Change in Fiscal Year
On May 11, 2016, our Board of Directors changed the Company’s
fiscal year end from September 30 to March 31. As a result of this change, this Transition Report on Form 10-K/T impacts the comparability
of the prior fiscal year ended September 30, 2015 to the transitional year ended March 31, 2016. The transitional period covered
by this Transition Report on Form 10-K/T is October 1, 2015 to March 31, 2016, and we have, therefore, provided unaudited financial
information for the comparable period of the prior year, from October 15, 2014 (inception) to March 31, 2015, for comparison. The
equivalent prior period is based on historical data and is matched to the current transitional period as closely as possible.
Overview
We were incorporated in the State of Nevada on August 6, 2012
under the name “Online Yearbook” with the principal business objective of developing and marketing online yearbooks
for schools, companies and government agencies.
On November 17, 2014, Rocky Mountain Resource Holdings, Inc.
(“RMRH”) became our majority shareholder by acquiring 5,200,000 shares of our common stock (the “Shares”),
or 69.06% of the issued and outstanding shares of our common stock, pursuant to stock purchase agreements with Messrs. El Maraana
and Salah Blal, our former officers and directors. The Shares were acquired for an aggregate purchase price of $357,670.
On December 8, 2014, we changed our name to “RMR Industrials,
Inc.” in connection with the change in our business plan.
On February 27, 2015 (the “Closing Date”), we entered
into and consummated a merger transaction pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) by and
among the Company, OLYB Acquisition Corporation, a Nevada corporation and wholly owned subsidiary of the Company (“Merger
Sub”) and RMR IP, Inc., a Nevada corporation (“RMR IP”). In accordance with the terms of Merger Agreement, on
the Closing Date, Merger Sub merged with and into RMR IP (the “Merger”), with RMR IP surviving the Merger as our wholly
owned subsidiary. Chad Brownstein and Gregory M. Dangler are directors of the Company and co-owners of RMRH which was the majority
shareholder of the Company prior to the Merger. Additionally, Messrs. Brownstein and Dangler were indirect controlling shareholders
and directors of RMR IP prior to the Merger. As such, the Merger was among entities under the common control of Messrs. Brownstein
and Dangler.
Our current focus is on developing and commercializing
key intellectual property rights across natural resource related assets. Our business operations focus on developing potential
licensing opportunities, joint ventures and strategic alliances, which leverage our management team’s industrial operations
experience.
We have acquired proprietary intellectual property rights, including
patents to increase oil and gas production. This package of intellectual property, licensed from Colorado School of Mines, which
specializes in minerals technology innovation, occurs through modified injection processes. Our active operations have primarily
focused on developing commercial opportunities and product line extensions for this industrial based intellectual property.
The enhanced oil recovery process patents include multiple configurations varying the cycles of low-salinity water, carbon dioxide
and pumping pressure. Our rights correspond to issued US patent 7,662,275 and US patent applications 61/946062, 61/941869 and 61/950500.
Our current intellectual property portfolio is focused on industrial
mineral advancement. Specifically, the extraction of hydrocarbons from reservoirs. Our current sales and marketing effort is dedicated
to multiple leading industry operators and service providers, such as oilfield and well completion providers, through licensing
and joint venture efforts. Our business methodology is that the academic and corporate cultures provide an environment to source
appealing technological and process improvements but lack the teams to properly implement and monetize. Further, we believe our
affiliations, capabilities, and key relationships within the academic, corporate and industrial sectors is an advantage to complement
our current development plans. Our management team has over 15 years of experience licensing intellectual property from leading
universities and corporations.
To complement our current development plans, we have a strategy
to own, operate, produce and distribute certain industrial minerals, including but are not limited to: feldspar, talc, mica, bentonite,
vermiculite, frac sand, aggregates, antimony, barite, silica, ball clays, graphite, sulfur and zeolite. In addition, we also plan
to own, operate, produce and distribute certain chemicals, including but not limited to: glycols, ethanolamines, methanol, antifreeze,
biocides, corrosion inhibitors, demulsifiers, desalting compounds and dispersants. The experienced management team of RMR
Industrials Inc. brings a multi-cycle successful track record of developing and licensing key intellectual property rights and
discovering, financing and operating off-market natural resource businesses.
We plan to develop, acquire and consolidate complementary industrial
commodity assets and intellectual property through capitalizing on the volatile oil markets, down cycles in commodity markets,
and other ancillary opportunities. Typically these assets are the core manufacturer and supplier of specific bulk commodity minerals,
chemicals and petrochemicals distributed to the global manufacturing industry. Part of our strategy is to assemble a portfolio
of mature and value-add industrial commodities businesses to generate scalable enterprises with a large portfolio of products and
services addressing a common and stable customer base.
We do not have any current plans, arrangements, discussions
or intentions to engage in a merger or acquisition with any entities or persons to be used as vehicle for a private company to
become a publicly reporting company.
Strategy
We plan to organically develop multiple intellectual property
assets within our fields’ of expertise. We believe the industrial and natural resource sectors have ample gaps in operations,
optimization, and personnel management and the intellectual property we develop will help enable potential licensees to better
execute in those areas providing key cost savings or revenue growth. We intend to purchase and develop our own proprietary assets
to monetize our own physical resource assets but also license them to producers and industrial consumers in the relevant sectors.
We have been in active discussions with multiple drilling service
providers and larger independent energy companies to potentially license our intellectual property. In the current global energy
climate, low oil prices require operators and service providers to significantly cut costs and show greater returns on extraction
capital. We believe our technology provides that operational advantage to our target customers. For example, low-salinity water
injected into carbonate reservoirs, which have undergone sea-water injection for water flooding, can produce additional oil more
economically if a low-concentration non-ionic surfactant is added to the low-salinity water and injected as chase fluid. This process
can be implemented as low-salinity water flooding – alternating - surfactant augmented in low-salinity water flooding scheme
as well. The reasons are:
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i.
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Full field low salinity water injection is expensive because it has to displace the already injected seawater to be beneficial. This takes a long time to reach the beneficial effects.
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ii.
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Surfactant flooding is effective only in low-salinity environment.
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iii.
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This process can be implemented as an alternating low-salinity-surfactant system to improve economics.
