LBWR Labwire Inc (CE)

—	Secure and Compliant Drug Testing.   The majority of the Company’s drug testing clients are required under some federal (49cfr part 40) or state regulation to perform random periodic drug testing on its employees.  Labwire will select randomly a certain number of client employees and give the list to the client who will give notice to the selected employees.  These employees will have a certain length of time to go to a collection facility using certified specimen collectors as required by the Department of Transportation (Clients have a list of certified facilities, both primary and backup, that their employees can use 24 hours a day) and provide a sample for testing.  Our comprehensive nationwide network of collection sites features on-demand access of a complete database with important information including certification, performance monitoring, hours of operation and need for appointments.  Labwire contracts with only SAMHSA certified and accredited laboratories.  When employees present themselves at the collection facility they have to provide a picture ID and the chain of control over the sample is begun.  The collection facility takes the sample and completes the paperwork and the sample and paperwork are forwarded to a lab that is certified by the federal government.  The lab results are reviewed by a medical review officer, certified by national certification associations, and if the sample tests positive, they will go through a protocol to determine if it should be classified as substance abuse.  The medical review officer’s report is then forwarded simultaneously to the client and Labwire.  Labwire securely delivers fast, real-time laboratory test results and reports by Web, e-mail Adobe Acrobat* pdf file attachments, fax or phone-24 hours a day, 7 days a week.
—	Custom Statistical Reports and Data Transfer Services.   Labwire works with new clients to establish customized software programs and Internet services to issue reports the way that clients like support custom data interfacing with all facets of the drug testing program to insure that it is compliant with federal and state laws and also gives the client and the employees their proper corporate and individual protections.
—	Collection Site Management and Billing Consolidation.   Labwire can manage the myriad of specimen collections through the thousands of sites in Labwire’s database, which will free up client resources and relieve them from this daunting administrative task.
—	Background Checks.   Labwire also has the ability to provide its clients with background check services.   Up until recently this service has been outsourced with Labwire making a commission on the fee charged by the contracted company.  Labwire has recently acquired access to national data bases and has started to perform its own background checks.  This service generates reports about a prospective employee’s criminal record, motor vehicle violations, credit standing and involvement in civil litigation.  Labwire’s margins on this service can be increased by approximately 20%, if done in house.
—	Training.   Labwire provides real-time, online federally mandated supervisor training and employee education that conforms to all DOT modality requirements in addition to DOD and DOE.  In addition Labwire has just developed a program for employee training as required under the Fair and Accurate Credit Transaction Act of 2003 (FACTA), and will begin marketing this product by September 2008.  The education and training system operates 24/7, is accessible over the Internet, and provides audit tracking information and annual notification to the clients for ongoing re-training of supervisors as defined in federal rules.  This program has high margin numbers as do all software driven products and should very favorably affect net margins.
—	Security Services.   Labwire (dba Labwire Security, Inc.) contracts with American K-9 Bomb Search, Inc., which is one-half owned by Labwire’s Chairman and Chief Executive Officer, to perform security services.  Labwire Security, Inc. is fully licensed with the State of Texas.  This security model features a web based solution for reporting and record keeping delivered with a traditional hand on type product giving client security managers the ability to manage more locations more securely, effectively, and at lower costs.  A typical weekly consolidated, online report to a client would contain the numbers and types of vehicles entering, license plates numbers, rail and marine traffic, incident reports, the times of entering and leaving, observations of persons and contents, etc.  These reports now allow for the efficient use of resources by security services and client resources to be managed globally rather than autonomously as now done in most industries.   Labwire is paid a 5% commission for the K-9 security services that it refers to Labwire Security, Inc.  The commissions received by the Company have been less than 1% of the Company’s gross revenues.
—	Data Management and Transmission.   Labwire has the ability to provide its clients with secure and compliant, real-time online data management through an off-site facility.  Your entire workflow can be managed and automated through the use of Labwire’s interfaces. Data transmission to and from MROs and Collection Sites is seamless.  Labwire has just implemented a customized, completely integrated reporting and data management solution with a large aerospace client’s Human Resources (HR) management system.

  Market Opportunity

Virtually unheard of less than fifteen years ago, drug testing experienced explosive growth throughout the 1990’s and is now a $5.9 billion industry, according to estimates from Standard and Poors.  Under President Ronald Reagan, federal employees were required to undergo mandatory drug testing with a zero tolerance policy, followed in 1988 by Congressional passage of the Drug-Free Workplace Act, requiring all federal contractors to maintain a drug free workplace.  This was followed by the Omnibus Transportation Employee Testing Act of 1991, which implemented compulsory and random drug testing for employees in sensitive transportation positions such as mass transit operators, commercial truck drivers, and airline pilots.  With these massive federal drug testing programs in place, private employers soon followed suit.  The economic cost of drug and alcohol abuse in the workplace is tremendous, estimated at between $100 billion and $200 billion each year.  It has been proven that employed drug users are more prone to accidents, have higher absenteeism rates, higher medical costs, and perform only at about 67% of their ability.  All told, 87% of the nation’s largest companies test their employees or applicants for drugs, according to a 2001 survey by the American Management Association.

Marketing and Sales

Labwire intends to promote itself to large and mid-sized corporations, which conduct their own internal drug screening programs or currently utilize a TPA.  To this end, Labwire has developed strategic relationships with a variety of industry organizations, such as the Substance Abuse Program Administrators Association (SAPAA), the premier trade association for both third party administrators (TPAs) and large corporate Drug & Alcohol administrators, and Drug and Alcohol Testing Industry Association (DATIA) primarily focused on TPAs and collection site operations nationally.

