ITEM 1. BUSINESS
BACKGROUND AND BUSINESS OVERVIEW
We are a development stage company that was incorporated under the laws of the
State of Nevada on May 4, 2010. We have never declared bankruptcy, have never
been in receivership, and have never been involved in any legal action or
proceedings. Since becoming incorporated, we have not made any significant
purchase or sale of assets, nor have we been involved in any mergers,
acquisitions or consolidations. We are not a blank check registrant as that term
is defined in Rule 419(a)(2) of Regulation C of the Securities Act of 1933,
since we have a specific business plan or purpose.
On February 20, 2013, the Company effected a 5 for 1 forward stock split of all
of its issued and outstanding shares of common stock (the "Stock Split"). The
Stock Split increased the number of the Company's issued and outstanding common
stock to 70,000,000.
Our offices are currently located at c/o Easybiz.com Inc. 17-5348 Vegas Dr., Las
Vegas, NV 89108. Our telephone number is 866-824-2112. We have one executive
officer who also serves as our director. Mr. Karlo Guray, our President,
Secretary, Treasurer and Director, resides in the Philippines.
PRINCIPAL PRODUCTS AND SERVICES
We are planning to develop and commercialize a performance management system for
use by cellular operators. Once developed, we expect our product to enable
cellular operators to analyze and optimize their cellular network performance.
Common cellular network equipment records different events during voice calls or
data calls. These call events are being stored in a dedicated database. Each
cellular manufacture has its own unique database structure to store the call
events. Cellular operators have to monitor the call events in order to evaluate
and improve their cellular network performance. Key Performance Indicators
(KPIs) are the significant measurements used to track the cellular network
performance against the cellular operator's objectives. These KPIs are being
calculated to summarize the call events; the major KPIs are pre-specified and
common for every cellular manufacture with respect to the specific technology.
Analyzing the KPIs enables the operator a real-time monitoring, trend
performance tracking and a drill-down into network element level. Our planned
system will present the KPIs in a browser based, parameter driven, dynamic
report generation, flexible report scheduling capabilities and Support a wide
variety of export formats including PDF, HTML, CSV, XLS, RTF, and Image.
Our goal is to help small cellular operators monitor their network and enable
them to improve their network using an off-the-shelf product with a minimum
customization which will lead to minimal cost. We plan to generate revenues from
the sale of our AdvancedPM system to cellular network operators, and plan to
offer support and maintenance service at additional cost.
Once developed, we expect AdvancedPM to provide radio access network status
management, performance analysis and support for the following capabilities:
* Monitor real-time system performance and not only the element status;
* Display the performance trend enabling to identify problems which
missed by the manual process;
* Geographic map display enable analyzing the data over detailed maps,
streets, satellite photo, topographical;
* Export detailed daily reports for engineers and high level of
management;
* Increase engineering efficiency and automatically identifying issues
that impact network quality; and
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* Assess current deployment and decide regarding requirement for new
deployment or expansion.
In order to use our planned system, prospective cellular network operators will
be required to send us cellular network manufacture data sheets with regards to
performance collection and database specification, and then we will need to
integrate the cellular network manufacture database with AdvancedPM.
Once developed, we expect AdvancePM to support multi-user environments through
high speed and secure access across the Intranet or the Internet. The user will
be able to access reports directly without any client application using simple
to access web reports to improve information sharing across the organization.
Reporting capabilities include exporting to a common PC application format such
as Microsoft Excel, PDF or JPG. Reporting and Monitoring includes geographic map
displays that enable analysis of data over detailed street maps, satellite photo
and topographical maps.
We have commenced only limited operations, primarily focused on organizational
matters. Our performance management system is currently in the development stage
and is not ready for commercial sale. We plan on launching an online store that
sells a wide variety of electronics and cellular devices and accessories.
At this stage in our development, there can be no assurance that we will be
successful in generating revenues from our performance management system or that
cellular operators seeking for performance management system will be receptive
to using our service.
To date, we have been unable to raise sufficient funds to implement our
operations, and we do not believe that we currently have sufficient resources to
do so without additional funding. As a result of the current difficult economic
environment and our lack of funding to implement our business plan, our Board of
Directors has begun to analyze strategic alternatives available to our Company
to continue as a going concern. Such alternatives include raising additional
debt or equity financing or consummating a merger or acquisition with a partner
that may involve a change in our business plan.
