Item
1.
Description
of Business.
Business
Development/Corporate Background
Lightview,
Inc. was incorporated under the laws of the State of Nevada on December 22,
2006. We are a development stage company. From our inception to date, we have
not generated any revenues, and our operations have been limited to
organizational, start-up, and capital formation activities. We currently have
no
employees other than our officers, who are also our directors.
Our
Company has been established to become engaged in the sale and branding of
laser
devices used in Low Level Laser Therapy (“LLLT”) for a wide range of
applications. LLLT is a type of technology that uses low power, non-thermal
laser beams for health and/or cosmetic applications.
Lightview
will initially focus on LLLT products that are geared toward the cosmetic
market, and specifically to target the anti-aging sector of that market. Such
LLLT products will be used for the cosmetic treatment of skin related problems
such as wrinkles and discoloration. We anticipate that the Company will later
expand into LLLT products that cater to other markets including hair loss,
cold
sores, and other over-the-counter consumer markets. The Company intends to
sell
only laser devices that have already been granted FDA or approval for sale
to
consumers over the counter, without prescription from a physician.
Our
business strategy is to license existing products and thereafter re-package,
brand and market such products under the Lightview brand by developing new
sales
channels. We also intend to market other “brands” of LLLT products with other
corporate brands.
On
December 21, 2007, Geeks on Call Holdings, Inc. was incorporated as a wholly
owned subsidiary of the Company under the laws of the State of Delaware. The
wholly owned subsidiary was formed for the purpose of changing the state of
incorporation of the Company from Nevada to Delaware through a merger
transaction which was completed on January 23, 2008, and the name of the Company
to Geeks On Call Holdings, Inc. Under the terms of the merger, shares of common
stock of the Company were exchanged for shares of common stock of Geeks On
Call
Holdings, Inc, par value $0.001 per share. The Company’s stockholders received
1.3 shares of Geeks On Call Holdings, Inc. common stock for each share of the
Company common stock owned on the date of the merger. The stockholders’
percentage ownership of the surviving corporation will not be affected by the
merger.
Business
of the Issuer
Target
Markets and Competition
Skin
Care / Anti-Aging Market
The
skin
care and anti-aging market is one of the fasted growing sectors of the cosmetic
industry. This market is estimated at $38.3 billion globally. (Louise Prance,
“Algae-Based Cosmetic Ingredient Set To Impact Anti-Aging Market," Cosmetics
Design, December 20, 2006,
http://www.cosmeticsdesign.com/news/ng.asp?n=72961-atrium-l-oreal-anti-aging-skin-care
.)
New
products are entering the cosmetic market on a consistent basis. In order to
compete in this market, the new products whether crèmes, sprays or topical
ointments claim to have new technologies in their products. The buying public
is
interested in new products and new technologies that can better address cosmetic
skin issues; hence the use of LLLT devices in the cosmetic market is expected
to
grow.
The
devices we intend to license will target customers looking for anti-aging
products. There have been numerous clinical studies that have shown that LLLT
increases collagen production, increases cell metabolism and increases tissue
repair. (Dr. Marta Moidlova, “Soft Laser in Cosmetics,” November 3, 2003,
http://www.lasermedics.net/handlaser/pdf/laserpartner0062.pdf
).
We
will
make use of the extensive research that has already been conducted on the use
of
LLLT devices for cosmetic applications and this research will be prominent
on
our packaging and an integral part of our marketing materials.
Our
packaging will advertise that low level laser light devices can help to:
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energise
tissue and stimulate collagen regeneration
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smooth
out fine lines and shallow wrinkles
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reduce
fresh stretch marks and minimise fresh new scars
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(Dr.
Marta Moidlova, “Soft Laser in Cosmetics”, November 3, 2003,
http://www.lasermedics.net/handlaser/pdf/laserpartner0062.pdf).
We
will
be competing with other LLLT products for market share in the Cosmetic sector,
such as: the Vitagnost Highlight Pocket Sized Soft Laser, the Nulase Softlaser
Plus, the Beurer Soft Laser VSL40, and the Etrans Softlaser.