Recently, Labwire has begun utilizing alliance agreements with much larger vendors to promote our products and expand our service offerings and our revenue base.  Our new alliance with USIS Commercial Services, Inc. (“USIS”) allows us the opportunity to grow our drug and alcohol services through their existing client base.  The USIS agreement was entered into on April 3, 2008 for an initial term of two (2) years.  USIS will perform all of the billings and receive a ten percent (10%) commission on revenue received by Labwire from USIS referral customers.  We are currently exploring three other alliance opportunities in the areas of employee training, national and international specimen collection solutions, and additional background and federally required employment solutions.

Also, Labwire will conduct direct sales on a highly targeted basis utilizing senior experienced representatives and outside industry specific consultants to develop both key vertical customers and channels.

In addition to strategic relationships and direct sales approaches, Labwire will conduct its own advertising, public relations and media campaign that will include print, broadcast, Internet, trade journals, direct mail and all other applicable news media.  Further, we intend to accomplish our public relations campaign through a variety of means including, but not limited to, the distribution of press releases and the arranging of press interviews.

Competition

Testing for drug use and abuse has evolved at a dramatic rate from a small minority of companies testing employees for substance abuse in the mid-1980s to the practice becoming standard in almost all government agencies and large corporate firms in the 1990s.  Legislation requiring the testing of all transportation industry workers, as well as court decisions upholding the legality of testing high school students, is making drug testing commonplace in all segments of society.  Overall, the drugs of abuse market was projected to witness average annual growth of about 4.7% from 2002 to 2007 [Business Communications Company – July 2002].  Labwire’s principals have provided client oriented “service philosophy” substance abuse management services for the past 21 years.  The Labwire operating platform, which provides modular delivery systems, procedures compliant with HIPAA protocols standards (unique within the industry), and live user-friendly access to all clients, all while adhering to ISO 9000:2000 certification standards specifically for employee screening (also unique within the industry).

 

HIPPA protocols in healthcare are based on the premise that all personally identifiable information (PII) (social security #, name, address, phone number, medical records, etc.) should be protected and that every instance of access to this record by any party be not only noted, but also be available at any time in a  written, reproducible audit trial upon demand.   Labwire’s proprietary software does exactly what he law requires in HIPPA. We can reproduce every single access to any PII in our entire database of employee information and deliver a compliant audit trail. We fully expect our industry to require these same standards in the future and we are already operating our system to these levels of data security.

 

 

ISO 9000 (more formally ISO9001:2000) is an international quality standard that defines minimum requirements for a company’s Quality Management System (QMS). A company’s QMS comprises the organization’s policies, procedures and other internal requirements that ensure customer requirements are met with consistency resulting in customer satisfaction.  Labwire specifically addresses the concerns generated by the growing “commodity philosophy” (the industry has moved toward a stance of selling drug testing and backgrounds on a commodity basis with no real value added mark-ups or margins, basically acknowledging that all deliverables from any supplier are the same. Labwire now prices based on the value added by our levels of client service (both personnel and software) and seeks to attain higher margins than it has in the past when we too had adopted this commodity approach currently prevalent within the industry. 

 

 With the recent acquisition of traditional TPA’s by corporate entities not previously involved in substance abuse management, the need for a return to a service based philosophy is apparent.  Labwire’s experienced staff and compliant platform are ready to provide its clients with our marketing focus; “Great Service … Period.”

 Labwire Inc. achieved ISO 9000:2000 certification in April 18, 2005 and has just celebrated our third successful annual audit and re-certification. ISO 9000 is a family of standards for quality management systems. ISO 9000 is maintained by ISO, the International Organization for Standardization and is administered by accreditation and certification bodies. Some of the requirements in ISO 9001 (which is one of the standards in the ISO 9000 family) include

 

—	a set of procedures that cover all key processes in the business;
—	monitoring processes to ensure they are effective;
—	keeping adequate records;
—	checking output for defects, with appropriate and corrective action where necessary;
—	regularly reviewing individual processes and the quality system itself for effectiveness; and
—	facilitating continual improvement

 

A company or organization that has been independently audited and certified to be in conformance with ISO 9001 may publicly state that it is “ISO 9001 certified” or “ISO 9001 registered”.

Labwire’s methods of marketing in this competitive industry consists of traditional marketing ventures, including direct mail campaigns, selective media advertising, and participation in targeted conferences and trade shows.  In addition, Labwire is uniquely able to draw upon the extensive experience of its management to capitalize on personal contacts with key industry players and deliver a quick response at critical times.  Labwire believes that it has competitive advantages over its competitors with its Labwire™ Platform, which is a proprietary, web-based application that streamlines the complex regulatory and record management activities associated with employee screening, delivering accurate timely results while eliminating service calls and paper trails. All the data is on one page and the software is very easy to learn and use.  This comprehensive solution to managing employee screening services is a very t efficient and cost-effective platform in the industry and the only one, to the Company’s knowledge, that is currently compliant with HIPPA regulations.   

Labwire also has joint marketing ventures with key suppliers, such as USIS discussed above, which allows it access to large companies across the country.

Principal Suppliers and Partners

 

Suppliers  

Data represents a key ingredient in most of our products. In obtaining such data, we draw upon a wide variety of sources, including governmental agencies, credit reporting agencies, competitors, customers, third parties which compile public record information and on-line search services. Many of our suppliers provide this data in electronic format. We do not anticipate the termination of any significant relationship with any of our data suppliers. Because we believe we could acquire necessary data from other sources, we do not believe that the termination of any supplier relationship would have a material adverse effect on our financial condition or operating results.

 

In connection with our occupational health services, we depend upon services provided by specimen collection agencies and laboratories. There is significant competition among suppliers of these services and, consequently, we do not believe the termination of our relationship with any of these suppliers would have a material adverse effect on its financial condition or operating results.

