Item 1. Description of Business
Overview
Oculus VisionTech Inc. is a Canadian-based development-stage technology company that designs and markets digital marking technology to business customers.
We have also developed a Cloud-based Document Protection System (Cloud-DPS) technology that allows us to offer a Cloud-based Internet service for document tamper-proof protection and authentication that allow us to leverage our digital watermarking technology.
Historically, we have used our digital watermarking technology for streaming video content distribution based on embedded digital watermarking, as well as video-on-demand (VOD) systems, services and source-to-destination digital media delivery solutions that allow live or recorded digitized and compressed video to be transmitted through Internet, intranet, satellite or wireless connectivity. We developed a number of specific products and services based on these technologies. These include MediaSentinel™ and SmartMarks™, a process that watermarks digital video content; StreamHQ™, a collection of source-to-destination media delivery services marketed to businesses; EncodeHQ™, a service that digitizes and compresses analog-source video; hardware server and encoder system applications under the brand name Hurricane Mediacaster™; ZMail™, a service that delivers web and rich media content to targeted audiences, and mediaClix™, a service that delivers content similar to Zmail™ but originating from an existing web presence.
We were incorporated on April 18, 1986, as "First Commercial Financial Group Inc." in the Province of Alberta, Canada. In 1989, our name was changed to "Micron Metals Canada Corp.", which purchased 100% of the outstanding shares of USA Video Inc., a Texas corporation, in order to focus on the digital media business. In 1995, we changed our name to "USA Video Interactive Corp." and continued out of the Province of Alberta into the State of Wyoming. At a shareholders meeting held on December 30, 2011, a resolution was passed to change our name to "Oculus VisionTech Inc." and to alter our share capital by way of a reverse stock split (share consolidation) on the basis of fifteen old common shares for one new common share. On January 25, 2012, we changed our name to "Oculus VisionTech Inc." and completed the reverse stock split. We had one wholly-owned subsidiary, USVO Inc., a corporation organized under the laws of the State of Connecticut that was dissolved December 30, 2019.
Our executive and corporate offices are located at Suite 507, 837 West Hastings Street, Vancouver, British Columbia, Canada, V6C 3N6. Our telephone number is 1-800-321-8564 and our facsimile number is 604-685-5777. Our email address is contact@ovtz.com and our website is www.ovtz.com. Our common shares are listed for trading on the TSX Venture Exchange (TSX.V – OVT, OTCQB – OVTZ, FSE – USF1).
Business Environment and Market Opportunity
We have recognized that Internet-based, digital document security/protection products are a business opportunity for the Company that allow us to apply our proprietary real-time digital video watermarking technology, which was developed for studios and networks in the entertainment industry, to the digital document security/protection sector. Our Cloud- DPS technology introduces the Company to the online, digital document security/protection industry and possible vertical markets that exist in the sector, including the ability to confirm the authenticity of online documents and photographs distributed through traditional wireline networks or over wireless smart devices.
Our Cloud-DPS secures and protects digital documents (including text documents, photos, blueprints, etc.) from any modification, and/or attempted forgery. It works by imperceptibly watermarking documents, using real-time image processing and watermarking algorithms, embedded into a secured/protected copy of a document. This protected copy is designed to resist any attempts to alter or forge the document by forensically tracking and deterring any attempts to tamper with the document. The watermarking algorithms are able to ascertain whether a document is protected by our DPS technology and if any attempts to modify or tamper with the document occurred. Any such modifications will be flagged, time stamped, and can be spatially highlighted in the document where any tampering occurred. This authentication and verification process ensures the integrity of the original document.
Strategic Plan
Our strategic plan is to use our proprietary digital watermarking technology to offer a Cloud-based Internet service for document tamper-proof protection and authentication. We expect to continue our focus on developing our Cloud-DPS technology and, overtime to switch our focus away from video-on-demand (VOD) systems and the associated products and services.
We believe that our Cloud-DPS technology is superior to the products offered by our competitors, which do not rely on a file invariant watermarking system (as opposed to a system that supports different file formats, such as Microsoft Office, Open Office, etc., by employing handlers for each document file format.). In order for a non-file invariant system to be used successfully for a variety of documents, it must be capable of handling and working with all present and future file formats, whereas our DPS solution relies on the PDF (portable document format) document format to create a format invariant watermarking system. PDF document readers are freely available and widely popular. All the incoming documents can be converted into PDF images and protected with an image understanding algorithm, while the PDF document layout is preserved.
Going forward, we plan to license our Cloud-based Document Protection Services (Cloud-DPS) to select document distributors and allow these distributors to expand their Cloud-based service offerings for end-customers. We expect to differentiate the Cloud-DPS from our competitors on the basis of its core tamper-proof technology and by providing a superior process workflow and mobile user experience for document protection, processing and management for business to business (B2B) and business to consumer (B2C) customers. We also plan to develop our Cloud services and workflows to enable the mass market mobile users access these technologies while processing, storing and sharing their sensitive documents.