Although our Board of Directors' preference would be to obtain additional
funding to develop our performance management system, the Board believes that it
must consider all viable strategic alternatives that are in the best interests
of our shareholders. Such strategic alternatives include a merger, acquisition,
share exchange, asset purchase, or similar transaction in which our present
management will no longer be in control of our Company and our business
operations will be replaced by that of our transaction partner. We believe we
would be an attractive candidate for such a business combination due to the
perceived benefits of being a publicly registered company, thereby providing a
transaction partner access to the public marketplace to raise capital.
THE MARKET OPPORTUNITY
According to statistics made available by the International Telecommunication
Union (ITU) in their "The World in 2010" report on their website:
* By the end of 2010, there will be an estimated 5.3 billion mobile
cellular subscriptions worldwide, including 940 million subscriptions
to 3G services.
* Access to mobile networks is now available to 90% of the world
population and 80% of the population living in rural areas.
Our target market is the worldwide small size cellular network operators who
wish to monitor and optimized their network and currently do not have a
performance management system or the ones who wish to replace their current
system. We expect, although no assurance can be given, that our solution will
appeal to small size cellular operators who cannot afford to purchase currently
existing solutions in the market place.
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Our management believes that if we properly execute our business plan, our
solution will enable new and existing operators to monitor and optimize their
network in a significant lower cost.
COMPETITION AND COMPETITIVE STRATEGY
Competition within the cellular network performance management industry is
intense. We believe there is no performance management system designed for small
size cellular network operators. Existing solutions are designed for cellular
network operators who have thousands of cell sites; these networks generate a
massive amount of call events that must to be logged in a large database.
Generating the KPIs from this database requires an expensive database management
tools and an expensive reporting application.
We believe that designing a solution to support a limited database and limited
reporting capabilities will result in lower cost than our competitors. Our
competition is based primarily on the cost of the system. We seek to
differentiate ourselves by providing our customers with an easy to use and
functional system and pre-customized reporting. On an ongoing basis, we intend
to add more service features such as: automatic alerting system and performance
report exporting capabilities.
Many of our competitors have longer operating histories, greater financial,
sales, marketing and technological resources and longer established client
relationships than we do.
Our primary competition comes primarily from several industry participants:
Actix, Inc (www.actix.com) - This company is a world leading developer of
cellular network optimization tools. They offer systems which design for large
scale mobile operators. They also provide tools for status management. They do
not currently offer small scale pre-customized systems for small mobile
operators. We believe their price point is extremely high compared what we are
planning.
TTI Telecom (www.tti-telecom.com) - This Company is a world leading developer of
cellular network status management tools. They also offer performance management
system to large cellular operators. They do not currently offer small scale
pre-customized systems for small mobile operators. We believe their price point
is extremely high compared what we are planning.
QuantumSI (www.quantumsi.com) - This Company is a system integrator and software
developer for several industries including telecommunication. They also offer
performance management system to medium size cellular operators. They do not
currently offer small scale pre-customized systems for small mobile operators.
We believe their price point is higher than what we are planning.
EMPLOYEES
We have no full time or part-time employees. Our sole director/officer, Mr.
Karlo Guray, is expected to devote approximately five hours per week to our
business activities. If and when we develop and market a product, we may need
additional employees for our operations. We do not foresee any significant
changes in the number of employees we will have over the next twelve months.
ITEM 1A. RISK FACTORS
RISK FACTORS
An investment in our common stock involves a high degree of risk. You should
carefully consider the following risk factors and other information in this
report before deciding to invest in our Company. If any of the following risks
actually occur, our business, financial condition, results of operations and
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prospects for growth could be seriously harmed. As a result, the trading price
of our common stock could decline and you could lose all or part of your
investment.
RISKS RELATING TO OUR COMPANY
THERE IS UNCERTAINTY REGARDING OUR ABILITY TO CONTINUE AS A GOING CONCERN,
INDICATING THE POSSIBILITY THAT WE MAY BE REQUIRED TO CURTAIL OR DISCONTINUE OUR
OPERATIONS IN THE FUTURE. IF WE DISCONTINUE OUR OPERATIONS, YOU MAY LOSE ALL OF
YOUR INVESTMENT.