 

We obtain some of our data from consumer credit reporting agencies. Any of these suppliers could stop supplying this data or could substantially increase their prices. Withholding this data could have a material adverse effect on our business, financial condition or results of operations.

We ally ourselves with the top industry institutions in laboratory analysis (only SAMHSA certified facilities) and medical review (only licensed physicians certified by the American Association of Medical Review Officers) in determining the final results of the drug test, including:

 

	—	LabCorp - A major player in the forensic testing world, LabCorp offers versatility, service and fully integrated reporting systems to serve our clients.  The Company’s predecessor company, Workplace Screening Services, Inc., entered into a master service agreement with Laboratory Corporation of America Holdings on January 22, 2004 for a one year term with automatic annual extensions unless cancelled by either party.  As of the date of this filing, neither company has given notice of intention to cancel.  The fees for services provided by LabCorp vary by the type service provided.
	—	Substance Abuse Program Administrators Association - The Substance Abuse Program Administrators Association (SAPAA) mission is to establish, promote, and communicate the highest standards of quality, integrity, and professionalism in the administration of workplace substance abuse prevention programs through education, training and the exchange of ideas. SAPAA’s membership is comprised of TPA’S, In-house administrators, MRO’s, SAP’s, Collection Sites and Government Agencies. Labwire’s CEO was one of the 5 founding members of SAPAA. As a founding member, we are very proud to have had a small part in providing these services to the entire industry.
	—	DATIA - DATIA’s mission is to represent the drug and alcohol testing industry in Washington, D.C. on key legislative and regulatory issues, to expand the workplace drug and alcohol testing market, to provide members information, resources and benefits important to their operations and to promote the highest possible standards for the industry.
	—	Quest Diagnostics - The largest drug testing laboratory in the US, Quest Diagnostics is consistently a leader in providing excellent analysis services and customer service.
	—	LabOne - LabOne is a fully accredited and certified national laboratory that provides high-quality drug testing and responsive service. Through their centralized laboratory in Lenexa KS they provide rapid turnaround time from all parts of the country. LabOne does more DOT testing than any other laboratory in the US, and is an innovator of new technologies.  They are currently owned by Quest Diagnostics (see above).

Dependence on Major Customers

Labwire is not dependent on one or a few customers.

Patents, Trademarks and Licenses

The Company maintains its Labwire Platform and management systems as proprietary systems and has a trademark on the name Labwire with the Reg. No. 2,674,091 as granted on June 24, 2003 under Sections 8 and 15 of the Trademark Act by the Director of the U.S. Patent and Trademark Office.  The Company controls access to and distribution of its proprietary information.

Governmental Regulation  

Although generally our services do not require governmental approvals, our business is subject to various federal and state regulations that may impact our services. For example, the Federal Fair Credit Reporting Act, Fair and Accurate Credit Transactions Act, the Drivers Privacy Protection Act, the CAN-SPAM act, federal and state laws relating to drug testing, federal and state tax credit laws, state private investigator laws, federal and state laws regulating to residential-leasing and landlord services, federal and state laws regulating the hiring process, and various state laws regulating services that include disclosure of personal information.

 

Many state and local laws require certain of strategic partners and employees engaged in providing our investigative services products to be licensed as private investigators. Some state and local governments require the same with respect to our employee screening services.

 

Historically, we have been able to comply with existing laws and regulations without incurring substantial costs or restrictions on our business.

The US Department of Transportation reserves the right to restrict non-compliance service providers from performing services for programs covered under 49 CFR 40.  Labwire is in full compliance with all such regulations.

Certifications

Based on stringent U.S. Department of Transportation standards and protocols, Labwire services are of the highest standards and fully defensible. We only ally ourselves with fully licensed providers.  Our services conform to recognized certification and/or compliance, including:

 

—	U.S. Department of Health and Human Services (DHHS)
—	Substance Abuse and Mental Health Services Administration (SAMHSA)
—	National Institute on Drug Abuse (NIDA)
—	College of American Pathologists (CAP)
—	Drug Enforcement Administration (DEA)
—	State Department of Health licensing (where required)
—	Health Insurance Portability and Accountability Act of 1996 (HIPAA)
—	International Organization for Standardization (ISO9000)
—	Fair Credit Reporting Act of 2001 (FCRA)
—	Fair and Accurate Credit Transaction Act of 2003 (FACTA)

 

Research and Development

Labwire has spend approximately $142,142, $334,461,  and $264,621during the nine months ended September 30, 2008 and the years ended December 31, 2007 and 2006, respectively, on development of its proprietary software to manage corporate drug testing on line.

Employees  

Labwire has seven full-time employees and 25 service contract individuals available as used.  Labwire has no collective bargaining agreements with its employees.  Labwire believes that its employee relationships are satisfactory.

Reports to Security Holders

The Company recently became subject to the reporting requirements of Section 13 of the Exchange Act.  The Company must now file annual, quarterly and periodic reports with the Securities and Exchange Commission (“SEC”).  

The public may read and copy any materials filed by the Company with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, DC 20549.  The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.  The Company is an electronic filer and the SEC maintains an Internet site that contains reports and other information regarding the Company that may be viewed at http://www.sec.gov.

 

Our Common Stock

Our Common Stock is quoted on the over-the-counter Pink Sheets LLC electronic quotation service under the symbol “LBWR.PK.”

Corporate Information

Our principal executive offices are located at 1514 FM 359, Brookshire, Texas  77423, and our telephone number is (281) 934-3153. Our website is located at www.labwire.com.

ITEM 1A.  RISK FACTORS

An investment in our Common Stock is highly speculative and is not an appropriate investment for investors who cannot afford the loss of all or part of their investment. The risks described below are all of the material risks that we are currently aware of facing.  Additional risks and uncertainties not presently known to us may also impair our business operations. If any of the following risks actually occur, our business, financial condition, and results of operations could be seriously harmed.  You could lose all or part of your investment due to any of these risks.