Hair
Loss-Re-growth Market
Male
pattern baldness (“MPB”) is the most common form of hair loss for and represents
close to 95% of all cases of hair loss in men. Eighty million American men
and
woman suffer from male pattern baldness many of whom are seeking products that
will delay hair loss or assist in hair re-growth. (“New Survey Finds People
Understand the Causes of Hair Loss But are at a Loss when it Comes to Seeking
Treatment” International Society of Hair Restoration Surgery Press Release,
December 18, 2006 ). Several products on the market target the MPB market such
as the better known brands of Propecia and Rogaine.
We
will
use the same methodology for marketing our hair-re-growth devices as our
anti-aging devices. We will make use of the extensive research that has been
conducted on this subject and coordinate it into unique packaging and marketing
materials. Further, our infomercial will interview experts in the field and
showcase testimonials of users of these devices.
We
will
be competing with other LLLT products for market share in the hair
loss-re-growth market we will be competing with products such as: the Hairmax
Laser Comb, the Sagora Hair Laser, and the Leimo Laser Comb.
Cold
Sore Market
One
hundred and thirty six million Americans suffer from cold sores on an annual
basis. (“Statistics by Country for Cold Sores,” March 12,
2007, www.wrongdiagnosis.com/c/cold_sores/stats-country.htm). Because of
the affects of cold sores, which are typically visible on one’s face, sufferers
look for products that offer immediate relief. There are several topical crèmes
which compete in this market, one of the better known brands being Zovirax.
We
intend
to showcase our cold sore LLLT device as a new technology that aids the natural
process of healing. Clinical studies have shown that individuals treated with
LLLT therapy have a quicker healing time than those treated with conventional
products. (Arturo Guerra Alfonso and Pedro José Muñoz; “Lazer therapy of human
herpes simples lesions,” March 12, 2007,
http://www.rj-laser.com/german/herpes.html). A separate clinical trial of 50
patients, conducted in 1999 at the University of Vienna, found that
low-intensity infra-red laser treatment reduced significantly the recurrence
of
cold sores.” (Celia Dodd; “It works for me: hot treatment for cold sores,” The
Times Online, January 21, 2006,
http://www.timesonline.co.uk/tol/life_and_style/health/complementary_medicine/article715547.ece)
We
intend
to include all the scientific evidence conducted on the use of LLLT on the
HSV
virus. We will include this on our packaging as well as in our
infomercial.
In
the
cold sore market we will be competing with the Bio-Oral.
Revenue
Model
We
will
employ two revenue models: the internet and infomercials. Our internet sales
will come from pay advertising, web-logs, and direct affiliation programs.
Our
infomercial sales will come from agents purchasing air-time and consequently
“buyers” ordering products from a call center number that we, or the agent will
nominate.
We
intend
to direct all of our internet advertising and web-log discussions to our
web-site, which will be an e-commerce web site. Customers will be able to
purchase our devices on-line using credit cards or online payment services
such
as Pay Pal. We expect that customers purchasing products via our web-site will
net us our highest profit margin. Next, we anticipate that by using direct
affiliation programs where other-web sites link to our site or sell our product
online will be our second highest source of income. In this case, we will be
paying a percentage of profits or a commission to those sites that directed
the
customer to purchase our device. Lastly, the infomercial will be a marketing
tool that will allow us to expand our product to agents, both in the US and
possibly overseas. We intend to sell agents minimum quantities of our devices
in
order to grant them “time” exclusivity to run our infomercial in their
respective territory. We would not look to ship out items from our facility,
but
rather place the responsibility of the delivery of the products on the agents.
Hence, the prices that we will be offering our agents on our devices that we
will be showcasing in our infomercial will be lower than the prices we sell
over
the internet directly to customers.
Regulatory
Approvals
In
the
United States, the United States Food and Drug Administration (the “FDA”)
regulates the design, manufacture, distribution, quality standards and marketing
of medical devices. There are two principal methods by which FDA regulated
devices may be marketed in the United States: 510(k) clearance and pre-market
approval (“PMA”). Unless an exemption applies, each medical device we wish to
distribute commercially in the United States will require either prior 510(k)
clearance or a PMA from the FDA.