Proprietary Technologies
Our previous video-on-demand (VOD) systems, source-to-destination digital media delivery solution were based on our proprietary rich media delivery infrastructure and software and our Store and Forward Video-on-Demand patent. This patent expired in February of 2010. Subsequently, we have elected not to patent our Cloud-DPS technology.
Our proprietary document protection technologies include digital watermarking based document tamper-proofing for all types of documents. The objective is providing document originators and users the confidence that a subject document is authentic and has not been forged.
Our main technology differentiator is content-based document protection, which involves searches for robust, invariant document/image segments. This proprietary document "recognition" technology is a file format invariant watermarking system, and is subsequently fundamentally different from today's document data encrypted schemes, stored in different file formats-containers. The key feature of our DPS technology are:
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Our DPS technology "personalizes" protected documents, based on their content, thereby creating a format invariant watermarking system. A document, converted into a PDF document is encrypted before delivery, such that it cannot be opened without providing proper credentials. The result is that a document watermarking system can be offered as a cloud-based software service that can:
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Protect - Accept any incoming document through a web portal, watermark it and return the watermarked document as a PDF document.
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Authenticate - The "document authenticator" is also a cloud-based software service that can accept the watermarked document and validate the authenticity of the documents.
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Our DPS technology combines the access control security for electronic documents, forensic grade anti-tampering technology based on the document's content "understanding", and data storage (optional) into a single, unique solution. Because of its cloud-based scalable system architecture, the DPS has a potential to expand and grow into a complete document management, security and storage eco-system, offered in a flexible and cost-effective web service model.
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Products and Services
Currently, our principal product is our proprietary digital watermarking document protection technology.
Our Cloud-based web service system architecture enhances already existing storage and collaboration solutions such as Google Drive, DropBox, Box.com and others by adding document tamper-proof protection and workflows such as document sign-offs, authentication, secure distribution and collaboration. We believe that this will allow our DPS technology to be deployed and scaled in wide range of vertical markets such as:
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Corporate contracts and agreements management
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Corporate core development documents
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IP protection
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real estate contracts management
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government-related document management and security (health care, law enforcement)
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Specification document protection for industrial users in the automotive, aerospace, engineering companies.
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Another product under development is a stand-alone, cost-effective document/photo security solution for the personal document management field (B2C segment).
We have been developing a number of specific products and services based on our DPS technology. These include:
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Legal DPS - A text-based DPS web-service to protect legal/contract documents for business partners
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Cyber DPS - A stand-alone, generic DPS product, fully accessible by a Desktop/Web/Mobile App (smart devices), and intended for retail/small-office customers and individual users.
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Photo DPS - An online photo protection system intended for social media industry, and for hybrid documents – mixed text, still images (including medical images), graphs, blue prints etc.
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Hybrid DPS - A protection/security system for documents with textual, graphical and photo (still images) inputs - segments, making a document page.
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MS Cyber DPS - A next-generation stand-alone DPS, offering a user friendly end-to-end Cloud-based DPS with a competitive document management system (DMS) for small businesses and individuals, on top of document protection/security service.
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P2 Biometrics - A photo protection system for social media industry that is intended to include fast online image understanding, features selection and extraction for facial/pattern recognition/detection, capabilities. This product may require a co-development effort with global network providers.
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We also plan to launch our own Cloud with the following features:
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Secure server cluster
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Digital vault for storing protected documents
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Online document availability and delivery
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Off-site backup using a secure archival service
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Redundancy maintained by the fail-over servers.
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Customers and Markets
We currently have no customers for our products and services. We are taking steps to monetize our Cloud-DPS technology. These steps include actively seeking licensing initiatives. Our DPS architecture is designed as a web service, which allows for an easy customization to individual customer needs. The main customization effort is reduced by our creation of well synchronized interfaces to a potential customer's infrastructure. This feature will allow us to offer "white label" licensing of our DPS technology.
The principal market for our products services are businesses requiring digital documents protection, authentication and storage. For example, digital watermarking technology may be required by copyright-owning content providers who have concerns about the authenticity and forgery protection of their documents. Potential business users and areas of our products include:
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Legal Contracts – We plan to offer a secured contract protection services to online legal content distributors, and directly to legal firms from our data center. This will require us to launch our Legal DPS differently, disruptively and globally for the mass market rather than joining the list of local vendors in this segment.