Our business is difficult to evaluate because we have a limited operating history.

Labwire was incorporated on October 8, 2004, but has only recently begun to generate meaningful revenue. Because of our limited operating history, we do not have significant historical financial information on which to base planned revenues and operating expenses. For the nine months ended September 30, 2008 and the years ended December 31, 2007, 2006 and 2005, respectively, gross revenues were approximately $3,168,726, $4,799,631, $3,701,742 and $2,665,364, respectively and the net income (loss)  was $145,367, $345,679, $(500,981) and $267,876, respectively.  We expect to experience fluctuations in future quarterly and annual operating results that may be caused by many factors, including:

 

—	our ability to achieve significant sales for our products and services;
—	the cost of technology, software and other costs associated with production and distribution;
—	the size and rate of growth of the market for Internet products and online content and services;
—	the potential introduction by others of products that are competitive with our products; and
—	the general economic conditions in the United States and worldwide.

 

In view of the foregoing, our results of operations and projections of future operating results are not necessarily meaningful and should not be relied upon as an indication of future performance.

We are dependent on information suppliers. If we are unable to manage successfully our relationships with a number of these suppliers, the quality and availability of our services may be harmed.

We obtain some of the data used in our services from third party suppliers and government entities. If a number of suppliers are no longer able or are unwilling to provide us with certain data, we may need to find alternative sources. If we are unable to identify and contract with suitable alternative data suppliers and integrate these data sources into our service offerings, we could experience service disruptions, increased costs and reduced quality of our services. Additionally, if one or more of our suppliers terminates our existing agreements, there is no assurance that we will obtain new agreements with third party suppliers on terms favorable to us, if at all. Loss of such access or the availability of data in the future due to increased governmental regulation or otherwise could have a material adverse effect on our business, financial condition or results of operations.

We may be subject to increased regulation regarding the use of personal information.

Certain data and services we provide are subject to regulation by various federal, state and local regulatory authorities. Compliance with existing federal, state and local laws and regulations has not had a material adverse effect on our results of operations or financial condition to date. Nonetheless, federal, state and local laws and regulations in the United States designed to protect the public from the misuse of personal information in the marketplace and adverse publicity or potential litigation concerning the commercial use of such information may increasingly affect our operations and could result in substantial regulatory compliance expense, litigation expense and a loss of revenue.

We face significant security risks related to our electronic transmission of confidential information.

We rely on encryption and other technologies to provide system security to effect secure transmission of confidential or personal information. We may license these technologies from third parties. There is no assurance that our use of applications designed for data security, or that of third-party contractors will effectively counter evolving security risks.

A security or privacy breach could:

—	expose us to liability;
—	increase our expenses relating to resolution of these breaches;
—	deter customers from using our services; and
—	deter suppliers from doing business with us.

 

Any inability to protect the security and privacy of our electronic transactions could have a material adverse effect on our business, financial condition or results of operations.

Labwire may be adversely affected by recent high-profile events involving data theft at a number of information services companies.

Several information services companies that are competitors of Labwire have recently been involved in high-profile events involving data theft. These incidents or similar data theft incidents in the future could impact Labwire.  In particular, these events could result in increased legal and regulatory scrutiny of the industry in general and specific information services companies in particular and changes in federal, state and local laws and regulations in the United States designed to protect the public from the misuse of personal information in the marketplace. Changes in the laws and adverse publicity or potential litigation concerning the commercial use of such information may affect Labwire’s operations and could result in substantial regulatory compliance expense, litigation expense and a loss of revenue.

We could face liability based on the nature of our services and the content of the materials provided which may not be covered by insurance.

We may face potential liability from individuals, government agencies or businesses for defamation, invasion of privacy, negligence, copyright, patent or trademark infringement and other claims based on the nature and content of the materials that appear or are used in our products or services. Insurance may not be available to cover claims of these types or may not be adequate to cover us for all risks to which we are exposed. Any imposition of liability, particularly liability that is not covered by insurance or is in excess of our insurance coverage, could have a material adverse effect on our business, financial condition or results of operations.

We may not be able to pursue our acquisition strategy.

Our strategy is to grow through acquisitions. We may not be able to identify suitable acquisition candidates, obtain the capital necessary to pursue our acquisition strategy or complete acquisitions on satisfactory terms. A number of our competitors also have adopted the strategy of expanding and diversifying through acquisitions. We likely will experience competition in our effort to execute on our acquisition strategy, and we expect the level of competition to increase. As a result, we may be unable to continue to make acquisitions or may be forced to pay more for the companies we are able to acquire.

The integration of companies we acquire may be difficult and may result in a failure to realize some of the anticipated potential benefits of our acquisitions.

When we acquire companies or businesses, we may not be able to integrate or manage these businesses so as to produce returns that justify the investment. Any difficulty in successfully integrating or managing the operations of the businesses could have a material adverse effect on our business, financial condition, results of operations or liquidity, and could lead to a failure to realize any anticipated synergies. Our management also will be required to dedicate substantial time and effort to the integration of our acquisitions. These efforts could divert management’s focus and resources from other strategic opportunities and operational matters.  The exact amount of funds raised, if any, will determine how aggressively we can grow and what additional projects we will be able to undertake. No assurance can be given that we will be able to raise additional capital, when needed or at all, or that such capital, if available, will be on terms acceptable to us. If we are not able to raise additional capital, the growth of our business could suffer.

Our success will be limited if we are unable to attract, retain and motivate highly skilled personnel.  