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Our strategy is to evolve from providing primarily patent licenses
to providing additional technology, products and services while creating and leveraging strategic synergies to increase revenue.
One of our goals is to supplement our patent licensing business with additional licensing opportunities for our technologies, products
and services to be incorporated into our customers’ products and/or systems. Our technology licenses are designed to
support the implementation and adoption of our technology into our customers’ products or services. Under technology licenses,
our customers are expected to receive licenses to our patents necessary to implement these solutions in their products with specific
rights and restrictions to the applicable patents elaborated in their individual contracts with us.
When implementing our asset acquisition strategy, our due diligence
process begins with outlining a framework for each prospective asset’s position within the vision of our consolidation strategy.
In defining this framework, we seek to identify the key drivers of the business and industry, as well as the risks associated with
each transaction. With our team of management and finance professionals, its board of advisors, and leading industry consultants,
our due diligence process includes a full examination of each target’s managerial, operational, financial, legal, and environmental
components in relation to how each facet impacts our broader strategy. Our process, while instrumental in identifying the risk
level of each transaction, seeks to also identify hidden value-add opportunities within each business and for our broader portfolio.
We believe that the cash flows generated by the diverse business
segments that we operate will provide us with the ability to pursue further development and growth acquisitions in order to build
on our existing segments, or to establish a new business platform for future growth. To further supplement our capital requirements
for future potential acquisitions, we intend to utilize a combination of debt and equity financings, including traditional loans
from financial institutions. We will utilize a disciplined approach to identify and evaluate potential acquisitions, only pursuing
those that meet our financial and strategic criteria. Our primary criteria focus on accretive assets with positive cash flow in
the industrial commodities sectors. These assets should generate annual cash flow of $500,000 to $15,000,000 or annual revenues
greater than $10,000,000. For consolidating businesses within the same sector and business plan, our criteria will be focused
on not only acquiring historical cash flows but also incremental products, services, proprietary technology, regional access, new
customers or unique advantages.
We have not yet completed the acquisition of any industrial
assets or entered into any types of asset purchase agreements, however, we are engaged in advanced negotiations with two companies
for which we established a preliminary purchase price and key terms. We believe the target audience has been receptive due to adverse
global economic factors in the energy sector, which lead us to anticipate closing on several acquisitions within the next 12 months.
With macroeconomic uncertainty and the recent volatility in commodity prices, we believe many companies will be seeking an exit
strategy at attractive pricing. These favorable valuations may offer increased flexibility to finance potential acquisition targets
through debt or equity securities based on stable historical asset values and expectation of long-term cyclical appreciation of
industrial commodity prices.
We are in advanced negotiations to acquire the assets and certain
liabilities of a magnesium silicate producer and supplier for the ceramic, paint, plastic, roofing, composite wood and agricultural
industries in North America. Due diligence efforts are substantially completed and we have developed a transition plan for post-acquisition
integration activities. The purchase price for the potential acquisition would be $19,000,000, plus the assumption of certain liabilities
and subject to certain working capital and other post-closing adjustments. However, to date we have not entered into any definitive
or binding agreement with such company, and there are no assurances that we will ultimately agree to definitive terms and consummate
the acquisition.
Intellectual Property
Pursuant to an option agreement with the Colorado School of
Mines (“CSM”), we have acquired the rights to certain intellectual property from CSM, including issued US patent 7,662,275
and US patent applications 61/946062, 61/941869 and 61/950500 through payment of an advance deposit of $7,500 to exercise our rights
in accordance with our option agreement with CSM in July 2015. US patent 7,662,275 is the main patent in which we aim to commercialize
our products and services. Our payment secures this intellectual property. The patent applications 61/946062, 61/941869 and 61/950500
are still pending approval with the US Patent and Trademark Office. We believe these applications are complementary and effectively
build on the core technology present in US patent 7,662,275. Regardless of the applications in process, we will pursue our plans
with the issued patent. We estimate an additional payment of $2,500 to $7,500 to secure the remaining patent rights depending on
approvals of the patent applications. These patents describe a process to increase oil and gas production through modified injection
processes. Our management views CSM as a highly respected institution which specializes in industrial minerals technology research
and believes that CSM could be a valuable technical resource for future intellectual property development. We currently have the
right to market and pursue licensing opportunities with these patents and patent applications. We continue to have exclusive rights
to negotiate and acquire rights to US patent applications 61/946062, 61/941869 and 61/950500 from CSM under our option agreement,
which terminates on September 1, 2016.
Our success depends in part upon our ability to protect our
core technology and intellectual property. To establish and protect our proprietary rights, we will rely on a combination of patents,
patent applications, trademarks, copyrights, trade secrets, including know-how, license agreements, confidentiality procedures,
non-disclosure agreements with third parties, employee disclosure and invention assignment agreements, and other contractual rights.
Many of the asset purchases under consideration include intellectual property which has been typically underutilized or under-leveraged
by their current owners. Our plans to maximize value from these assets through focused capital infusion and strategic marketing
implementation.
Potential Competitive Strengths
We believe our process to discover, finance, develop and operate
unique natural resource, intellectual property and industrial assets provides us a competitive advantage to achieve critical mass
through development and acquisition of under-performing assets. Our principals have extensive experience and also collaborated
in investing in and operating natural resource assets for many years. We believe our potential competitive strengths to be the
following:
Application of Intellectual Property.
We have a background
in engineering, operations, finance and general management all within the natural resource sectors.
Proprietary Acquisition Sources
. We have a long-standing
track record of discovering unique assets pertinent to our current business strategy. We will seek to capitalize on the global
network and investing and operating experience of our management team to identify, acquire and operate one or more businesses or
assets in the industrial minerals mining and processing industry, although we may pursue a business combination in complementary
industries, such as specialty chemicals and agriculture.
Status as a Public Company
.
Our status
as a public company will make us an attractive business partner to other natural resource related companies, and will provide greater
access to capital and an increased company profile.
Management Operating and Investing Experience
.
Over
the course of their careers, the members of our management team have developed a broad international network of contacts and corporate
relationships which we believe will serve as a useful source of investment opportunities. Our executive officers are officers of
our sponsor and Rocky Mountain Resources, a privately held natural resources operating company. The management team has applied
their deep understanding of historical precedents to the natural resources markets and established a reputation as one of the thought
leaders within the natural resources sector. The Management team has been working together for the last ten years, over such time
they have assembled a team of natural resources and investment professionals to pursue investments across the industry.