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Real Estate Contracts – A special case of the above service, real estate is a large and unique market where we can provide streamlined efficient contract signing and sharing service among buyers, sellers, agents and lawyers related to a deal. We believe that many of the cumbersome, manually signed contracts today could become paperless and be signed off from mobile. Real estate title registration in the United Stated by First American Title, Fidelity National Financial and alike are potential customers, because the tamper-proofing protection of their title documents is crucial and including millions of documents a year.
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Healthcare Records Management System – This vertical market requires secure sharing of patient data among healthcare service providers, the patients, and the healthcare insurers. We expect to develop B2B projects with selected healthcare providers that require secure and standard complying health records management.
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Government Documents Management – We expect this vertical to be similar to the Healthcare vertical applications in serving citizens, businesses, and vendors.
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Engineering Specs Protection – Manufacturing and engineering companies are required to store, manage and share their secured files with vendors and developers. We intend to offer secured cloud storage for tamper-proof documents.
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Financial Institutions have a great deal of account related files, agreements and transaction records that may require tamper-proof protection. We intend to pursue large opportunities in this vertical market and be open to licensing servers in these institutions' data centers.
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High Security Organizations – Similarly to Financial Institutions, these organizations would require our DPS installed in their data centers. This complicates the update and maintenance of these servers and hence makes this difficult market even less attractive for us. We will monitor opportunities in this vertical market.
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Materials and Supplies
We are in the process of migrating from a server-based environment into a Cloud web-based environment. Eventually, we expect to host a digital cloud in our own data center. We plan to assemble our cloud server hardware from components manufactured by others. We will specify, procure, assemble, test and deploy the various system components (servers, routers, solid-state memory blocks) according a set of procedures that we will develop for this. We have started preliminary consultations with companies that supply the major components and materials needed to build and expand our Cloud systems. Cloud components can be programmed and configured to meet a wide variety of different vertical markets requirements. We will procure the materials and hardware to assemble our Cloud from various companies, as needed, and in sufficient quantities to preclude any danger of significant sourcing problems in the immediate future. There are no seasonal limitations on our operations.
We plan to launch the OVT Cloud with main set of features, as follows:
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Secure server cluster
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Digital vault for storing protected documents
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Online document availability and delivery
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Off-site backup using a secure archival service
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Redundancy maintained by the fail-over servers
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Competition
To successfully launch our products and services and derive revenues from our technology, we face competition from a number of competitors with more established products and services in our sector. Potential competitors include:
1. Digi-Sign, which markets Cloud-based application programming to document creating companies, offering them digital signatures. Their business model is similar to ours. While a potential competitor, we are contemplating offering a product that complements Digi-Sign's technology, otherwise we will have to provide our own document signing and protecting workflows and solutions. The principal differences between the Digi-Sign solution and our solution are that we offer (i) document tamper-proof protection for high-value documents; (ii) simple and fast mobile user experience; (iii) B2C consumer collaborative repository of contracts, signed and sealed, in the Cloud.
2. Altavion/NexStamp, a California based developer of document and human authentication technologies. The company developed Digital Stamping Technology for document authentication filling a void in the standard Digital Signature Technology area. This technology alleviates the burden of proof of forgeries made to documents. The company grows through franchises in various countries.
3. MarkAny from South Korea released in 2001 e-Page SAFER™, the world's first solution designed to prevent document forgery. The solution has improved public administration services and helped move the age of e-government forward in Korea. MarkAny also developed Content SAFER, a digital rights management platform that has contributed to the development of Korea's content industry by creating a secure environment for the distribution of content through the protection of multimedia content copyrights. MarkAny develops a technology for 3D parts protection from copying.
4. ContractWorks.com is the newest member of the SecureDocs, Inc. from California. ContractWorks provides contract management software services from the Cloud that focuses on usability and a simple user interface. They provide secure storage and visible watermarking feature to protect documents. Their pricing is $400 a month for unlimited secure storage of contracts.
Most of our current and potential competitors have longer operating histories in the document protection industry, larger customer bases, greater name recognition and significantly greater financial, marketing and other resources than us. In addition, larger, well-established and well-financed entities may acquire, invest in or form joint ventures with on-line competitors as the use of the Internet-centric, Cloud-based cyber document security services increases. In addition, cyber document security and cloud document management technologies and the expansion of existing B2B and B2C document protection technologies are expected to result in additional competition.
Research and Development
Our current research and development is focused on the evolution of our digital watermark technology. We redirected our Wavelet development and other image processing methods toward the creation of an adaptive, content-dependent document protection technology that is grounded in similar science as Wavelet compression. Products currently in development include:
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Photo DPS - An online photo protection system intended for social media industry, and for hybrid documents – mixed text, still images (including medical images), graphs, blue prints etc.
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Hybrid DPS - A protection/security system for documents with textual, graphical and photo (still images) inputs - segments, making a document page.