We
intend
to market products which have already been approved by the FDA for marketing
in
the United States. If we distribute another firm's domestically manufactured
device we are required to comply with certain labeling regulations, including
place a label on the device such as "Distributed by ABC Firm" or "Manufactured
for ABC Firm." If we are a repackager or a relabeler we will not be required
to
submit a 510(k) if the existing labeling or condition of the device is not
significantly changed. The labeling should be consistent with the labeling
submitted in the 510(k) with the same indications for use and warnings and
contraindications.
After
a
device is placed on the market, numerous regulatory requirements apply. These
include:
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quality
system regulations, or QSRs, which require manufacturers, including
third-party manufacturers, to follow stringent design, testing, control,
documentation and other quality assurance procedures during all aspects
of
the manufacturing process;
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labeling
regulations, which prohibit the promotion of products for uncleared,
unapproved or “off label” uses;
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medical
device reporting regulations, which require that manufacturers report
to
the FDA if their device may have caused or contributed to a death
or
serious injury or malfunctioned in a way that would likely cause
or
contribute to a death or serious injury if it were to recur;
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correction
and removal regulations, which require that manufacturers report
to the
FDA any corrections to or removals of distributed devices that are
made to
reduce a risk to health; and
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post-market
surveillance regulations, which apply when necessary to protect the
public
health or to provide additional safety and effectiveness data for
the
device.
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We
intend
to pursue our strategy in the following manner:
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a)
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License
a LLLT product
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We intend to license a LLLT product that is already FDA approved.
We will
seek to label these products under the Lightview name.
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b)
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Create
Packaging
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We intend to offer a unique product packaging that will draw consumers’
attention and will advertise the benefits of using LLLT devices on
the
devices we are selling.
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c)
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Design
a Website
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We intend to build an interactive web site that will be considered
an
informational hub on LLLT’s unique attributes. We will advertise our
web-site on other health and beauty sites. Active promotion of the
website
will be implemented using the latest Search Engine Optimization and
Search
Engine Marketing techniques.
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d)
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Launch
a Public Relations
Campaign-
Our goal is to receive as much “free” editorial coverage of our products.
We would write to editors of magazines in the health and beauty industry
and seek to get stories published on our
products.
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e)
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Showcase
and Attend Trade Shows
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We will attend trade shows for the health and beauty industry, such
as
Cosmoprof North America, held in Las Vegas and attended by over 25,000
people. Financing permitting, we intend to have a booth at certain
beauty
related trade shows; furthering our ability to recruit distributors
for
our products.
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f)
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Produce
an Infomercial
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the Company intends to create a 5 and 15 minute Infomercial which
will be
given free of charge to distributors and retailers who will then
purchase
airtime in their respective markets to showcase the infomercial.
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Employees
We
have
no full time employees at this time. All functions including development,
strategy, negotiations and administration are currently being provided by our
executive officers on a voluntary basis.
RISK
FACTORS
An
investment in our common stock involves a high degree of risk. You should
carefully consider the following factors and other information in this
prospectus before deciding to invest in our company. If any of the following
risks actually occur, our business, financial condition, results of operations
and prospects for growth would likely suffer. As a result, you could lose all
or
part of your investment.
Risk
Factors Relating to Our Company
1.
We
are a development stage company and may never be able to effectuate our business
plan or achieve any revenues or profitability. Therefore, at this stage of
our
business, potential investors have a high probability of losing their entire
investment.
We
were
established on December 22, 2006 and have no operating history. We are in the
development stage and are subject to all of the risks inherent in the
establishment of a new business enterprise. We have had no revenues to date.
Our
operations to date have been focused on organizational, start-up, and capital
formation activities. As a development stage company, we are a highly
speculative venture involving significant financial risk. It is uncertain as
to
when we will become profitable, if ever.