Revenues and Customers
We do not currently generate any revenues. Future revenues will
be generated through licensing intellectual property, providing services and selling commodity and industrial assets. We plan to
grow revenues by not only expanding sales to existing customers but also expanding customer acquisitions through improved infrastructure.
Our future customers are typically manufacturers of ceramics, paints, plastics, paper, rubber, food, cosmetics, and many other
consumer products. Customers of industrial chemicals include oil and gas producers and manufacturing facilities.
Industry and Competition
Industrial Minerals
: The industrial minerals sector
encompasses a large variety of minerals including: chamottes, ball clay, talc, feldspar, graphite, ground silica, kaolin, pegmatite,
quartz, mica, bauxite, bentonite, metakaolins, zeolite, frac sand, aggregates and vermiculite. Industrial minerals are used in
a variety of end projects for a variety of purposes. These minerals are used in ceramics, paints, plastics, paper, rubber, food,
cosmetics, and many other products.
There are significant barriers to entry into industrial mineral
production due to the scarcity of economically viable resources from which to extract the minerals. Geographical location of the
resource drives a large portion of the competitive advantages or disadvantages of an operation. Large companies in this sector
include Imerys, W.R. Grace, and Minerals Technologies.
Talc
Talc is a mineral composed of hydrated magnesium silicate. It
is the softest known mineral and listed as “1” on the Mohs hardness scale. Talc is practically insoluble in water and
in weak acids and alkalis. It is neither explosive nor flammable. Although it has very little chemical reactivity, talc does have
a marked affinity for certain organic chemicals.
Talc is used as a functional filler in the manufacturing of
ceramics, rubbers, plastics and paints/coatings. It is also used for pitch control in paper manufacturing and it is used to coat
seeds in the agriculture industry.
Based on 2013 United States Geological Survey (“USGS”)
data, sales of talc produced domestically were estimated to be 589,000 tons valued at $89 million. Sales of imported talc were
estimated at 240,000 tons. We believe the value of imported talc per ton is estimated to be above $300 based on data collected
in the market place. Compared to other pricing indices (such as the S&P 500 and Case-Schiller index), talc has experienced
less pricing volatility, and has averaged growth of 3.6% annually, over a 20 year span.
Montana was the leading producer state, followed by Texas, Vermont,
and Virginia. The top three companies accounted for more than 99% of the U.S. talc production. The total estimated use of talc
in the United States, including imported talc, was plastics, 27%; ceramics, 18%; paint, 16%; paper, 15%; roofing, 6%; cosmetics,
5%; rubber, 3%; and other, 10%.
Vermiculite
Vermiculite is a hydrated magnesium-aluminum-iron silicate.
Raw vermiculite is mica-like in appearance, contains water molecules within its internal structure, and ranges in color from black
to various shades of brown to yellow. When vermiculite flakes are heated rapidly to a temperature of 900 °C or higher, the
intermolecular water flashes into steam, and the flakes expand into accordion-like particles, which are gold or bronze in color.
This expansion process is called exfoliation, and the resulting lightweight material is chemically inert, fire resistant, and odorless.
Vermiculite has a wide range of uses particularly in the agricultural
and construction industries because of its various attributes including fire resistance, low thermal conductivity, high liquid
absorption capacity, inertness, and low density. In horticulture, vermiculite mixed with peat or other composted materials, such
as pine bark, produces a soil-like material well suited as a growing medium for plants.
Based on 2013 USGS data, the end market of about 64,000 tons
of exfoliated vermiculite sold or used by producers was valued at about $50.1 million. There are approximately 18 facilities in
the US which process vermiculite. There are only two companies which mine vermiculite domestically. U.S. domestic prices for vermiculite
concentrate, ex-plant, largely dependent on grade sizing, ranged from $150 to $580 per metric ton in 2014.
Frac Sand
"Frac sand" is a high-purity quartz sand with very
durable and very round grains. It is a crush-resistant material produced for use by the petroleum industry. It is used in the hydraulic
fracturing process (known as "fracking") to produce petroleum fluids, such as oil, natural gas and natural gas liquids
from rock units that lack adequate pore space for these fluids to flow to a well. Most frac sand is a natural material made from
high purity sandstone. An alternative product is ceramic beads made from sintered bauxite or small metal beads made from aluminum.
Frac sand is produced in a range of sizes from as small as 0.1
millimeter in diameter to over 2 millimeters in diameter depending upon customer specifications. Most of the frac sand consumed
is between 0.4 and 0.8 millimeters in size. Until recently, producers in Wisconsin and Texas were supplying much of the frac sand
used by the oil and gas industry. However, a huge spike in demand caused by the natural gas and shale oil boom has motivated many
companies to provide this product.
Total industrial sand and gravel production in the United States
increased to 62.1 million metric tons (Mt) in 2013 from 50.6 Mt in 2012. Industrial sand production increased by 23%, and industrial
gravel production decreased by 20%, compared with that of 2012. The value of production in 2013 was $3.47 billion—a 30% increase
from that of 2012 and a record-high value for industrial sand and gravel production. Estimated world production of industrial sand
and gravel in 2013 was 142 Mt, a 9% increase compared with 2012 production.
Aggregates
Aggregates are key material components used in the production of cement, ready-mixed concrete and asphalt
paving mixes for the residential, nonresidential and public infrastructure markets and are also widely used for various applications
and products, such as road and building foundations, railroad ballast, erosion control, filtration, roofing granules and in solutions
for snow and ice control. Generally extracted from the earth using surface or underground mining and products, such methods, aggregates
are produced from natural deposits of various materials such as limestone, sand and gravel, granite and trap rock.
Markets are typically local due to high transport costs and
are generally fragmented, with numerous participants operating in localized markets. According to the March 2014 U.S. Geological
Survey, the U.S. market for these products was estimated at approximately 2.1 billion tons in 2013, at a total market value of
$18.6 billion. Relative to other construction materials, such as cement, aggregates consumption is more heavily weighted towards
public infrastructure and maintenance repair. However, the mix of end uses can vary widely by geographic location, based on the
nature of construction activity in each market. Typically, three to six competitors comprise the majority market share of each
local market because of the constraints around the availability of natural resources and transportation.