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DM Cyber DPS - A next-generation stand-alone DPS, offering a user friendly end-to-end Cloud-based DPS with a competitive document management system (DMS) for small businesses and individuals, on top of document protection/security service.
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Our short-to-mid-term R&D plans include:
In order to use DPS as a stand-alone product, it needs to have a front end interface. For wider acceptance, the front-end application needs to be implemented on smartphone devices. In this release, an app will be created for Android platform, which will be available in the Google Play store.
This release will enhance DPS in a major way by implementing new watermarking algorithm, capable of protecting photos. With this functionality, DPS can start to address wider market such as Healthcare, Social Media etc.
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Document Dispatch Agent
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With the document dispatch framework more document dispatch agents can be created that are capable of routing the protected documents to various destinations, such as:
We plan to create a stand-alone product that allows user to protect the documents from their own favourite apps by simply printing the document to Oculus Virtual Printer. This product will only be available on Microsoft Windows Desktop platforms.
We plan to address DPS front end capability as well by supporting the iOS platform and by creating iPhone App. DPS will then be capable of running the front-end apps on Windows Desktop, Android and iOS platform, allowing us to cover all of the major platforms available.
During fiscal 2019 and 2018, our research and development expenditures were $-0- and $4,763, respectively.
Intellectual Property
Our success is dependent, in part, upon our proprietary technology. We generally rely upon patents, trademarks, and trade secret laws to establish and maintain our proprietary rights in our technology products and services.
On June 19, 2001, United States Patent Application No. 09/884,787, "Method and Apparatus for Digitally Fingerprinting Videos", was officially filed with the U.S. Patent and Trademark Office. This patent is for "MediaSentinel™". This patent expired in February of 2010. At this time, we have elected not to patent our Cloud-DPS technology.
Laws and Regulations
Our operations are or may be subject to various federal, provincial, state and local laws, regulations and recommendations relating to the marketing of products and relationships with data protection, intellectual property protection, the export of technology products to certain countries and privacy protection. Although we believe that we are compliance with all federal, provincial, state and local regulations, the risk of claims and actions against us for breach of the aforesaid laws cannot be eliminated completely. In the event of a breach of these laws, we could be held liable for any damages that result. The amount of such damages could have a materially adverse effect on our results of operations and financial condition.
Employees
We currently have no employees. We engage independent contractors to provide services as necessary. Compensation for current and future work will be conducted on a contract basis.
The loss of the services of any key management could have a materially adverse effect on the Company. We do not maintain key man life insurance on the life of its officers. In addition, our future success will depend in part upon its continuing ability to hire, train, motivate and retain key senior management and skilled technical and marketing personnel. Competition for technical personnel in the industry we compete in is intense. Our future success will depend in part on our continued ability to contract, assimilate and retain qualified personnel. To date, we have had limited success in recruiting qualified contractors, but there is no assurance that we will continue to do so in the future. Attracting qualified expertise is contingent on raising sufficient working capital and project advancement.
Oculus' Website
Our website address is www.oculusvisiontech.com. Information found on our website is not incorporated by reference into this annual report. We make available free of charge through our website our Securities and Exchange Commission ("SEC"), filings filed pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after it electronically files such material with, or furnish it to, the SEC. We will also make available all financial reports filed in accordance with United States generally accepted accounting principles ("US GAAP") on SEDAR through its website www.sedar.com. We invite investors and interested parties to sign up for "Email Alerts" on our website to receive information such as press releases as they become available.
Item 1A. Risk Factors.
Our business and operations are subject to a number of risks and uncertainties as described below. However, the risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that we are unaware of, or that we may currently deem immaterial, may become important factors that harm our business, financial condition or operations. If any of the following risks actually occur, our business, financial condition or operations could suffer.
Our limited operating history makes it difficult to evaluate our business and prospects.
We have a very limited operating history in the context of document protection products and services and have yet to develop an extensive record regarding the sale of our products and services. As a result, our ability to accurately forecast our future operating results is limited and subject to a number of uncertainties, including our ability to:
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maintain or develop relationships with suppliers and marketing partners;
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establish a customer base;
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continue to develop and upgrade our technology, products and services;
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provide superior customer service;
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respond to competitive developments; and
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retain and motivate qualified personnel.
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In addition, we have and will continue to be subject to the risks and uncertainties frequently experienced by growing companies in rapidly changing industries. If our assumptions regarding these risks and uncertainties are incorrect or change due to market factors, or if we are unsuccessful in addressing these risks, our business could suffer.
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We have incurred substantial losses; we expect to incur losses in the future, and may never achieve profitability.
To date, we have not generated a profit or significant revenue from operations and in fact have incurred substantial losses. For the year ended December 31, 2019 we maintained $248,303 of working capital but sustained a net loss of $192,865 and had an accumulated deficit of $41,386,696.