Our future success also will depend on our ability to attract, retain and motivate highly skilled engineering, management, sales and other key personnel. Competition for such personnel is, at times, intense in the Internet industry, and we may be unable to successfully attract, integrate or retain sufficiently qualified personnel. In addition, our ability to generate revenues relates directly to our personnel in terms of both numbers and expertise of the personnel we have available to work on the projects. Moreover, competition for qualified employees may require us to increase our cash or equity compensation, which may have an adverse effect on earnings.

Any system failure or slow down could significantly harm our reputation and damage our business.

System failures would harm our reputation and reduce our attractiveness to clients. Our ability to attract potential clients will depend significantly on the performance of our network infrastructure. In addition, a key element of our strategy is to perform services for clients to increase their usage of our services. Usage of our online services could strain the capacity of our infrastructure, resulting in a slowing or outage of services and reduced traffic to clients’ web sites. We may be unable to improve our technical infrastructure in relation to increased usage of our services. In addition, the users of the systems we deploy for our clients depend on Internet service providers, online service providers and other web site operators for access to our web sites. Many of these providers and operators have also experienced significant outages in the past, and they could experience outages, delays and other difficulties due to system failures unrelated to our systems. We may provide some of our clients with a service level agreement guarantee based on the size of the client and the amount of the business generated with our Company. This guarantee could result in financial penalties to us that could have a material adverse effect on our business, financial condition and operating results.

We compete in a highly competitive market and many of our competitors have greater financial resources and established relationships with major corporate customers.

The information industry in which we operate is highly competitive, and is expected to remain highly competitive. In each of the markets served, we compete on the basis of price, quality, customer service and product and service selection. Our competitive position in various market segments depends upon the relative strength of competitors in the segment and the resources devoted to competing in that segment. Due to their size, certain competitors may be able to allocate greater resources to a particular market segment than we can. As a result, these competitors may be in a better position to anticipate and respond to changing customer preferences, emerging technologies and market trends. In addition, new competitors and alliances may emerge to take market share away. We may be unable to maintain or strengthen our competitive position in our market segments, especially against larger competitors. We any incur additional costs to upgrade systems in order to compete. If we fail to successfully compete, our business, financial position and results of operations may be adversely affected.

Our business could suffer if we are unable to protect our intellectual property rights or are liable for infringing the intellectual property rights of others.

We regard our Labwire software platform as critical to our success, and we rely upon and confidentiality and license agreements with our employees, strategic partners, and others to protect our proprietary rights, which can have only limited effectiveness.

Further, we may be subject to claims in the ordinary course of our business, including claims of alleged infringement of the trademarks, copyrights and other intellectual property rights of third parties by us and our licensees.

Other parties may assert claims of infringement of intellectual property or other proprietary rights against us. These claims, even if without merit, could require us to expend significant financial and managerial resources. Furthermore, if claims like this were successful, we might be required to change our trademarks, alter our content or pay financial damages, any of which could substantially increase our operating expenses. We also may be required to obtain licenses from others to refine, develop, market and deliver new services. We may be unable to obtain any needed license on commercially reasonable terms or at all, and rights granted under any licenses may not be valid and enforceable. In the future we could be subject to legal proceedings and claims from time to time in the ordinary course of our business, including claims of alleged infringement of trademarks and other intellectual property rights of third parties by us and our licensees. Any such claims could have a material adverse effect on our business, financial condition and operating results.

We face potential liability related to the privacy of health information we obtain.

Most health care providers, from which we may obtain patient information, are subject to privacy regulations promulgated under the Health Insurance Portability and Accountability Act of 1996, or HIPAA. Although we are not directly regulated by HIPAA, we could face substantial criminal penalties if we knowingly receive individually identifiable health information from a health care provider that has not satisfied HIPAA’s disclosure standards. Further, we may face civil liability if our HIPAA compliant system fails to satisfy its disclosure standards. Claims that we have violated individuals’ privacy rights or breached our contractual obligations, even if we are not found liable, could be expensive and time-consuming to defend and could result in adverse publicity that could harm our business.

 

Our business will not succeed if we are unable to keep pace with rapid technological changes.

We use the Labwire P latform technology designed by our Company and other information technology to better serve our clients and reduce costs. These technologies likely will change and may become obsolete as new technologies develop. Our future success will depend upon our ability to remain current with the rapid changes in the technologies used in our business, to learn quickly to use new technologies as they emerge and to develop new technology-based solutions as appropriate. If we are unable to do this, we could be at a competitive disadvantage. Our competitors may gain exclusive access to improved technology, which also could put us at a competitive disadvantage. If we cannot adapt to these changes, our business, financial condition or results of operations may be materially affected in an adverse manner.

If we suffer system failures or overloading of computer systems, our business and prospects could be harmed. The success of our online offerings is highly dependent on the efficient and uninterrupted operation of our computer and communications hardware systems. Fire, floods, earthquakes, power fluctuations, telecommunications failures, hardware “crashes,” software failures caused by “bugs” or other causes, and similar events could damage or cause interruptions in our systems. Computer viruses, electronic break-ins or other similar disruptive problems could also adversely affect our websites. If our systems, or the systems of any of the websites on which we advertise or with which we have material marketing agreements, are affected by any of these occurrences, our business, results of operations and financial condition could be materially and adversely affected.

We presently carry insurance policies that cover losses that may occur due to any failures or interruptions in our systems. We do have a secondary “off-site” system and a formal disaster recovery plan. In addition, our users depend on Internet service providers and other Internet site operators for access to our websites. Many Internet service providers have experienced significant outages in the past, and could experience outages, delays and other difficulties due to system failures unrelated to our systems. If we experience any of these problems, and if our insurance did not cover the costs of such occurrences, our business, results of operations and financial condition could be materially and adversely affected.

Disruptions to the business of our strategic partners could affect our business.