Industrial Chemicals
:
Chemical distribution
is a cyclical business dependent on industrial demand. The profitability of individual companies depends on an efficient distribution
system. Larger companies can offer more products and services. Local and regional distributors can compete effectively through
superior service or geographic focus.
Chemical products in the oil and gas field segment includes
iron sulfide, demulsifiers, corrosion inhibitor, emulsion breaker, paraffin solvent, biocides, methanol, dispersant and scale inhibitor.
Companies create proprietary blends of these chemicals based on regional production research to solve and prevent production problems.
Other chemical products used in the manufacturing, peroxide
stabilization, surface refinishing and as catalysts include inorganic, organometallic, metal and acid chemicals. This industry
produces basic inorganic chemicals including titanium dioxide, chlor-alkali products and carbon black. Inorganic chemicals are
mineral based, while organic chemicals are carbon based. Inorganic chemicals are mainly used as inputs in manufacturing and industrial
processes. Inorganic chemicals used as pigments and dyes. Distribution networks are the primary channel through which these chemicals
are sold to manufacturers.
The U.S. industry is concentrated: the largest 50 companies
generate more than half of the revenue. Imports to the US of industrial chemicals and plastic resins, largely from Canada, Germany,
Japan, and China, are substantial. Many of these imports move through chemical distributors. Canada, Mexico, China, Belgium, and
Japan are the top recipients of US chemical exports. Major players in the global chemical market include: DuPont, PPG, BASF, Dow,
Bayer, and DSM.
Government Regulation
Our operations will be subject to extensive federal, state and
local laws, regulations and ordinances in the United States and abroad relating to the protection of the environment and human
health and to safety, including those pertaining to chemical manufacture and distribution, waste generation, storage and disposal,
discharges to waterways, and air emissions and various other health and safety matters. Governmental authorities have the power
to enforce compliance with their regulations, and violators may be subject to civil, criminal and administrative penalties, injunctions
or both. We will devote significant financial resources to ensure compliance. We believe that we are in substantial compliance
with all the applicable laws and regulations.
We anticipate that the regulation of our business operations
under federal, state and local environmental laws in the United States and abroad will increase and become more stringent over
time. We cannot estimate the impact of increased and more stringent regulation on our operations, future capital expenditure requirements
or the cost of compliance.
United States Regulation.
Statutory programs relating
to protection of the environment and human health and to safety in the United States include, among others, the following.
CERCLA.
The Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, also known as “CERCLA” and “Superfund”, and comparable state laws
generally impose joint and several liability for costs of investigation and remediation and for natural resource damages, without
regard to fault or the legality of the original conduct, on certain classes of persons with respect to the release into the environment
of specified substances, including under CERCLA those designated as “hazardous substances.” These persons include the
present and certain former owners or operators of the site where the release occurred and those that disposed or arranged for the
disposal of the hazardous substance at the site. These liabilities can arise in association with the properties where operations
were conducted, as well as disposal facilities where wastes were sent. Many states have adopted comparable or more stringent state
statutes. In the course of our operations, we generated materials that fall within CERCLA’s definition of hazardous substances.
We may be the owner or operator of sites on which hazardous substances have been released and may have generated hazardous substances
that have been transported to or otherwise released upon offsite facilities. We may be responsible under CERCLA for all or part
of the costs to clean up facilities at which such substances have been released by previous owners or operators and offsite facilities
to which our wastes were transported and for associated damages to natural resources.
Resource Conservation and Recovery Act.
The federal Resource
Conservation and Recovery Act, as amended (“RCRA”) and comparable state laws regulate the treatment, storage, disposal,
remediation and transportation of wastes, specifically under RCRA those designated as “hazardous wastes.” The EPA and
various state agencies have limited the disposal options for these wastes and impose numerous regulations upon the treatment, storage,
disposal, remediation and transportation of them. Our operations generate wastes that are subject to RCRA and comparable state
statutes. Furthermore, wastes generated by our operations that are currently exempt from treatment as hazardous wastes may be designated
in the future as hazardous wastes under RCRA or other applicable statutes and, therefore, may be subject to more rigorous and costly
treatment, storage and disposal requirements. Governmental agencies (and in the case of civil suits, private parties in certain
circumstances) can bring actions for failure to comply with RCRA requirements, seeking administrative, civil, or criminal penalties
and injunctive relief, to compel us to abate a solid or hazardous waste situation that presents an imminent or substantial endangerment
to health or the environment.
Clean Water Act.
The federal Clean Water Act imposes
restrictions and strict controls regarding the discharge of wastes and fill materials into waters of the United States. Under the
Clean Water Act, and comparable state laws, the government (and in the case of civil suits, private parties in certain circumstances)
can bring actions for failure to comply with Clean Water Act requirements and enforce compliance through civil, criminal and administrative
penalties for unauthorized discharges of hazardous substances and of other pollutants. In the event of an unauthorized discharge
of wastes, we may be liable for penalties and subject to injunctive relief.
Clean Air Act
. The federal Clean Air Act (CAA), as amended
and comparable state and local laws restrict the emission of air pollutants from many sources and also impose various monitoring
and reporting requirements. These laws may require us to obtain pre-approval for the construction or modification of certain projects
or facilities expected to produce or significantly increase air emissions, obtain and strictly comply with air permit requirements
or utilize specific equipment or technologies to control emissions. Governmental agencies (and in the case of civil suits, private
parties in certain circumstances) can bring actions for failure to strictly comply with air pollution regulations or permits and
generally enforce compliance through administrative, civil or criminal enforcement actions, resulting in fines, injunctive relief
(which could include requiring us to forego construction, modification or operation of sources of air pollutants) and imprisonment.
While we may be required to incur certain capital expenditures for air pollution control equipment or other air emissions-related
issues, we do not believe that such requirements will have a material adverse effect on our operations.