There
is
nothing at this time on which to base an assumption that business operations
will prove to be successful or that we will ever achieve profitability. We
do
not yet have any licenses or license agreements or other agreements, and there
is no assurance that we will be able to obtain such licenses. There can be
no
assurance we will ever achieve any revenues or profitability. The revenue and
income potential of the proposed business and operations plan is unproven as
the
lack of operating history makes it difficult to evaluate the future prospects
of
the business. In the case that we will not be able to license a product that
has
received regulatory approvals, we will not be able to effectuate the business
plan. We will be operating in a very competitive market. The cosmetics industry
is a highly competitive industry and other products and devices exist which
target customers seeking similar applications for cosmetic uses. We may find
it
difficult to market the devices under the Lightview brand as it is not yet
known
to our target markets. Other products that target the same consumer may be
cheaper, better known or marketed by large corporations.
2.
We
expect losses in the future because we have no revenue.
We
are
expecting losses over the next twelve months because we do not yet have any
revenues to offset the expenses associated with our business development. We
cannot guarantee that we will ever be successful in generating revenues in
the
future. We recognize that if we are unable to generate revenues, 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 investors with no assurance that we will generate any operating
revenues or ever achieve profitable operations.
3.
The
Company has not developed any of the laser products it intends to sell and
does
not have any licenses or other agreements authorizing it to sell such products.
We
intend
to become engaged in the sale of laser devices used in Low Level Laser Therapy,
as described above in the section entitled “Business of the Issuer.” We have not
developed any such laser devices nor are we engaged in the research and
development of such products. We intend to acquire a license to sell such
products from the developers or manufacturers of such products. We do not have
any such license or license agreements or other agreements, and there is no
assurance that we will be able to obtain such license. We do not have any
commitment or understanding to acquire such a license. We have not entered
into
any negotiations regarding such a license. We have not engaged in any
negotiations with any representative of any company regarding the possibility
of
such a license. No assurances can be given that we will successfully obtain
such
a license. We cannot guarantee that we will be able to negotiate a license
agreement on favorable terms. If we fail to obtain such a license, we will
not
be able to generate any operating revenues or ever achieve profitable
operations, our business may fail, and you may lose your entire investment
in
us.
4.
We
have conducted no market research or identification of business opportunities,
which may affect our ability to enter into a license agreement authorizing
us to
sell suitable laser products.
The
Company has neither conducted nor have others made available to us results
of
market research concerning the sale of laser devices for use in low level laser
therapy. Therefore, we have no assurances that market demand exists for such
products as contemplated by us. Our management has not identified any specific
laser product or other transactions for formal evaluation by us. There is no
assurance that we will be able to acquire a license agreement on terms favorable
to us. Decisions as to which laser products we will seek to obtain a license
for
will be unilaterally made by our management, which may act without the consent,
vote or approval of our stockholders.
5.
We
may not be able to compete with other types of internationally branded products
targeting the same consumer.
The
cosmetics industry is highly competitive and will most likely be even more
competitive in the future. Our planned products will compete with numerous
other
products selling to the same target market. Our products will be sold both
via
the Internet and retail shops. We will compete with products sold by
international companies such as L’Oreal, Ann Klein, Clinique and others in the
anti-aging industry. In the future, we will be competing with Rogaine, Propecia
and other topical liquids in the hair re-growth market and Blistex, Zovirax,
and
Carmex in the cold sore market.
The
entry
of one or more large competitors into the potential market could reduce our
ability to sell products. Large competitors will have an advantage due to lower
costs and a known brand with large marketing budgets. As a re-seller, the
company may be at a disadvantage as the costs will always be higher than those
of companies manufacturing the devices.
Our
competitors in the targeted market are well known, international brands. Should
they decide to begin marketing and distributing LLLT devices their entry into
the Company’s market may disrupt ongoing retail distribution revenues.
6.
Cosmetics
is an evolving and highly-regulated industry. Any changes in regulation may
force the Company to change the way it operates.