We intend to continue to expend significant financial and management resources on the development of our proposed products and services, and other aspects of our business. As a result, we expect operating losses and negative cash flows to increase for the foreseeable future. Consequently, we will need to generate significant revenues to achieve and maintain profitability. We may be unable to do so. If our revenues grow more slowly than anticipated or if operating expenses increase more than expected, or are not reduced sufficiently, we may never achieve profitability. Because of factors discussed in this paragraph, our auditors, in their report on our financial statements, have expressed substantial doubt concerning our ability to continue as a going concern.
If we are unable to obtain substantial additional financing, we may not be able to remain in business.
We require substantial working capital to fund our business. We have had significant operating losses and negative cash flow from operations since the inception of our current business and expect to continue to do so for the foreseeable future. Our capital requirements will depend on several factors, including our ability to establish and expand a client base, to grow our sales and to employ effective marketing efforts. Our capital needs will also be influenced by the rate of market acceptance of our products and services.
We expect that we will require approximately $1,000,000 to $3,500,000 in financing to meet our working capital needs for the remainder of 2020 and further financing thereafter. If our capital requirements vary materially from those currently planned, we may require additional financing. We have no arrangements or commitments for any financing. Financing may not be available when needed on terms favorable to us, or at all. If adequate funds are not available or are not available on acceptable terms, we may be unable to further develop or enhance our products and services, take advantage of future opportunities or respond to competitive pressures, or ultimately, to remain in business.
Our operating results in future periods are expected to be subject to significant fluctuations, which would likely affect the trading price of our common shares.
Our quarterly and annual operating results are likely to fluctuate significantly in the future due to a variety of factors, many of which are outside of our control. Some of these factors include:
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our ability to attract and retain customers;
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the introduction of new enhancements in digital watermarking;
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our ability to remain competitive in our product and service offerings;
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our ability to attract new personnel; and
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U.S. and foreign regulations relating to the Internet.
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As a result of the factors listed above, and others, period-to-period comparisons of our operating results may not be meaningful in predicting our future performance. It is possible that our operating results will not meet market expectations in some future quarter or quarters, which would likely result in a significant decline in our stock price.
The document protection market is highly competitive, and our failure to compete successfully would limit our ability to retain and increase our market share.
The cyber document security, and its superset, cyber data security are new, rapidly evolving and extremely competitive sectors and we expect that competition will intensify in the future. We compete with other companies that provide all or certain aspects of our services, including other cyber/document protection systems based on document digital watermarking, and others, and expect that additional competition in the future will be provided by those types of providers. Our current market share is insignificant.
The document protection market is currently dominated by a small number of larger companies, including Digi-Sign, Altavion/NexStamp, MarkAny and ContractWorks.com. Most of our competitors have longer operating histories, larger customer bases, stronger brand recognition and significantly greater financial, marketing and other resources than us. In addition, larger, well-established and well-financed entities may acquire, invest in or form joint ventures with on-line competitors as the use of the Internet-centric, Cloud-based cyber document security services increases. In addition, cyber document security and cloud document management technologies and the expansion of existing B2B and B2C document protection technologies are expected to result in additional competition.
We may not be able to compete successfully against current and future competitors, and the inability to do so could decrease our revenues, prevent us from achieving profitability and adversely affect our ability to establish, maintain and increase our market share.
The video digital watermarking business is highly competitive, and our failure to compete successfully would limit our ability to retain and increase our market share.
The video digital watermarking market is rapidly evolving and extremely competitive. We expect competition to intensify in the future. We compete with companies that provide all or certain aspects of our services, including other media-streaming providers, content encoders, video production companies, and Internet data-management companies. Our current market share is insignificant.
The video digital watermarking market is currently dominated by a small number of larger companies, including Civolution and Verimatrix. Most of our competitors have longer operating histories, larger customer bases, stronger brand recognition and significantly greater financial, marketing and other resources than us. In addition, larger, well-established and well-financed entities may acquire, invest in or form joint ventures with online competitors as the use of the Internet and other online services increases. In addition, new technologies and the expansion of existing technologies are expected to result in additional competition.
We may not be able to compete successfully against current and future competitors, and the inability to do so could decrease our revenues, prevent us from achieving profitability and adversely affect our ability to establish, maintain and increase our market share.
We are subject to rapid technological change, which could render our products and services obsolete.
Our future success will depend in part on our ability to offer products and services that incorporate leading technology and address the increasingly sophisticated and varied needs of our current and prospective customers. Our market is characterized by rapidly changing and unproven technology, evolving industry standards, changes in customer needs, emerging competition and frequent new service introductions. These changes and developments may render our products and technologies obsolete in the future. As a result, our success depends on our ability to adapt to these changes, particularly to develop new products and services, adapt our current products and services or to acquire new products and services that can compete successfully. There can be no assurance that we will be successful in these efforts.