Greenhouse Gas Regulation
. More stringent laws and regulations
relating to climate change and greenhouse gases (GHGs) may be adopted in the future and could cause us to incur material expenses
in complying with them. The EPA has begun to regulate GHGs as pollutants under the CAA. The EPA adopted rules to permit GHG emissions
from stationary sources under the Prevention of Significant Deterioration and Title V permitting programs including the “Prevention
of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule,” requiring that the largest sources first obtain
permits for GHG emissions. The United States Supreme Court, however, ruled that the EPA did not have the authority to require permits
for GHG emissions and also did not have the authority to adopt that rule. The Court did hold that if a source required a permit
under the program because of other pollutants, the EPA had the authority to require that the source demonstrate that it would use
the best available control technology to minimize GHG emissions that exceeded a minimal amount.
Because of the lack of any comprehensive legislation program
addressing GHGs, the EPA is using its existing regulatory authority to promulgate regulations requiring reduction in GHG emissions
from various categories of sources, starting with fossil fuel-fired power plants. There is a great deal of uncertainty as to how
and when additional federal regulation of GHGs might take place. Some members of Congress have expressed the intention to promote
legislation to curb the EPA’s authority to regulate GHGs. In addition to federal regulation, a number of states, individually
and regionally, and localities also are considering implementing or have implemented GHG regulatory programs. These regional and
state initiatives may result in so–called cap–and–trade programs, under which overall GHG emissions are limited
and GHG emission “allowances” are then allocated and sold to and between persons subject to the program. These and
possibly other regulatory requirements could result in our incurring material expenses to comply, for example by being required
to purchase or to surrender allowances for GHGs resulting from other operations or otherwise being required to control or reduce
emissions.
Occupational Safety.
Our operations are also governed
by laws and regulations relating to workplace safety and worker health, principally the Occupational Safety and Health Act (OSHA)
and its regulations. The OSHA hazard communication standard, the EPA’s community right-to-know regulations and similar state
programs may require us to organize and/or disclose information about hazardous materials used or produced in our operations. We
believe that we are in substantial compliance with these applicable requirements.
Foreign Regulation.
We are subject to various laws, regulations
and ordinances to protect the environment, human health and safety promulgated by the governmental authorities in Mexico, Europe,
Singapore, and in other countries where we do business. Each country has laws and regulations concerning waste treatment, storage
and disposal, discharges to waterways, air emissions and workplace safety and worker health. Their respective regulatory authorities
are given broad authority to enforce compliance with environmental, health and safety laws and regulations, and can require that
operations be suspended pending completion of required remedial action.
Licenses, Permits and Product Registrations.
Certain
licenses, permits and product registrations are required for our products and operations in the United States, and in other countries
where we do business. The licenses, permits and product registrations are subject to revocation, modification and renewal by governmental
authorities. In the United States in particular, producers and distributors of chemicals such as penta and creosote are subject
to registration and notification requirements under federal law (including under the Federal Insecticide, Fungicide and Rodenticide
Act (“FIFRA”) and the Toxic Substances Control Act, and comparable state law) in order to sell those products in the
United States. Compliance with these laws has had, and in the future will continue to have, a material effect on our business,
financial condition and results of operations. Under FIFRA, the law’s registration system requires an ongoing submission
to the EPA of substantial scientific research and testing data regarding the chemistry and toxicology of pesticide products by
manufacturers.
Employees
We currently have 4 full-time employees.
Risks Relating to Our Business
We have incurred losses in prior periods and may incur losses
in the future.
We cannot be assured that we can achieve or sustain profitability
on a quarterly or annual basis in the future. Our operations are subject to the risks and competition inherent in the establishment
of a business enterprise. There can be no assurance that future operations will be profitable. We may not achieve our business
objectives and the failure to achieve such goals would have an adverse impact on us.
Our future is dependent upon our ability to obtain financing.
If we do not obtain such financing, we may have to cease our activities and investors could lose their entire investment.
There is no assurance that we will operate profitably or generate
positive cash flow in the future. We will require additional financing in order to proceed with our business plan and acquire existing
businesses that manufacture and distribute chemicals and minerals. We will also require additional financing to sustain our business
operations if we are not successful in earning revenues. We may not be able to obtain financing on commercially reasonable terms
or terms that are acceptable to us when it is required. Our future is dependent upon our ability to obtain financing. If we do
not obtain such financing, our business could fail and investors could lose their entire investment.
Because we may never earn revenues from our operations, our
business may fail and investors may lose all of their investment in our Company.
We are a company with a limited operating history and our future
profitability is uncertain. We have yet to generate positive earnings and there can be no assurance that we will ever operate profitably.
If our business plan is not successful and we are not able to operate profitably, then our stock may become worthless and investors
may lose all of their investment in our Company.
Prior to obtaining a large market share for our products, we
anticipate that we will incur increased operating expenses without realizing any revenues. We therefore expect to incur significant
losses into the foreseeable future. We recognize that, if we are unable to generate significant revenues from the sale of our products
in the future, we will not be able to earn profits or continue operations. There is no history upon which to base any assumption
as to the likelihood that we will prove successful, and we can provide no assurance that we will generate any revenues or ever
achieve profitability. If we are unsuccessful in addressing these risks, our business will fail and investors may lose all of their
investment in our Company.
Our limited operating history makes evaluating our business
and future prospects difficult, and may increase the risk of your investment.
Our limited operating history may not provide a meaningful basis
on which to evaluate our business. We will continue to encounter risks and difficulties frequently experienced by companies at
a similar stage of development, including our potential failure to:
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expand our product offerings and maintain the high quality
of products offered;
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manage our expanding operations, including the integration
of any future acquisitions;
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obtain sufficient working capital to support our expansion
and to fill customers’ orders on time;
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maintain adequate control of our expenses;
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implement our product development, marketing, sales, and
acquisition strategies and adapt and modify them as needed; and
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anticipate and adapt to changing conditions in the markets
in which we operate as well as the impact of any changes in government regulation, mergers and acquisitions involving our competitors,
technological developments, and other significant competitive and market dynamics.
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If we are not successful in addressing any or all of these risks,
then our business may be materially and adversely affected.
If we are unable to identify, fund and execute new acquisitions,
we will not be able to execute a key element of our business strategy.