The
cosmetics and beauty industry is an evolving industry that is heavily regulated
by various governmental agencies. The FDA may decide to change regulations
for
products such as LLLT, requiring the manufacturers to obtain new approvals,
causing delays in the supply chain and potentially increased prices. Failing
to
market LLLT products as a result of regulatory issues will have a detrimental
effect on the Company’s business.
There
can
be no assurance that federal, state, or local laws or regulatory procedures
which might adversely affect our business, financial condition, and results
of
operations for prospects will not be expanded or imposed.
7.
Import
duties, taxes, and lost freight and insurance costs will all impact the plan’s
success.
Our
products may be imported from various countries necessitating import licenses,
duties, taxes and shipping. While there are costs that can be predicted, there
may also be unexpected costs such as lost freight, shipping strikes, and
insurance premium increases. This will all adversely affect our revenues and
our
ability to execute our strategic plan.
8.
If
our business strategy is not successful, we may not be able to continue
operations as a going concern and our stockholders may lose their entire
investment in us.
We
have
not established any source of revenues to cover our operating costs, and as
such, we have incurred an operating loss since our inception. Further, as of
December 31, 2007, our cash resources were insufficient to meet our current
business plan. These factors raise substantial doubt that we will be able to
continue operations as a going concern, and our independent auditors included
an
explanatory paragraph regarding this uncertainty in their report on our
financial statements for the annual period ended December 31, 2007. Our ability
to continue as a going concern is dependent upon our generating cash flow
sufficient to fund operations and reducing operating expenses. Our business
strategy may not be successful in addressing these issues. If we cannot continue
as a going concern, our stockholders may lose their entire investment in
us.
9.
Since
our officers can work or consult for other companies, their activities could
slow down our operations
.
Our
officers are also members of our board of directors, and they are not required
to work exclusively for us. They do not devote all of their time to our
operations. Therefore, it is possible that a conflict of interest with regard
to
their time may arise based on their employment for other companies. Their other
activities may prevent them from devoting full-time to our operations which
could slow our operations and may reduce our financial results because of the
slow down in operations. It is expected that our directors will devote between
5
and 20 hours per week to our operations on an ongoing basis, and will devote
whole days and even multiple days at a stretch when required.
10.
We
are heavily dependent upon our officers and directors and their marketing
expertise, vision, and leadership. The loss of either Mr. Ryan Goldstein or
Mr.
Daniel Kominars would harm our ability to execute our business plan.
We
are
dependent on the continued contributions of Ryan Goldstein, our President,
Treasurer, and Director, and Daniel Kominars, our Secretary and Director, whose
marketing expertise, vision, and leadership
would
be
difficult to replace. If we were to lose either of their services, or if either
of them is not available to us when we need him, our ability to execute our
business plan would be harmed and we may be forced to cease operations until
such time as we could hire a suitable replacement.
11.
Failure
to obtain a suitable license agreement authorizing us to sell the laser products
we intend to sell could harm our ability to execute our business
plan.
We
intend
to acquire a license to sell such products from the developers or manufacturers
of such products. We do not have any such license or license agreements or
other
agreements, and there is no assurance that we will be able to obtain such
license. We do not have any commitment or understanding to acquire such a
license. We have not entered into any negotiations regarding such a license.
We
have not engaged in any negotiations with any representative of any company
regarding the possibility of such a license.
Since
we
are looking to license a product that has already obtained regulatory approvals,
we may be unsuccessful in either negotiating a licensing deal or we may find
that we will not be price competitive after licensing a product. Additionally,
because we will be licensing the rights to devices that have already attained
regulatory approvals, we will in effect be relying on these companies to keep
their devices in good standing with the regulators. There can be no assurances
that these licensors will be able to maintain their regulatory approval.
There
can
be no assurance that federal, state, or local laws or regulatory procedures
which might adversely affect our business, financial condition, and results
of
operations for prospects will not be expanded or imposed.
12.
If
we are unable to obtain funding, our business operations will be harmed. Even
if
we do obtain financing our then existing stockholders may suffer substantial
dilution.
We
will
require funds to enter into a license agreement, market our future products,
produce packaging and design, attend trade shows, produce an infomercial, and
establish a website. In the order of importance, depending on funds raised
we
will enter into a licensing agreement, produce proper packaging and launch
our
web site to assist in direct sales.