The success of our business depends on the continued uninterrupted use of the technology supplied to us by our strategic partners. If the business operations of any of our strategic partners are materially disrupted, our operations may be disrupted and, as a result, our financial condition could be materially and adversely affected.

We are dependent on our management and employees.

We are dependent on the services of our executive officers and key employees. As of this date, we have 7 fulltime employees, 3 of whom are members of management.  We do not have an employment agreement with any member of management.  Moreover, no member of management has entered into a covenant not to compete agreement with us.  As result, each member of management may discontinue providing his services to us at any time and for any reason, and even thereafter commence competition with us. We currently do not maintain key-man life insurance policies on key executive officers of the Company.  There can be no assurance that we can obtain executives of comparable expertise and commitment in the event of death, or that our business would not suffer material adverse effects as the result of the death, disability or voluntary departure of any such executive officer. Further, the loss of the services of any one or more of these employees could have a materially adverse effect on our business and our financial condition.  In addition, we will also need to attract and retain other highly skilled technical and managerial personnel for whom competition is intense. If we are unable to do so, our business, results of operations and financial condition could be materially adversely affected.

We may issue additional shares that could dilute your potential ownership interest and limit the ability of a third party to obtain voting control.

Some events over which investors in the Company have no control could result in the issuance of additional shares of our Common Stock or issuances of preferred stock (of which none is currently outstanding), which would dilute your ownership percentage in Labwire, Inc.  We may issue additional shares of Common Stock:

—	to raise additional capital or finance acquisitions;
—	upon the exercise or conversion of outstanding warrants or convertible notes;
—	in lieu of cash payment of interest on our outstanding convertible subordinated notes; or
—	to vendors in exchange for products or services.

 

We will incur increased costs as a result of becoming a reporting company.

In April 2008, we became a Securities and Exchange Commission (“SEC”) reporting company. Prior to this time, we have not filed reports with the SEC and had no history operating as a reporting company. In addition, the Sarbanes-Oxley Act of 2002, as well as a variety of related rules implemented by the SEC, have required changes in corporate governance practices and generally increased the disclosure requirements of public companies. For example, as a result of becoming a reporting company, we will be required to file periodic and current reports, proxy statements and other information with the SEC and we must adopt policies regarding disclosure controls and procedures and regularly evaluate those controls and procedures. As a reporting company, we will incur significant additional legal, accounting and other expenses in connection with our public disclosure and other obligations. Management will be engaged in assisting executive officers, directors and, to a more limited extent, stockholders, with matters related to insider trading and beneficial ownership reporting. Although not presently applicable to us, in the future we will be required to establish, evaluate and report on our internal control over financial reporting and to have our registered independent public accounting firm issue an attestation as to such reports.

We have incurred, and expect to continue to incur, increased general and administrative expenses as a reporting company. We also believe that compliance with the myriad rules and regulations applicable to reporting companies and related compliance issues will divert time and attention of management away from operating and growing our business.

Being a public company also increases the risk of exposure to class action stockholder lawsuits and SEC enforcement actions, and increases the expense to obtain appropriate director and officer liability insurance on acceptable or even reduced policy limits and coverage. As a result, we may find it more difficult to attract and retain qualified persons to serve on our board of directors or as executive officers.

Our Common Stock is subject to the SEC’s penny stock rules, and, therefore, broker-dealers may experience difficulty in completing customer transactions and trading activity in our securities may be adversely affected.

A penny stock is generally defined under the Securities Exchange Act of 1934, as amended (“Exchange Act”) as any equity security other than a security that: (i) is an national market system stock listed on a “grandfathered” national securities exchange, (ii) is a national market system stock listed on a national securities exchange or an automated quotation system sponsored by a registered national securities association that satisfies certain minimum quantitative listing standards, (iii) has a transaction price of five dollars or more, or (iv) is a security whose issuer has met certain net tangible assets or average revenues, among other exemptions. Our Common Stock is not currently traded on a national securities exchange or quotation system sponsored by a national securities exchange and our price as reported on the Pink Sheets, LLC, is currently less than five dollars.

In accordance with the rules governing penny stocks, broker-dealers participating in transactions in low-priced securities must first deliver a risk disclosure document that describes the risks associated with such stocks, the broker-dealer’s duties in selling the stock, the customer’s rights and remedies and certain market and other information. Furthermore, the broker-dealer must make a suitability determination approving the customer for low-priced stock transactions based on the customer’s financial situation, investment experience and objectives. Broker-dealers must also disclose these restrictions in writing to the customer, obtain specific written consent from the customer and provide monthly account statements to the customer.

The effect of these restrictions may decrease the willingness of broker-dealers to make a market in our Common Stock, decrease liquidity of our Common Stock and increase transaction costs for sales and purchases of our Common Stock as compared to other securities. Broker-dealers may find it difficult to effectuate customer transactions in our Common Stock and trading activity in our Common Stock may be adversely affected. As a result, the market price of our Common Stock may be depressed and stockholders may find it more difficult to sell their shares of Common Stock.

If we fail to maintain an effective system of internal control over financial reporting and disclosure controls and procedures, we may be unable to accurately report our financial results and comply with the reporting requirements under the Exchange Act.

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”), we will be required, beginning with our annual report on Form 10-K for the fiscal year ending December 31, 2009, to include in our annual reports on Form 10-K, our management’s report on internal control over financial reporting and the registered public accounting firm’s attestation report on our management’s assessment of our internal control over financial reporting. We intend to prepare an internal plan of action for compliance with the requirements of Section 404. As a result, we cannot guarantee that we will not have any “significant deficiencies” or “material weaknesses” within our processes. Compliance with the requirements of Section 404 is expected to be expensive and time-consuming. If we fail to complete this evaluation in a timely manner, we could be subject to regulatory scrutiny and a loss of public confidence in our internal control over financial reporting. In addition, any failure to establish an effective system of disclosure controls and procedures could cause our current and potential stockholders and customers to lose confidence in our financial reporting and disclosure required under the Exchange Act, which could adversely affect our business.