We have incurred net losses totaling $83,306 from our inception on May 4, 2010
to June 30, 2013 and have completed only the preliminary stages of our business
plan. We anticipate incurring additional losses before realizing any revenues
and will depend on additional financing in order to meet our continuing
obligations and ultimately, to attain profitability. The financial statements do
not include any adjustments that might result from the uncertainty about our
ability to continue our business. If we are unable to obtain additional
financing from outside sources and eventually produce enough revenues, we may be
forced to sell our assets, or curtail or discontinue our operations. If this
happens, you could lose all or part of your investment.
WE ARE A DEVELOPMENT STAGE COMPANY WITH NO OPERATING HISTORY AND MAY NEVER BE
ABLE TO CARRY OUT OUR BUSINESS PLAN OR ACHIEVE ANY REVENUES OR PROFITABILITY; AT
THIS STAGE OF OUR BUSINESS, EVEN WITH OUR GOOD FAITH EFFORTS, POTENTIAL
INVESTORS HAVE A HIGH PROBABILITY OF LOSING THEIR ENTIRE INVESTMENT.
We are subject to all of the risks inherent in the establishment of a new
business enterprise. We were established on May 4, 2010, we have not generated
any revenues nor have we realized a profit from our operations to date, and
there is little likelihood that we will generate any revenues or realize any
profits in the short term. Any profitability in the future from our business
will be dependent upon the successful development and commercialization of a
performance management system for use by cellular operators. Our product will
enable cellular operators to analyze and optimize their cellular network
performance. At this stage in our development, there can be no assurance that we
will be successful in generating revenues from our performance management system
or that cellular operators seeking for performance management system will be
receptive to using our service. Which itself is subject to numerous
industry-related risk factors as set forth herein. We may not be able to
successfully carry out our business. There can be no assurance that we will ever
achieve any revenues or profitability. Accordingly, our prospects must be
considered in light of the risks, expenses, and difficulties frequently
encountered in establishing a new business in our industry, and the fact that
our Company is a highly speculative venture involving significant financial
risk.
WE EXPECT TO INCUR OPERATING LOSSES IN THE NEXT TWELVE MONTHS BECAUSE WE HAVE NO
PLAN TO GENERATE REVENUES UNLESS AND UNTIL WE SUCCESSFULLY DEVELOP OUR NETWORK
PERFORMANCE MANAGEMENT SYSTEM.
We have never generated revenues. We intend to engage in the development and
commercialization of a network performance management system for use by cellular
operators. We expect to incur operating losses over the next twelve months
because we have no source of revenues unless and until we are successful in
developing and commercialization of a network performance management system. We
cannot guarantee that we will ever be successful in developing and
commercialization of a network performance management system or 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. We can provide
investors with no assurance that we will generate any operating revenues or ever
achieve profitable operations.
WE DO NOT HAVE SUFFICIENT CASH TO FUND OUR OPERATING EXPENSES FOR THE NEXT
TWELVE MONTHS, AND WE WILL REQUIRE ADDITIONAL FUNDS THROUGH THE SALE OF OUR
COMMON STOCK, WHICH REQUIRES FAVORABLE MARKET CONDITIONS AND INTEREST IN OUR
ACTIVITIES BY INVESTORS. WE MAY NOT BE ABLE TO SELL OUR COMMON STOCK AND FUNDING
MAY NOT BE AVAILABLE FOR CONTINUED OPERATIONS.
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Currently, we do not have sufficient cash on hand to fund our administrative
expenses and operating expenses for the next twelve months. Because we do not
expect to have any cash flow from operations within the next twelve months, we
will need to raise additional capital, which may be in the form of loans from
current stockholders and/or from public and private equity offerings. Our
ability to access capital will depend on our success in implementing our
business plan. It will also depend upon the status of the capital markets at the
time such capital is sought. Should sufficient capital not be available, the
implementation of our business plan could be delayed, and, accordingly, the
implementation of our business strategy would be adversely affected. If we are
unable to raise additional funds in the future, we may have to cease all
substantive operations. In such event, investors would likely not obtain a
profitable return on their investment or a return of their investment at all.