In addition, future advances in technology may not be beneficial to or compatible with our business and we may not be able to incorporate technological advances into our products and services in a cost-effective and timely manner. Keeping pace with technological advances may require substantial expenditures and lead time, particularly with respect to acquiring updated hardware and infrastructure components for our systems. We may require additional financing to fund such purchases. Any such financing may not be available on commercially reasonably terms, if at all, when needed and may result in a loss of earnings and market share.
We are dependent upon vendors and other third party service providers, and will be competing with some of these companies.
We are, and will continue to be dependent on vendors and other providers to supply the hardware, software and co-location resources that comprise our products and services. We have no long-term or exclusive contracts or arrangements with any of these vendors or providers. We cannot be certain that our current and proposed vendors and service providers will continue to do business with us or that we will be able to establish relationships with new vendors and service providers if necessary. If we are unable to establish and maintain satisfactory relationships and arrangements with these third parties, our business could be harmed. In addition, we will be dependent upon our third party vendors and other suppliers to adequately test their products before release, and to provide support for their products after delivery. Failure to do so could have a material adverse effect on our business.
Further, we currently compete with, and expect to compete with in the future, providers of some of our technology or system components. If we are unable to effectively balance our need to cooperate and compete with these companies, our business may be harmed.
Our services are complex and we may not be able to prevent defects that could decrease their market acceptance, result in product liability or harm our reputation.
Our document security, digital water marketing and streaming media products and services are complex, and the steps we take to ensure that they are free of errors or defects, particularly when first introduced or when new versions or enhancements are released, may not be successful. We cannot guarantee that current versions or enhanced versions or our products will be free of significant software defects or bugs. Despite our testing, and testing by our third-party vendors and providers, current or future products may contain serious defects. Serious defects or errors could result in lost revenue or a delay in market acceptance of our products and could seriously harm our business and operating results. Errors in our products may be caused by defects in third-party hardware or software incorporated into our products. If so, we may be unable to fix these defects without the co-operation of these third-party providers. Because these defects may not be as significant to these providers as they are to us, we may not receive the rapid co-operation that we may require. Errors, defects or other performance problems with our products could also harm our customers' businesses or result in potential product liability claims. Even if unsuccessful, a product liability claim brought against us would likely be time-consuming, costly and harmful to our reputation. Nor can there be any assurance that our product liability insurance coverage will be sufficient to satisfy any successful claim.
Any loss of our personnel or inability to acquire new personnel could harm our business.
Our continued operations and future success relies significantly on the continued services and performance of our senior management. The loss of the services of any member of our senior management team could cause significant disruption in our business. We have no long-term employment agreements with senior management, do not currently maintain any "key person" life insurance and have no employees. As such, our future success depends on our ability to retain current senior management and to identify, attract, hire, train, retain and motivate other highly skilled technical, managerial, operations, customer service, and sales and marketing personnel. Competition for such personnel is intense, and we may not successfully attract, assimilate or retain sufficiently qualified personnel. The failure to retain and attract the necessary personnel could impede our future success.
Failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and operating results and shareholders could lose confidence in our financial reporting.
Effective internal controls are necessary for the Company to provide reliable financial reports and effectively prevent fraud. If we cannot provide reliable financial reports or prevent fraud, our's operating results could be harmed. Failure to achieve and maintain an effective internal control environment, regardless of whether the Company is required to maintain such controls, could also cause investors to lose confidence in our reported financial information, which could have a material adverse effect on the Company's share price. Although the we are not aware of anything that would impact its ability to maintain effective internal controls, we have not obtained an independent audit of the Company's internal controls and, as a result, we are not aware of any deficiencies which would result from such an audit. Further, at such time as the Company is required to comply with the internal controls requirements of the Sarbanes-Oxley Act, we may incur significant expenses in having its internal controls audited and in implementing any changes which are required.
We do not currently have any paying customers.
Our sales were $-0- in 2019 and 2018. We expect that a small number of customers will account for a substantial portion of our revenue in the foreseable future. The inability to increase the number of customers could limit our ability to maintain or increase our market share, or could cause revenue to drop quickly and unexpectedly.
Our business may suffer if we cannot protect our intellectual property.
We seek to protect our proprietary rights through a combination of patents, trade secrets, trademark laws, confidentiality procedures and contractual provisions with employees and third parties. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our products or obtain and use information that we have proprietary rights over. Litigation may be necessary to enforce our intellectual property rights, to protect our trade secrets and to determine the validity and scope of our proprietary rights. Any litigation could result in substantial costs and diversion of management and other resources with no assurance of success and could seriously harm our business and operating results.