We   are controlled by our principal stockholders and management, which will limit other stockholders’ ability to influence our operations and may affect the likelihood that other stockholders will receive a premium for your securities through a change in control.

Our executive officers, directors and principal stockholders and their affiliates own approximately 85% of the outstanding shares of Common Stock as of the date of this Registration Statement. These parties effectively control the Company and direct its affairs and have significant influence in the election of directors and approval of significant corporate transactions. The interests of these stockholders may conflict with those of other stockholders. This concentration of ownership may also delay, defer or prevent a change in control of us and some transactions may be more difficult or impossible without the support of these stockholders.

Our Common Stock has a very limited trading market.

Our Common Stock is traded on the over-the-counter Pink Sheets LLC electronic quotation service, an inter-dealer quotation system that provides significantly less liquidity than the NASDAQ stock market or any other national securities exchange. In addition, trading in our Common Stock has historically been extremely limited. This limited trading adversely affects the liquidity of our Common Stock, not only in terms of the number of shares that can be bought and sold at a given price, but also through delays in the timing of transactions and reduction in security analysts’ and the media’s coverage of us. As a result, there could be a larger spread between the bid and ask prices of our Common Stock and you may not be able to sell shares of our Common Stock when or at prices you desire.

We do not intend to pay dividends.

We currently intend to retain any future earnings to fund growth and, therefore, do not expect to pay any dividends to our stockholders in the near future.

Our bylaws provide for our indemnification of our officers and directors.

We do not have any compensation plans under which equity securities were authorized to be issued as of the end of our last fiscal year.

ITEM 10.  RECENT SALES OF UNREGISTERED SECURITIES

The Company has sold certain shares of stock for cash and has issued shares in exchange for services. The sale and issuance of the shares of stock were exempt from registration under the Securities Act of 1933, as amended, by virtue of section 4(2) and, in other cases, in accordance with Rule 701. Purchasers in transactions exempt under Section 4(2) purchased shares from the Company for investment and not with a view to distribution to the public.

On December 3, 2004, the Company purchased its wholly owned subsidiary Workplace Screening Services, Inc. from related parties, Dexter Morris – Chairman and CEO, John Maring – Director and Vice President, Thomas Maring and Janet Kowalski for 120,000,000 shares of restricted common stock valued at $120,000 and the assumption of $467,352 of liabilities.

In December of 2004, the Company sold 125,000 shares of this restricted common stock for $5,750, which the Company issued in private placements to accredited investors.

In the year ended December 31, 2005, the Company sold 16,107,330 shares in private placements to accredited investors for $178,828 in cash.

In the year ended December 31, 2006, the Company sold 4,177,670 shares in private placements to accredited investors for $307,205 in cash.

During the second quarter of 2008, the Company issued an aggregate of 2,200,000 shares of its common stock to its two directors in exchange for the cancellation of promissory notes that we executed in favor of them in the aggregate principal amount of approximately $181,151.

During the first quarter of 2008, the Company sold 100,000 shares of its common stock to a single accredited investor at a per share price of $0.15.

Each certificate issued for unregistered securities contained a legend stating that the securities have not been registered under the Act and setting forth the restrictions on the transferability and the sale of the securities. No underwriter participated in, nor did the Company pay any commissions or fees to any underwriter in connection with any of these transactions. None of the transactions involved a public offering. All of the persons below are sophisticated investors, are familiar with our business activities and were given full and complete access to any corporate information requested by them.

ITEM 11.  DESCRIPTION OF SECURITIES

Common Stock

We are currently authorized to issue 200,000,000 shares of common stock, par value $.001 per share.  The following is a summary description of our capital stock and certain provisions of our certificate of incorporation and by-laws, copies of which have been incorporated by reference as exhibits to the registration statement of which this prospectus forms a part. The following discussion is qualified in its entirety by reference to such exhibits.  As of September 30, 2008, there were 142,699,001 shares of common stock outstanding.  Holders of common stock are entitled to receive ratably such dividends, if any, as may be declared by the Board of Directors out of fund legally available therefore.  Upon the liquidation, dissolution, or winding up of our company, the holders of common stock are entitled to share ratably in all of our assets, which are legally available for distribution after payment of all debts and other liabilities and liquidation preference of any outstanding preferred stock.  The outstanding shares of common stock are validly issued, fully paid and non-assessable.

On May 22, 2008, the Board of Directors and Shareholders owning a majority of the issued and outstanding common stock voted to amend its articles of incorporation to increase the authorized common shares to 200,000,000, par value $0.001.  The amended articles of incorporation have been filed with the Nevada Secretary of State.

Holders of our Common Stock are entitled to one vote per share on all matters to be voted upon by stockholders. All shares of Common Stock rank equally as to voting and all other matters. The shares of Common Stock have no preemptive or conversion rights, no redemption or sinking fund provisions and are not entitled to cumulative voting rights. Holders of our Common Stock are entitled to receive dividends when and as declared by the board of directors out of funds legally available for dividends.

The Common Stock of Labwire is currently quoted on the over-the-counter Pink Sheets LLC electronic quotation service under the symbol “LBWR.PK.”

The Company has not effectuated a change of control, or an increase in its authorized common stock.  There are no past, pending or anticipated stock splits, stock dividends, recapitalizations, mergers, acquisitions, spin-off, or reorganizations.

Transfer Agent  

The transfer agent and registrar for our Common Stock is Holliday Stock Transfer, Inc., 2939 N. 67th Place, Scottsdale, AZ, 85251.