Our
business depends heavily on a well thought out marketing plan as well as the
ability to secure licensing deals from manufacturers. We anticipate that we
will
require up to approximately $150,000 to fund our operations for the next twelve
months. Such funds may come from the sale of equity and/or debt securities
and/or loans. It is possible that additional capital will be required to
effectively support our operations and to otherwise implement our overall
business strategy. The inability to raise the required capital will restrict
our
ability to grow and may reduce our ability to continue to conduct business
operations. If we are unable to obtain necessary financing, we will likely
be
required to curtail our development plans which could cause the Company to
become dormant. We currently do not have any arrangements or agreements to
raise
additional capital. Any additional equity financing may involve substantial
dilution to our then existing shareholders.
13.
We
may not be able to raise sufficient capital or generate adequate revenues to
meet our obligations and fund our operating expenses.
We
have
not had any revenues since our inception. Failure to raise adequate capital
and
generate adequate sales revenues to meet our obligations and develop and sustain
our operations could result in our having to curtail or cease operations.
Additionally, even if we do raise sufficient capital and generate revenues
to
support our operating expenses, there can be no assurances that the revenues
will be sufficient to enable us to develop business to a level where it will
generate profits and cash flows from operations. These matters raise substantial
doubt about our ability to continue as a going concern. Our independent auditors
currently included an explanatory paragraph in their report on our financial
statements regarding concerns about our ability to continue as a going concern.
Accordingly, our failure to generate sufficient revenues or to generate adequate
capital could result in the failure of our business and the loss of your entire
investment.
14.
Our
officers and directors own a controlling interest in our voting stock, and
investors will not have any voice in our management, which could result in
decisions adverse to our general stockholders.
Approximately
57.1% of our outstanding common stock is owned by Ryan Goldstein and Daniel
Kominars, our officers and directors. As a result, Mr. Goldstein and Mr.
Kominars have the ability to control substantially all matters submitted to
our
stockholders for approval including:
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election
of our board of directors;
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removal
of any of our directors;
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amendment
of our Articles of Incorporation or bylaws;
and
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adoption
of measures that could delay or prevent a change in control or impede
a
merger, takeover or other business combination involving
us.
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As
a
result of their ownership and positions, our directors and executive officers
are able to influence all matters requiring stockholder approval, including
the
election of directors and approval of significant corporate transactions.
15.
Our
directors and officers own a significant percentage of our issued and
outstanding shares of common stock, and any future sales of their shares may
result in a decrease in the price of our common stock and the value of your
investment.
Our
directors and officers have control over 57.1% of the issued and outstanding
shares of our common stock. The future prospect of sales of significant amounts
of shares held by Mr. Goldstein and Mr. Kominars could affect the market price
of our common stock if the marketplace does not orderly adjust to the increase
in shares in the market and the value of your investment in the company may
decrease. Management's stock ownership may discourage a potential acquirer
from
making a tender offer or otherwise attempting to obtain control of us, which
in
turn could reduce our stock price or prevent our stockholders from realizing
a
premium over our stock price.
16.
Because
we do not have an audit or compensation committee, stockholders will have to
rely on our directors, who are not independent, to perform these functions.
We
do not
have an audit or compensation committee comprised of independent directors.
Indeed, we do not have any audit or compensation committee. These functions
are
performed by our two directors, who are also our only officers. Thus, there
is a
potential conflict of interest in that our directors have the authority to
determine issues concerning management compensation and audit issues that may
affect management decisions.
17.
Due
to the high-risk circumstances in which we conduct business, we may encounter
liability claims in excess of insurance coverage; should such event occur,
it
may have a material adverse effect upon our financial condition and results
of
operations.
The
sale
of LLLT products entails an inherent risk of liability. As we are a development
stage company, we do yet have liability insurance for any one exposure. Although
we believe that it is in keeping with industry standards, there can be no
assurance that claims in excess of any preset limit will not arise. Any such
successful claims could have a material adverse effect upon our financial
condition and results of operations. Claims against us, regardless of their
merit or eventual outcome, may also have a material adverse effect upon our
ability to attract and retain business.
