents is a pivotal breakdown in early March when Robinhood stopped working for more than a day, just as markets were swinging wildly on coronavirus fears. Some complainants reported losing thousands of dollars because they couldn’t sell holdings. Others bemoaned the missed opportunity to profit. Most disturbing to the investors was that as the chaos reigned, there was nobody at Robinhood to call for assistance. Many couldn’t even find a listed phone number. https://bloom.bg/3hUuxfC
U.S. considers blacklisting China’s largest chipmaker as tech tensions escalate. The Trump administration is considering imposing export restrictions on Semiconductor Manufacturing International Corporation, China’s largest manufacturer of semiconductors, according to a Defense Department spokesperson. The Department of Defense is in discussions over whether SMIC should be added to the Commerce Department’s entity list, which essentially restricts those companies from receiving specific goods made in the U.S. The administration’s move is part of a continued effort to put pressure on China’s technology firms and would mark a major escalation in the tech battle between the U.S. and China. SMIC is viewed as a key player in China’s effort to boost its domestic semiconductor industry, an ambition that was accelerated by the U.S.-China trade war. Imposing export controls on SMIC would impact U.S. companies that sell chip-making technology to China manufacturers. The U.S. entity list now includes more than 275 China-based companies, according to Reuters, which first reported that SMIC might be blacklisted. U.S. officials recently announced it will further tighten restrictions on China’s Huawei Technologies in order to crack down on the telecommunication company’s access to commercially available chips. https://cnb.cx/3bvqVOs
China to plan sweeping support for chip sector to counter Trump. China is planning a sweeping set of new government policies to develop its domestic semiconductor industry and counter Trump administration restrictions, conferring the same kind of priority on the effort it accorded to building its atomic capability, according to people with knowledge of the matter. Beijing is preparing broad support for so-called third-generation semiconductors for the five years through 2025, said the people, asking not to be identified discussing government deliberations. A suite of measures to bolster research, education and financing for the industry has been added to a draft of the country’s 14th five-year plan, which will be presented to the country’s top leaders in October, the people said. China’s top leaders will gather next month to lay out their economic strategy for the next half decade, including efforts to ramp up domestic consumption and make critical technology at home. President Xi Jinping has pledged an estimated US$1.4 trillion through 2025 for technologies ranging from wireless networks to artificial intelligence. Semiconductors are fundamental to virtually every component of China’s technology ambitions — and an increasingly aggressive Trump administration threatens to cut off their supply from abroad. https://bloom.bg/2QTxVLA
Apple investing in world’s largest onshore wind turbines to power data center. Apple has announced that it is investing in the world’s largest onshore wind turbines as part of its commitment to becoming 100% carbon neutral by 2030. The company’s own operations achieved this back in 2018, but the expanded target incorporates Apple’s entire supply chain and product lifecycle. The wind turbines will power one of the company’s data centers, with the excess power feeding into the national grid. The investment is taking place in Denmark. https://bit.ly/3lPEJYQ
Bitcoin miner is scoring 700% profits selling energy to grid. On a sweltering summer afternoon in West Texas, a cryptocurrency miner backed by billionaire Peter Thiel powered down its data-processing centers for about 30 minutes. During that short window, the company made money not from Bitcoin, but from selling electricity. https://bloom.bg/34XTpPC
Sophic Capital Client Insights
Sophic clients at LD Micro conference. This past week, Kontrol Energy (KNR-CSE, KNR-OTCQB), Nanotech Security (NTS-TSXV; NTSFF-OTC), OneSoft Solutions (OSS-TSXV; OSSIF-OTC) and UGE International (UGE-TSXV; UGEIF-OTC) presented the LD Micro conference virtually along with over 350 other companies. The conference also saw well over 1,000 1×1 investor meetings.
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