WE HAVE NO TRACK RECORD THAT WOULD PROVIDE A BASIS FOR ASSESSING OUR ABILITY TO
CONDUCT SUCCESSFUL BUSINESS ACTIVITIES. WE MAY NOT BE SUCCESSFUL IN CARRYING OUT
OUR BUSINESS OBJECTIVES.
The revenue and income potential of our proposed business and operations are
unproven and the lack of operating history makes it difficult to evaluate the
future prospects of our business. There is nothing at this time on which to base
an assumption that our business operations will prove to be successful or that
we will ever be able to operate profitably. Accordingly, we have no track record
of successful business activities, strategic decision-making by management,
fund-raising ability, and other factors that would allow an investor to assess
the likelihood that we will be successful. There is a substantial risk that we
will not be successful in implementing our business plan, or, if initially
successful, in thereafter generating any operating revenues or in achieving
profitable operations.
AS A DEVELOPMENT STAGE COMPANY, WE MAY EXPERIENCE SUBSTANTIAL COST OVERRUNS IN
DEVELOPING AND COMMERCIALIZING THE NETWORK PERFORMANCE MANAGEMENT SYSTEM AND WE
MAY NOT HAVE SUFFICIENT CAPITAL TO SUCCESSFULLY COMPLETE THE DEVELOPMENT AND
COMMERCIALIZATION OF OUR PRODUCT.
We may experience substantial cost overruns in developing and commercializing
the network performance management system and we may not have sufficient capital
to successfully complete our business plan. We may not be able to market our
product because of industry conditions, general economic conditions, and/or
competition from other manufacturers and distributors. In addition, the
commercial success of any product is often dependent upon factors beyond the
control of the company attempting to market the product, including, but not
limited to, market acceptance of the product, governmental restrictions, and
whether or not third parties promote the products through prominent marketing
channels and/or other methods of promotion. Even if we do succeed in raising the
capital to develop and operate the network performance management system, we
cannot ensure that the cost for this product will be found to be warranted and
reasonable by potential purchasers, and therefore we cannot ensure that the
product, will actually find popularity and acceptance.
WE ARE A SMALL COMPANY WITH LIMITED RESOURCES COMPARED TO SOME OF OUR CURRENT
AND POTENTIAL COMPETITORS AND WE MAY NOT BE ABLE TO COMPETE EFFECTIVELY AND
INCREASE MARKET SHARE.
Software for cellular networks is part of an industry that is highly regulated
and competitive, and although we believe our technology offers unique features,
we cannot guarantee that these unique features are enough to effectively capture
a significant enough market share to successfully launch and sustain our
product. Existing solutions are designed for cellular network operators who have
thousands of cell sites; these networks generate a massive amount of call events
that must to be logged in a large database. Generating the KPIs from this
database requires an expensive database management tools and an expensive
reporting application., our current and potential competitors have longer
operating histories, significantly greater resources and name recognition, and a
larger base of customers than we have. As a result, these competitors have
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greater name credibility with our potential customers. Our competitors also may
be able to adopt more aggressive pricing policies and devote greater resources
to the development, promotion, and sale of their products and services than we
can to ours. To be competitive, we must continue to invest significant resources
in sales and marketing, and customer support. We may not have sufficient
resources to make these investments or to develop the technological advances
necessary to be competitive, which in turn could cause our business to suffer
and restrict our profitability potential.
BECAUSE MR. KARLO GURAY HAS OTHER OUTSIDE BUSINESS ACTIVITIES AND WILL ONLY BE
DEVOTING UP TO 20% OF HIS TIME TO OUR OPERATIONS, OUR OPERATIONS MAY BE
SPORADIC, WHICH MAY RESULT IN PERIODIC INTERRUPTIONS OR SUSPENSIONS OF OUR
BUSINESS ACTIVITIES.
Our sole director/officer is only engaged in our business activities on a
part-time basis. This could cause the officer a conflict of interest between the
amount of time devoted to our business activities and the amount of time
required to be devoted to other activities. We intend to increase our business
activities in terms of development, marketing and sales. This increase in
business activities may require that our director/officer engage in our business
activities on a full-time basis or that we hire additional employees; however,
at this time, we do not have sufficient funds to pursue either option.