Our strategy is to grow primarily by acquiring additional businesses
and product lines. We cannot give any assurance that we will be able to identify, acquire or profitably manage additional businesses
and product lines. Financing for acquisitions may not be available, or may be available only at a cost or on terms and conditions
that are unacceptable to us. Further, acquisitions may involve a number of special risks or effects, including diversion of management’s
attention, failure to retain key acquired personnel, unanticipated events or circumstances, legal liabilities, impairment of acquired
intangible assets and other one-time or ongoing acquisition-related expenses. Some or all of these special risks or effects could
have a material adverse effect on our financial and operating results. In addition, we cannot assure you that acquired businesses
or product lines, if any, will achieve anticipated revenues and earnings.
In addition, we may not be able to successfully or profitably
integrate, operate, maintain and manage our newly acquired operations or their employees. We may not be able to maintain uniform
standards, controls, procedures and policies, which may lead to operational inefficiencies.
Loss of key members of our management team could disrupt
our business.
We depend on the continued employment and performance of our
senior executives and other key members of our management team. If any of these individuals resigns or becomes unable to continue
in his or her present role and is not adequately replaced, our business operations and our ability to implement our growth strategies
could be materially disrupted. We generally do not have employment agreements with, and we do not maintain any "key person"
life insurance for, any of our executive officers.
The industries in which we compete are highly competitive,
and we may not be able to compete effectively with our competitors that have greater financial resources, which could have a material
adverse effect on our business, results of operations and financial condition.
The industries in which we operate are highly competitive. Among
our competitors are some of the world's largest chemical companies that have their own raw material resources. Changes in the competitive
landscape could make it difficult for us to retain our leadership position in various products and markets throughout the world.
In addition, some of the companies with whom we compete may be able to produce products more economically than we can. Furthermore,
most of our competitors have greater financial resources, which may enable them to invest significant capital into their businesses,
including expenditures for research and development. Some of our competitors are owned or partially owned by foreign governments
which may provide a competitive advantage to those competitors.
Increases in the price of our primary raw materials may decrease
our profitability and adversely affect our liquidity, cash flow, financial condition and results of operations.
The prices we pay for raw materials in our businesses may increase
significantly, and we may not always be able to pass those increases through to our customers fully and timely. In the future,
we may be unable to pass on increases in our raw material costs, and raw material price increases may erode the profitability of
our products by reducing our gross profit. Price increases for raw materials may also increase our working capital needs, which
could adversely affect our liquidity and cash flow. For these reasons, we cannot assure you that raw material cost increases in
our businesses would not have a material adverse effect on our financial condition and results of operations.
The Company will operate in a global, competitive environment
which gives rise to operating and market risk exposure.
The Company expects to sell a broad range of products and services
in a competitive, global environment, and to compete worldwide for sales on the basis of product quality, price, technology and
customer service. Increased levels of competition could result in lower prices or lower sales volume, which could have a negative
impact on the Company's results of operations.
Economic conditions around the world, and in certain industries
in which the Company does business also impact sales prices and volume. As a result, market uncertainty or an economic downturn
in the geographic areas or industries in which we sell our products could reduce demand for these products and result in decreased
sales volume, which could have a negative impact on our results of operations.
In addition, volatility and disruption of financial markets
could limit customers' ability to obtain adequate financing to maintain operations, which could result in a decrease in sales volume
and have a negative impact on our results of operations. The Company's global business operations may also give rise to market
risk exposure related to changes in foreign exchange rates, interest rates, commodity prices and other market factors such as equity
prices.
Disruptions in production at our manufacturing facilities,
both planned and unplanned, may have a material impact on our business, results of operations and/or financial condition.
Manufacturing facilities in our industry are subject to planned
and unplanned production shutdowns, turnarounds and outages. Unplanned production disruptions may occur for external reasons including
natural disasters, weather, disease, strikes, transportation interruption, government regulation, political unrest or terrorism,
or internal reasons, such as fire, unplanned maintenance or other manufacturing problems. Alternative facilities with sufficient
capacity may not be available, may cost substantially more or may take a significant time to increase production or qualify with
our customers, each of which could negatively impact our business, results of operations and/or financial condition. Long-term
production disruptions may cause our customers to seek alternative supply which could further adversely affect our profitability.
We will expend large amounts of money for environmental compliance
in connection with our operations.
When we become a manufacturer and distributor of minerals and
chemicals, we will be subject to stringent regulations under numerous U.S. federal, state, local and foreign environmental, health
and safety laws and regulations relating to the generation, storage, handling, discharge, disposition and stewardship of hazardous
wastes and other materials. We will expend substantial funds to comply with such laws and regulations and have established a policy
to minimize our emissions to the environment. Nevertheless, legislative, regulatory and economic uncertainties (including existing
and potential laws and regulations pertaining to climate change) make it difficult for us to project future spending for these
purposes and if there is an acceleration in new regulatory requirements, we may be required to expend substantial additional funds
to remain in compliance.
We are subject to environmental clean-up costs, fines, penalties
and damage claims that have been and continue to be costly.
We are subject to lawsuits and regulatory actions, in connection
with current and former operations (including divested businesses), for breaches of environmental laws that seek clean-up or other
remedies. We are also subject to lawsuits and investigations by public and private parties under various environmental laws in
connection with our current and former operations in various states, including with respect to off-site disposal at facilities
where we have been identified as a potentially responsible party under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, commonly referred to as CERCLA. We are also subject to similar risks outside of the U.S.
Increased concerns regarding the safe use of chemicals in
commerce and their potential impact on the environment have resulted in more restrictive regulations from local, state and federal
governments and could lead to new regulations.
Concerns regarding the safe use of chemicals in commerce and
their potential impact on health and the environment reflect a growing trend in societal demands for increasing levels of product
safety and environmental protection. These concerns could manifest themselves in stockholder proposals, preferred purchasing and
continued pressure for more stringent regulatory intervention. These concerns could also influence public perceptions, the viability
of the Company's products, the Company's reputation and the cost to comply with regulations. In addition, terrorist attacks and
natural disasters have increased concerns about the security and safety of chemical production and distribution. These concerns
could have a negative impact on the Company's results of operations.
Local, state and federal governments continue to propose new
regulations related to the security of chemical plant locations and the transportation of hazardous chemicals, which could result
in higher operating costs.