18.
Changes
in public perception or changes to the regulations pertaining to our planned
products may increase the cost of doing business and may require us to change
the way we may market our products.
The
cosmetic beauty industry is an evolving industry that is heavily regulated
by
various governmental agencies. Changes in public perception on products such
as
the laser products we intend to sell will inherently affect that way we will
be
able to conduct our future business. The FDA may decide to change regulations
for products such as ours, forcing us to either re-apply for the proper
approvals, which may be too costly for us to bear; in which case we will cease
marketing these products. Failing to market our products because of regulatory
issues will have a detrimental effect on our business. Our success will depend
partially on our ability to satisfy the applicable regulations and requirements
regarding our products and our ability to maintain their required licenses.
We
believe that our operations will not violate any existing federal or state
laws.
But there can be no assurance that federal, state, or local laws or regulatory
procedures which might adversely affect our business, financial condition,
and
results of operations for prospects will not be expanded or imposed.
Since
we
will be licensing the rights to devices that have already achieved regulatory
approvals, we will in effect be relying on these companies to keep their devices
in good standing with the regulators. There can be no assurance that federal,
state or local laws or regulatory procedures which might adversely affect our
business, financial condition, and results of operations for prospects will
not
be expanded or imposed.
19.
Regulatory
approvals will significantly affect our ability to market our products.
The
products we intend to license will require the approval of the FDA. We intend
to
initially license products that have already been approved for marketing by
the
FDA. If a product which we have licensed should lose its FDA approval, our
business in this product will be seriously jeopardized. Without specific FDA
approval, we will be unable to market our future products in the United
States.
Risks
Relating To Our Common Shares
20.
We
may, in the future, issue additional common shares, which would reduce
investors' percent of ownership and may dilute our share
value.
Our
Certificate of Incorporation authorizes the issuance of 100,000,000 shares
of
common stock, of which 3,500,0000 shares are issued and outstanding, and
5,000,000 shares of preferred stock, of which no shares are issued and
outstanding. The future issuance of an additional 95,500,000 shares of common
stock which we are currently authorized to issue may result in substantial
dilution in the percentage of our common stock held by our then existing
stockholders. We may value any common stock issued in the future on an arbitrary
basis. The issuance of common stock for future services or acquisitions or
other
corporate actions may have the effect of diluting the value of the shares held
by our investors, and might have an adverse effect on any trading market for
our
common stock.
21.
Our
common shares are subject to the "Penny Stock" Rules of the SEC and the trading
market in our securities is limited, which makes transactions in our stock
cumbersome and may reduce the value of an investment in our
stock.
The
Securities and Exchange Commission has adopted Rule 15g-9 which establishes
the
definition of a "penny stock," for the purposes relevant to us, as any equity
security that has a market price of less than $5.00 per share or with an
exercise price of less than $5.00 per share, subject to certain exceptions.
For
any transaction involving a penny stock, unless exempt, the rules
require:
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that
a broker or dealer approve a person's account for transactions in
penny
stocks; and
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the
broker or dealer receives from the investor a written agreement to
the
transaction, setting forth the identity and quantity of the penny
stock to
be purchased.
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In
order
to approve a person's account for transactions in penny stocks, the broker
or
dealer must:
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obtain
financial information and investment experience objectives of the
person;
and
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make
a reasonable determination that the transactions in penny stocks
are
suitable for that person and the person has sufficient knowledge
and
experience in financial matters to be capable of evaluating the risks
of
transactions in penny stocks.
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The
broker or dealer must also deliver, prior to any transaction in a penny stock,
a
disclosure schedule prescribed by the Commission relating to the penny stock
market, which, in highlight form:
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sets
forth the basis on which the broker or dealer made the suitability
determination; and
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that
the broker or dealer received a signed, written agreement from the
investor prior to the transaction.