WE MAY BE SUBJECT TO INTELLECTUAL PROPERTY LITIGATION, SUCH AS PATENT
INFRINGEMENT CLAIMS, WHICH COULD ADVERSELY AFFECT OUR BUSINESS.
Our success will also depend in part on our ability to develop a commercially
viable product without infringing the proprietary rights of others. Although we
have not been notified of any infringement claims, other patents could exist or
could be filed which would prohibit or limit our ability to develop and market
in the future. In the event of an intellectual property dispute, we may be
forced to litigate. Intellectual property litigation would divert management's
attention from developing our product and would force us to incur substantial
costs regardless of whether or not we are successful. An adverse outcome could
subject us to significant liabilities to third parties, and force us to cease
operations.
BECAUSE OUR CURRENT SOLE OFFICER AND DIRECTOR IS NOT A RESIDENT OF THE UNITED
STATES, IT MAY BE DIFFICULT FOR SHAREHOLDERS TO RECOVER AGAINST THEM.
Our sole officer and director is located outside of the United States, in the
Philippines. Were one or more shareholders to bring an action against our
management in the United States and succeed, either through default or on the
merits, and obtain a financial award against an officer or director of the
Company, that shareholder may be required to enforce and collect on his, her or
its judgment in a non-US country, unless the officer or director owned assets
which were located in the United States. Further, shareholder efforts to bring
an action in a non-US country against its citizens for any alleged breach of a
duty in a foreign jurisdiction may be difficult, as prosecution of a claim in a
foreign jurisdiction, and in particular a foreign nation, is fraught with
difficulty and may be effectively, if not financially, unfeasible. Our
operations in the United States are limited to our executive offices which are
being used as a mailing address and secretarial and administrative services
only.
RISKS RELATING TO OUR COMMON STOCK
NASD SALES PRACTICE REQUIREMENTS MAY LIMIT A STOCKHOLDER'S ABILITY TO BUY AND
SELL OUR STOCK.
In addition to the "penny stock" rules described below, the NASD 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,
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tax status, investment objectives and other information. Under interpretations
of these rules, the NASD believes that there is a high probability that
speculative low priced securities will not be suitable for at least some
customers. The NASD requirements make it more difficult for broker-dealers to
recommend that their customers buy our common stock, which may have the effect
of reducing the level of trading activity in our common stock. As a result,
fewer broker-dealers may be willing to make a market in our common stock,
reducing a stockholder's ability to resell shares of our common stock.
WE MAY IN THE FUTURE ISSUE ADDITIONAL SHARES OF OUR COMMON STOCK WHICH WOULD
REDUCE INVESTORS' OWNERSHIP INTERESTS IN THE COMPANY AND WHICH MAY DILUTE OUR
SHARE VALUE. WE DO NOT NEED STOCKHOLDER APPROVAL TO ISSUE ADDITIONAL SHARES.
Our certificate of incorporation authorizes the issuance of 50,000,000 shares of
preferred stock and 100,000,000 shares of common stock, par value $0.0001 per
share. The future issuance of all or part of our remaining authorized common
stock 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.
OUR COMMON STOCK IS 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.
If a trading market does develop for our stock, it is likely we will be subject
to the regulations applicable to "Penny Stock," the regulations of the SEC
promulgated under the Exchange Act that require additional disclosure relating
to the market for penny stocks in connection with trades in any stock defined as
a penny 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 non-NASDAQ 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: (i) that a broker or dealer approve a person's
account for transactions in penny stocks; and (ii) the broker or dealer receive
from the investor a written agreement to the transaction, setting forth the
identity and quantity of the penny stock to be purchased. In order to approve a
person's account for transactions in penny stocks, the broker or dealer must:
(i) obtain financial information and investment experience objectives of the
person; and (ii) 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.
The broker or dealer must also deliver, prior to any transaction in a penny
stock, a disclosure schedule prescribed by the SEC relating to the penny stock
market, which, in highlight form: (i) sets forth the basis on which the broker
or dealer made the suitability determination; and (ii) that the broker or dealer
received a signed, written agreement from the investor prior to the transaction.