We work with dangerous materials that can injure our employees,
damage our facilities and disrupt our operations.
Some of our operations involve the handling of hazardous materials
that may pose the risk of fire, explosion, or the release of hazardous substances. Such events could result from terrorist attacks,
natural disasters, or operational failures, and might cause injury or loss of life to our employees and others, environmental contamination,
and property damage. These events might cause a temporary shutdown of an affected plant, or portion thereof, and we could be subject
to penalties or claims as a result. A disruption of our operations caused by these or other events could have a material adverse
effect on our results of operations.
We may be subject to claims of infringement of the intellectual
property rights of others, which could hurt our business.
From time to time, we expect to face infringement claims from
our competitors or others alleging that our processes or products infringe on their proprietary technologies. Any claims that our
products or processes infringe the intellectual property rights of others, regardless of the merit or resolution of the claims,
could cause us to incur significant costs in responding to, defending and resolving the claims, and may divert the efforts and
attention of our management and technical personnel from our business. If we are found to be infringing on the proprietary technology
of others, we may be liable for damages, and we may be required to change our processes, redesign our products, pay others to use
the technology or stop using the technology or producing the infringing product. Even if we ultimately prevail, the existence of
the lawsuit could prompt our customers to switch to products that are not the subject of infringement suits.
We are engaged in advanced negotiations in connection
with two potential acquisitions. If we do not complete these transactions, our business and stock price may suffer.
We are engaged in advanced negotiations in connection with the
potential acquisition of a producer and supplier of industrial mineral products for the ceramic, paint, plastic, roofing, composite
wood and agricultural industries and a company that formulates production, drilling and specialty chemicals while also providing
contract blending and reclamation services to the oil and gas industry.
Completion of these transactions is subject to the drafting,
negotiation and consummation of definitive transaction agreements which will include extensive representations, warranties, covenants,
indemnities and certain conditions to the closing of such transactions, including obtaining the relevant regulatory approvals and
having sufficient financing in place. We cannot assure you that we will be able to complete the proposed transactions on the proposed
terms, if at all.
The proposed transactions are part of our ongoing efforts to
implement our business plan by acquiring industrial commodity businesses. However, if we do not complete the proposed acquisitions,
we may not achieve the returns that we seek from the proceeds raised in a potential offering to the extent, if any, that we intend
to use any net proceeds to acquire such assets or companies. We also cannot predict how the announcement of the potential
acquisitions, or the completion or non-completion of the transactions on the contemplated terms, will affect the trading price
of our common stock.
Risks Related to Our Common
Stock and Our Status as a Public Company
Shares of our common stock that have not been registered
under the Securities Act of 1933, as amended, regardless of whether such shares are restricted or unrestricted, are subject to
resale restrictions imposed by Rule 144, including those set forth in Rule 144(i) which apply to a “shell company.”
In addition, any shares of our common stock that are held by affiliates, including any received in a registered offering, will
be subject to the resale restrictions of Rule 144(i).
Pursuant to Rule 144 of the Securities Act of 1933, as amended
(“Rule 144”), a “shell company” is defined as a company that has no or nominal operations; and, either
no or nominal assets; assets consisting solely of cash and cash equivalents; or assets consisting of any amount of cash and cash
equivalents and nominal other assets. As such, we may be deemed a “shell company” pursuant to Rule 144 prior to the
Merger, and as such, sales of our securities pursuant to Rule 144 are not able to be made until a period of at least twelve months
has elapsed from the date on which our Current Report on Form 8-K is filed with the Commission reflecting our status as a non-
“shell company.” Therefore, any restricted securities we sell in the future or issue to consultants or employees, in
consideration for services rendered or for any other purpose will have no liquidity until and unless such securities are registered
with the Commission and/or until a year after the date of the filing of our Current Report on Form 8-K and we have otherwise complied
with the other requirements of Rule 144. As a result, it may be harder for us to fund our operations and pay our employees and
consultants with our securities instead of cash. Furthermore, it will be harder for us to raise funding through the sale of debt
or equity securities unless we agree to register such securities with the Commission, which could cause us to expend additional
resources in the future. Our previous status as a “shell company” could prevent us from raising additional funds, engaging
employees and consultants, and using our securities to pay for any acquisitions, which could cause the value of our securities,
if any, to decline in value or become worthless. Lastly, any shares held by affiliates, including shares received in any registered
offering, will be subject to the resale restrictions of Rule 144(i).
We will be required to incur significant costs and require
significant management resources to evaluate our internal control over financial reporting as required under Section 404 of the
Sarbanes-Oxley Act, and any failure to comply or any adverse result from such evaluation may have an adverse effect on our stock
price.
As a smaller reporting company as defined in Rule 12b-2 under
the Securities Exchange Act of 1934, as amended, we are required to evaluate our internal control over financial reporting under
Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”). Section 404 requires us to include an internal control
report with the Annual Report on Form 10-K. This report must include management’s assessment of the effectiveness of our
internal control over financial reporting as of the end of the fiscal year. This report must also include disclosure of any material
weaknesses in internal control over financial reporting that we have identified. Failure to comply, or any adverse results from
such evaluation could result in a loss of investor confidence in our financial reports and have an adverse effect on the trading
price of our equity securities. Management believes that its internal controls and procedures are currently effective to detect
the inappropriate application of U.S. GAAP rules.
Achieving continued compliance with Section 404 may require
us to incur significant costs and expend significant time and management resources. We cannot assure you that we will be able to
fully comply with Section 404. As a result, investors could lose confidence in our reported financial information, which could
have an adverse effect on the trading price of our securities, as well as subject us to civil or criminal investigations and penalties.
Our founders, who also comprise a majority of the Company’s
management team, have significant ownership of the Company, including a majority of our voting stock giving them the ability to
control most, if not all, Company decisions.
Our directors and executive officers own, directly or indirectly,
approximately 42.2% of the Company’s aggregate outstanding capital stock and approximately 57% of the Company Class A Common
Stock (the Company’s voting capital stock) on their own, effectively giving them voting control on most, if not all, decisions
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The voting rights represented by these share holdings provide our management with a sufficient number of voting rights for all
practical purposes to effectively control the election of our directors, cause us to engage in transactions with affiliated entities,
cause or restrict the sale or merger of the Company, and effect such other matters as may be presented for a vote of our shareholders.