Anti-Takeover Effects of Provisions of Nevada State Law

We may be or in the future, we may become subject to Nevada’s control share law. A corporation is subject to Nevada’s control share law if it has more than 200 stockholders, at least 100 of whom are stockholders of record and residents of Nevada, and it does business in Nevada or through an affiliated corporation.

The law focuses on the acquisition of a “controlling interest” which means the ownership of outstanding voting shares sufficient, but for the control share law, to enable the acquiring person to exercise the following proportions of the voting power of the corporation in the election of directors: (i) one-fifth or more but less than one-third, (ii) one-third or more but less than a majority, or (iii) a majority or more. The ability to exercise such voting power may be direct or indirect, as well as individual or in association with others.

The effect of the control share law is that the acquiring person, and those acting in association with it, obtains only such voting rights in the control shares as are conferred by a resolution of the stockholders of the corporation, approved at a special or annual meeting of stockholders. The control share law contemplates that voting rights will be considered only once by the other stockholders. Thus, there is no authority to strip voting rights from the control shares of an acquiring person once those rights have been approved. If the stockholders do not grant voting rights to the control shares acquired by an acquiring person, those shares do not become permanent non-voting shares. The acquiring person is free to sell its shares to others. If the buyers of those shares themselves do not acquire a controlling interest, the control share law does not govern their shares.

If control shares are accorded full voting rights and the acquiring person has acquired control shares with a majority or more of the voting power, any stockholder of record, other than an acquiring person, who has not voted in favor of approval of voting rights, is entitled to demand fair value for such stockholder’s shares.  Nevada’s control share law may have the effect of discouraging takeovers of the corporation. In addition to the control share law, Nevada has a business combination law, which prohibits certain business combinations between Nevada corporations, and “interested stockholders” for three years after the “interested stockholder” first becomes an “interested stockholder” unless the corporation’s board of directors approves the combination in advance. For purposes of Nevada law, an “interested stockholder” is any person who is (i) the beneficial owner, directly or indirectly, of ten percent or more of the voting power of the outstanding voting shares of the corporation, or (ii) an affiliate or associate of the corporation and at any time within the three previous years was the beneficial owner, directly or indirectly, of ten percent or more of the voting power of the then outstanding shares of the corporation. The definition of the term “business combination” is sufficiently broad to cover virtually any kind of transaction that would allow a potential acquirer to use the corporation’s assets to finance the acquisition or otherwise to benefit its own interests rather than the interests of the corporation and its other stockholders.

ITEM 12.  INDEMNIFICATION OF DIRECTORS AND OFFICERS  

Our officers and directors are indemnified as provided by the Nevada Revised Statutes and the Company’s bylaws. Under the Nevada Revised Statutes, director immunity from liability to a company or its shareholders for monetary liabilities applies automatically unless it is specifically limited by a company’s Articles of Incorporation.  Our Articles of Incorporation do not specifically limit the directors’ immunity.  Excepted from that immunity are: (a) a willful failure to deal fairly with the company or its shareholders in connection with a matter in which the director has a material conflict of interest; (b) a violation of criminal law, unless the director had reasonable cause to believe that his or her conduct was lawful or no reasonable cause to believe that his or her conduct was unlawful; (c) a transaction from which the director derived an improper personal profit; and (d) willful misconduct.

Our bylaws provide that we will indemnify the directors to the fullest extent not prohibited by Nevada law; provided, however, that we may modify the extent of such indemnification by individual contracts with the directors and officers; and, provided, further, that we shall not be required to indemnify any director or officer in connection with any proceeding, or part thereof, initiated by such person unless such indemnification: (a) is expressly required to be made by law, (b) the proceeding was authorized by the board of directors, (c) is provided by us, in our sole discretion, pursuant to the powers vested us under Nevada law or (d) is required to be made pursuant to the bylaws.

Our bylaws provide that we will advance to any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director or officer, of us, or is or was serving at the request of us as a director or executive officer of another company, partnership, joint venture, trust or other enterprise, prior to the final disposition of the proceeding, promptly following request therefore, all expenses incurred by any director or officer in connection with such proceeding upon receipt of an undertaking by or on behalf of such person to repay said amounts if it should be determined ultimately that such person is not entitled to be indemnified under the bylaws or otherwise.

Our bylaws provide that no advance shall be made by it to an officer of us except by reason of the fact that such officer is or was a director of the Company in which event this paragraph shall not apply, in any action, suit or proceeding, whether civil, criminal, administrative or investigative, if a determination is reasonably and promptly made: (a) by the board of directors by a majority vote of a quorum consisting of directors who were not parties to the proceeding, or (b) if such quorum is not obtainable, or, even if obtainable, a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, that the facts known to the decision-making party at the time such determination is made demonstrate clearly and convincingly that such person acted in bad faith or in a manner that such person did not believe to be in or not opposed to the best interests of the Company.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, MAY BE PERMITTED TO DIRECTORS, OFFICERS OR PERSONS CONTROLLING THE COMPANY PURSUANT TO THE FOREGOING PROVISIONS, IT IS THE OPINION OF THE SECURITIES AND EXCHANGE COMMISSION THAT SUCH INDEMNIFICATION IS AGAINST PUBLIC POLICY AS EXPRESSED IN THE ACT AND IS THEREFORE UNENFORCEABLE.

Item 13.  Financial Statements and Supplementary Data

See pages F-1 to F-29 attached hereto for financial statements and supplementary data.

 

Item 14.  Changes In And Disagreements With Accountants On Accounting And Financial Disclosure  

During the fiscal year ended December 31, 2007, 2006 and 2005, we engaged Moore & Associates, Chartered Accountants and Advisors as our principal accountant for the purposes of auditing our financial statements.  There are not and have not been any disagreements between the Company and our accountants on any matter of accounting principles, practices or financial statement disclosure.