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 stock 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.
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These disclosure requirements may have the effect of reducing the level of
trading activity, if any, in the secondary market for a stock that becomes
subject to the 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 market investor interest in and limit the
marketability of our common stock.
WE HAVE NOT PAID DIVIDENDS IN THE PAST AND DO NOT EXPECT TO PAY DIVIDENDS IN THE
FUTURE. ANY RETURN ON INVESTMENT MAY BE LIMITED TO THE VALUE OF OUR COMMON
STOCK.
Because we do not intend to pay any cash dividends on our shares of 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 they sell them at a price
higher than that which they initially paid for such shares.
THERE IS NO ESTABLISHED PUBLIC MARKET FOR OUR STOCK AND A PUBLIC MARKET MAY NOT
BE OBTAINED OR BE LIQUID AND THEREFORE INVESTORS MAY NOT BE ABLE TO SELL THEIR
SHARES.
There is no established public market for our common stock. While we intend to
apply for quotation of our common stock on the Over-The-Counter (OTC) Bulletin
Board system, we have not yet engaged a market maker for the purposes of
submitting such application, and there is no assurance that we will qualify for
quotation on the OTC Bulletin Board. Therefore, purchasers of our common stock
may be unable to sell their shares on any public trading market or elsewhere.
STATE SECURITIES LAWS MAY LIMIT SECONDARY TRADING, WHICH MAY RESTRICT THE STATES
IN WHICH YOU MAY SELL OUR COMMON STOCK.
If you purchase shares of our common stock, you may not be able to resell the
shares in any state unless and until the shares of our common stock are
qualified for secondary trading under the applicable securities laws of such
state or there is confirmation that an exemption, such as listing in certain
recognized securities manuals, is available for secondary trading in such state.
We currently do not intend to register or qualify our stock in any state.
Because the shares of our common stock have not been registered for resale under
the blue sky laws of any state, and we have no current plans to register or
qualify our shares in any state, the holders of such shares and persons who
desire to purchase such shares in any trading market that might develop in the
future should be aware that there may be significant state blue sky restrictions
upon the ability of investors to purchase and sell such shares. In this regard,
each state's statutes and regulations must be reviewed before engaging in any
securities sales activities in a state to determine what is permitted, or not
permitted, in a particular state. Furthermore, even in those states that do not
require registration or qualification for the resale of registered securities,
such states may require the filing of notices or place additional conditions on
the availability of exemptions. Accordingly, since many states continue to
restrict the resale of securities that have not been qualified for resale,
investors should consider any potential secondary market for our securities to
be a limited one.
EFFORTS TO COMPLY WITH RECENTLY ENACTED CHANGES IN SECURITIES LAWS AND
REGULATIONS WILL INCREASE OUR COSTS AND REQUIRE ADDITIONAL MANAGEMENT RESOURCES,
AND WE STILL MAY FAIL TO COMPLY.
As directed by Section 404 of the Sarbanes-Oxley Act of 2002, the SEC has
adopted rules requiring public companies to include a report of management on
their internal controls over financial reporting in their annual reports on Form
10-K. In addition, the public accounting firm auditing a public company's
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financial statements must attest to and report on management's assessment of the
effectiveness of its internal controls over financial reporting. These
requirements are not presently applicable to us, and we do not expect the
requirement to have the public accounting firm auditing our financial statements
attest to and report on management's assessment of the effectiveness of its
internal controls over financial reporting to be applicable to us in the
foreseeable future. If and when these regulations become applicable to us, and
if we are unable to conclude that we have effective internal controls over
financial reporting or if our independent auditors are unable to provide us with
an unqualified report as to the effectiveness of our internal controls over
financial reporting as required by Section 404 of the Sarbanes-Oxley Act of
2002, investors could lose confidence in the reliability of our financial
statements, which could result in a decrease in the value of our securities. We
have not yet begun a formal process to evaluate our internal controls over
financial reporting. Given the status of our efforts, coupled with the fact that
guidance from regulatory authorities in the area of internal controls continues
to evolve, substantial uncertainty exists regarding our ability to comply by
applicable deadlines.