Such concentration of ownership and control could have the effect of delaying, deferring or preventing a change in control of the
Company even when such a change of control would be in the best interests of the Company’s other shareholders. Accordingly,
investors will have little voice in our management decisions and will exercise very little control over us. In addition, the applicable
sections of the Nevada Revised Statutes provide that certain actions must be approved by a specified percentage of shareholders.
In the event that the requisite approval of shareholders is obtained, dissenting shareholders would be bound by such vote. Accordingly,
no persons should purchase any shares unless they are willing to entrust all aspects of control to our management.
The existence of indemnification rights to our directors,
officers and employees may result in substantial expenditures by our company and may discourage lawsuits against our directors,
officers and employees.
The indemnification obligations provided in our articles of
incorporation and our bylaws to our directors and officers could result in the Company incurring substantial expenditures to cover
the cost of settlement or damage awards against directors and officers, which we may be unable to recoup. These provisions and
resultant costs may also discourage our company from bringing a lawsuit against directors and officers for breaches of their fiduciary
duties, and may similarly discourage the filing of derivative litigation by our shareholders against our directors and officers
even though such actions, if successful, might otherwise benefit our company and shareholders.
Our stock is categorized as a penny stock. Trading of our
stock may be restricted by the SEC’s penny stock regulations which may limit a shareholder’s ability to buy and sell
our stock.
Our stock is categorized as a penny stock. The SEC has adopted
Rule 15g-9 which generally defines “penny stock” to be any equity security that has a market price (as defined) less
than US$ 5.00 per share or an exercise price of less than US$ 5.00 per share, subject to certain exceptions. Our securities are
covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other
than established customers and accredited investors. The penny stock rules require a broker-dealer, prior to a transaction in a
penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC
which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also
must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and
its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s
account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer
orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s
confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from
these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the
purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect
of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules
discourage investor interest in and limit the marketability of our common stock.
FINRA sales practice requirements may also limit a shareholder’s
ability to buy and sell our stock.
In addition to the “penny stock” rules described
above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable
grounds for believing that the investment is suitable for that 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, investment objectives and other information. Under interpretations of these rules, FINRA believes
that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The 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 stock and have an adverse effect on the market for our shares.
To date, we have not paid any cash dividends and no cash
dividends will be paid in the foreseeable future.
We do not anticipate paying cash dividends on our common stock
in the foreseeable future and we may not have sufficient funds legally available to pay dividends. Even if the funds are legally
available for distribution, we may nevertheless decide not to pay any dividends. We presently intend to retain all earnings for
our operations.
If we issue additional shares in the future, it will result
in the dilution of our existing shareholders.
Our articles of incorporation authorize the issuance of up 2,150,000,000
shares, 2,000,000,000 shares of which are Class A Common Stock, par value $0.001 per share, 100,000,000 shares of which are Class
B Common Stock, par value $0.001 per share, and 50,000,000 shares of which are Preferred Stock, par value $0.001 per share. Our
Board of Directors may choose to issue some or all of such shares to acquire one or more companies or properties and to fund our
overhead and general operating requirements. The issuance of any such shares may reduce the book value per share and may contribute
to a reduction in the market price of the outstanding shares of our common stock. If we issue any such additional shares, such
issuance will reduce the proportionate ownership and voting power of all current shareholders. Further, such issuance may result
in a change of control of our corporation.
We may not qualify to meet listing standards to list our
stock on an exchange.
The SEC approved listing standards for companies using reverse
acquisitions to list on an exchange may limit our ability to become listed on an exchange. We would be considered a reverse acquisition
company (i.e., an operating company that becomes an Exchange Act reporting company by combining with a shell Exchange Act reporting
company) that cannot apply to list on NYSE, NYSE Amex or Nasdaq until our stock has traded for at least one year on the U.S. OTC
market, a regulated foreign exchange or another U.S. national securities market following the filing with the SEC or other regulatory
authority of all required information about the merger, including audited financial statements. We would be required to maintain
a minimum $4 share price ($2 or $3 for Amex) for at least thirty (30) of the sixty (60) trading days before our application and
the exchange’s decision to list. We would be required to have timely filed all required reports with the SEC (or other regulatory
authority), including at least one annual report with audited financials for a full fiscal year commencing after filing of the
above information. Although there is an exception for a firm underwritten public offering with proceeds of at least $40 million, we do not
anticipate being in a position to conduct a public offering in the foreseeable future. To the extent that we cannot qualify for a listing
on an exchange, our ability to raise capital will be diminished.
We are an “emerging growth company” under the
JOBS Act of 2012, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will
make our common stock less attractive to investors.
We are an “emerging growth company,” as defined
in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”), and we may take advantage of certain exemptions from
various reporting requirements that are applicable to other public companies that are not “emerging growth companies”
including, but not limited to, not being required to comply with the auditor attestation requirements of section 404 of the Sarbanes-Oxley
Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions
from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute
payments not previously approved. We cannot predict if investors will find our common stock less attractive because we may rely
on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market
for our common stock and our stock price may be more volatile.
In addition, Section 107 of the JOBS Act also provides that
an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of
the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company”
can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are
choosing to take advantage of the extended transition period for complying with new or revised accounting standards. As a result,
our financial statements may not be comparable to those of companies that comply with public company effective dates.
We will remain an “emerging growth company” for
up to five years, although we will lose that status sooner if our revenues exceed $1 billion, if we issue more than $1 billion
in non-convertible debt in a three year period, or if the market value of our common stock that is held by non-affiliates exceeds
$700 million as of any May 30.
Our status as an “emerging growth company” under
the JOBS Act of 2012 may make it more difficult to raise capital as and when we need it.
Because of the exemptions from various reporting requirements
provided to us as an “emerging growth company” and because we will have an extended transition period for complying
with new or revised financial accounting standards, we may be less attractive to investors and it may be difficult for us to raise
additional capital as and when we need it. Investors may be unable to compare our business with other companies in our industry
if they believe that our financial accounting is not as transparent as other companies in our industry. If we are unable to raise
additional capital as and when we need it, our financial condition and results of operations may be materially and adversely affected.