Our products may infringe the intellectual property rights of others, causing us to incur significant costs or prevent us from licensing our products.
Other companies, including our competitors, may have or obtain patents or other proprietary rights that would prevent, limit or interfere with our ability to make, use or license our products. We cannot be certain that our products do not and will not infringe patents or the proprietary rights of others. We may be subject to legal proceedings, including claims of alleged infringement by others of the intellectual property rights of third parties. If a successful claim of infringement is brought against us and we fail to or are unable to license the infringed technology on commercially reasonable terms, our business and operating results could be significantly harmed. Companies in the technology sector are increasingly bringing suits alleging infringement of their proprietary rights, particularly patent rights. Although we are not currently subject to any litigation or claims, any future claims, whether or not valid, could result in substantial costs and diversion of resources with no assurance of success. Intellectual property litigation or claims could force us to do one or more of the following:
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cease selling, incorporating or using products or services that incorporate the infringed intellectual property;
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obtain a license from the rights-holder or owner of the infringed intellectual property, which license may not be available on commercially reasonable terms, or at all; or
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re-design our products or services.
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If we are forced to take any of these actions, our business could be substantially harmed.
Our success depends on the continued growth in demand for e-business applications.
Our primary business strategy involves the development of products and services that enable users to transmit video over the Internet. As a result, our future sales and any future profits will be substantially dependent upon the widespread acceptance and use of the Internet as an effective medium of business by consumers and businesses. To be successful, consumers and businesses that have historically used traditional means of commerce to transact business must continue to accept and utilize the Internet as a medium for conducting business and exchanging information. Consumers and businesses may reject the Internet as a viable commercial medium for a number of reasons, including potentially inadequate network infrastructure, slow development of enabling technologies, insufficient commercial support and privacy concerns. In addition, delays in the development or adoption of new standards and protocols required to handle increased levels of Internet activity or increased government regulation could cause the Internet to lose its viability as a commercial medium. If the demand for e-business applications does not grow or grows more slowly than expected, demand for our products and services would be reduced and our revenue would suffer.
Government regulation and legal uncertainties could add additional costs and risks to doing business on the Internet.
We are not currently subject to direct regulation by any governmental agency, other than regulations applicable to businesses generally, export control laws and laws or regulations directly applicable to electronic commerce. However, due to the increasing popularity and use of the Internet, it is possible that a number of laws and regulations may be adopted with respect to the Internet covering issues such as: user privacy, pricing, content, copyrights, distribution and characteristics and quality of products and services.
Furthermore, the growth and development of the market for electronic commerce may prompt calls for more stringent consumer protection laws that may impose additional burdens on companies conducting business online. The adoption of additional laws or regulations may decrease the growth of the Internet or other online services, which could, in turn, decrease the demand for our products and services and increase our cost of doing business.
The applicability of existing laws to the Internet, property ownership, copyrights, encryption and other intellectual property issues, taxation, libel, export or import matters, obscenity and personal privacy is uncertain. The vast majority of such laws were adopted prior to the advent of the Internet and related technologies. As a result, they do not contemplate or address the unique issues of the Internet and related technologies. Changes to such laws intended to address these issues, including some recently proposed changes, could create uncertainty in the Internet marketplace. Such uncertainty could reduce demand for our products and services or increase the cost of doing business due to increased costs of litigation or increased service delivery costs.
Our share price has been and could be highly volatile, which could result in substantial losses to investors.
The trading price of our common shares has been and is likely to continue to be highly volatile and could be subject to wide fluctuations in response to a number of factors including variations in quarterly operating results, new products or services offered by us or our competitors, conditions or trends in the Internet and online commerce industries, changes in the economic performance and/or market valuations of other Internet and online service companies, and other events or factors, many of which are beyond our control. In addition, the stock market in general, and the market for Internet-related and technology companies in particular, has experienced extreme price and volume fluctuations, including large price drops in 2017, 2015, 2011, 2010, 2009, 2008, 2003, 2002 and 2001, that have often been unrelated or disproportionate to the operating performance of such companies. These broad market and industry factors may materially adversely affect the market price of our common shares, regardless of our actual operating performance. In the past, following periods of volatility in the market price of a company's securities, securities class-action litigation has often been instituted against affected companies. Such litigation, if instituted, could result in substantial costs and a diversion of management's attention and resources.
We have not paid cash dividends in the past and does not expect to pay cash dividends in the foreseable future. Any return on investment may be limited to the value of the Company's common shares.