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Generally,
brokers may be less willing to execute transactions in securities subject to
the
"penny stock" rules. This may make it more difficult for investors to dispose
of
our common shares and cause a decline in the market value of our
stock.
Disclosure
also has to be made about the risks of investing in penny stocks in both public
offerings and in secondary trading and about the commissions payable to both
the
broker-dealer and the registered representative, current quotations for the
securities and the rights and remedies available to an investor in cases of
fraud in penny stock transactions. Finally, monthly statements have to be sent
disclosing recent price information for the penny stock held in the account
and
information on the limited market in penny stocks.
22.
There
is currently a limited trading market for our securities and as a result,
purchasers of our securities may have difficulty selling their
shares.
There
is
currently a limited public trading market for our securities and an active
trading market in our securities may not develop or, if developed, may not
be
sustained. If for any reason an active trading market does not develop or our
shares are delisted from the Over The Counter Bulletin Board, purchasers of
the
shares may have difficulty selling their common stock should they desire to
do
so.
23.
The
requirements of being a public company may strain our resources and distract
our
management.
As
a
public company, we will be subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended, or the Exchange Act, and the
Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act. These requirements may
place a strain on our systems and resources. The Exchange Act requires that
we
file annual, quarterly and current reports with respect to our business and
financial condition. The Sarbanes-Oxley Act requires that we maintain effective
disclosure controls and procedures and internal controls for financial
reporting. We will be required to document and test our internal control
procedures in order to satisfy the requirements of Section 404 of the
Sarbanes-Oxley Act, which requires regular management assessments of the
effectiveness of our internal controls over financial reporting and eventually,
a report by our independent registered public accountants addressing these
assessments. During the course of our testing, we may identify deficiencies
which we may not be able to remediate in time to meet the deadline imposed
by
the Sarbanes-Oxley Act for compliance with the requirements of Section 404.
We will be required to comply with the requirements of Section 404 for our
fiscal year ended December 31, 2007. In addition, if we fail to achieve and
maintain the adequacy of our internal controls, as such standards are modified,
supplemented or amended from time to time, we may not be able to ensure that
we
can conclude on an ongoing basis that we have effective internal controls over
financial reporting in accordance with Section 404 of the Sarbanes-Oxley
Act.
In
order
to maintain and improve the effectiveness of our disclosure controls and
procedures and internal control over financial reporting, significant resources
and management oversight will be required. This may divert management’s
attention from other business concerns, which could have a material adverse
effect on our business, financial condition, results of operations and cash
flows. In addition, we may need to hire additional accounting and financial
staff with appropriate public company experience and technical accounting
knowledge, and we cannot assure you that we will be able to do so in a timely
fashion.
24.
Because
we do not intend to pay any cash dividends on our common stock, our stockholders
will not be able to receive a return on their shares unless they sell
them.
We
intend
to retain any future earnings to finance the development and expansion of our
business. We do not anticipate paying any cash dividends on our common stock
in
the foreseeable future. Unless we pay dividends, our stockholders will not
be
able to receive a return on their shares unless the value of such shares
appreciates and they sell them. There is no assurance that stockholders will
be
able to sell shares when desired.
25.
We
may issue shares of preferred stock in the future that may adversely impact
your
rights as holders of our common stock.
Our
Articles of Incorporation authorizes us to issue up to 5,000,000 shares of
"blank check" preferred stock. Accordingly, our board of directors will have
the
authority to fix and determine the relative rights and preferences of preferred
shares, as well as the authority to issue such shares, without further
stockholder approval. As a result, our board of directors could authorize the
issuance of a series of preferred stock that would grant to holders preferred
rights to our assets upon liquidation, the right to receive dividends before
dividends are declared to holders of our common stock, and the right to the
redemption of such preferred shares, together with a premium, prior to the
redemption of the common stock. To the extent that we do issue such additional
shares of preferred stock, your rights as holders of common stock could be
impaired thereby, including, without limitation, dilution of your ownership
interests in us. In addition, shares of preferred stock could be issued with
terms calculated to delay or prevent a change in control or make removal of
management more difficult, which may not be in your interest as holders of
common stock.