We have never paid cash dividends on its capital stock and does not anticipate paying cash dividends on its capital stock in the foreseable future. The payment of dividends on the Company's capital stock will depend on its earnings, financial condition and other business and economic factors affecting the Company at such time as the board of directors may consider relevant. If we do not pay dividends, its common shares may be less valuable because a return on your investment will only occur if the common shares price appreciates.
Securities analysts may not initiate coverage or continue to cover the Company's common shares, and this may have a negative impact on its market price.
The trading market for the Company's securities could depend in part on the research and reports that securities analysts publish about Oculus' business and the Company. We do not have any control over these analysts. There is no guarantee that securities analysts will cover the Company's securities. If securities analysts do not cover the Company, the lack of research coverage may adversely affect the market prices of the Company's common shares. If the Company is covered by securities analysts, and its securities are the subject of an unfavorable report, the prices for the Company's securities would likely decline. If one or more of these analysts ceases to cover the Company or fails to publish regular reports on the Company, the Company could lose visibility in the financial markets, which could cause its share price and/or trading volume to decline.
Anti-takeover provisions in our charter documents could prevent or delay a change in control of the company.
Our articles of continuance and bylaws contain anti-takeover provisions that could discourage, delay or even prevent an acquisition of our company at a premium price or at all. Any of these provisions might prevent the market price of our common shares from increasing in response to takeover attempts, and could prevent our shareholders from realizing a premium over the then-prevailing market price for the common shares.
We intend to issue additional equity securities, which may dilute the interests of current shareholders or carry rights or preferences senior to the common shares.
We intend to issue additional equity securities in order to raise working capital. Accordingly, existing shareholders may experience additional dilution of their percentage ownership interest in our company. In addition, the new equity securities may have rights, preferences or privileges senior to those of our existing common shares.
The exercise of options and warrants and other issuances of common shares or securities convertible into or exercisable for common shares will dilute the ownership interests of the Company's current shareholders and may adversely affect the future market price of the Company's common shares.
We may use stock options, stock grants and other equity-based incentives, to provide motivation and compensation to our officers, employees and key independent consultants. The award of any such incentives will result in an immediate and potentially substantial dilution to our existing shareholders and could result in a decline in the value of the Company's share price. The exercise of these options and the sale of the underlying common shares and the sale of common shares issued pursuant to stock grants may have an adverse effect upon the price of the Company's common shares.
Limited liability of executive officers and directors may discourage shareholders from bringing a lawsuit against them.
Our bylaws contain provisions that limit the liability of directors for monetary damages and provide for indemnification of officers and directors. These provisions may discourage shareholders from bringing a lawsuit against officers and directors for breaches of their fiduciary duty and may also reduce the likelihood of derivative litigation against officers and directors even though such action, if successful, might otherwise have benefited the shareholders. In addition, a shareholder's investment in Oculus may be adversely affected to the extent that costs of settlement and damage awards against officers or directors are paid by Oculus pursuant to the indemnification provisions of the bylaws.
Requirements of the SEC with regard to low-priced "penny stocks" may adversely affect the ability of shareholders to sell their shares in the secondary market.
"Penny stocks" are low-priced, and usually highly speculative, stock selling at less than $5.00 per share. Our securities are subject to Rule 15g-9 under the Exchange Act, which imposes additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and "accredited investors" (generally, an individual with a net worth in excess of $1,000,000 or an annual income exceeding $200,000, or $300,000 together with his or her spouse). For transactions covered by this rule, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser's written consent to the transaction prior to sale. The rule also requires the delivery, prior to the transaction, of a risk disclosure document mandated by the SEC relating to the penny stock market. The broker-dealer must also disclose the commissions payable for the transaction, current quotations for the stock, and, if applicable, the fact that it is the sole market maker in the stock. Consequently, the rule may adversely affect the ability of broker-dealers to sell our securities and may adversely affect the ability of shareholders to sell their shares in the secondary market.
We do not anticipate paying dividends to shareholders in the foreseable future.
We have not paid dividends on our common shares and we intend, for the foreseable future, to invest any earnings in the further development of our business. Accordingly, shareholders should not expect to receive any dividends on their shares.
We may be exposed to adverse currency exchange rate fluctuations, which could harm our financial results and cash flows.
Substantially all of our assets and operations are located and conducted in the United States and Canada. As a result, our primary exposure to movements in foreign currency rates relate to Canadian dollar operating expenses, assets and liabilities. A decline in the Canadian dollar would decrease the U.S. dollar value of our Canadian assets while a rise in the Canadian dollar would increase the U.S. dollar value of Canadian operating expenses and liabilities.
International transactions are settled in U.S. dollars. As a result, weaknesses in foreign currencies could adversely affect demand for our products.
Service outages and disruption of our infrastructure may harm our adversely impact business operations and injure reputation.
We may experience outages or disruptions to our services or infrastructure before, during or after the transition to a cloud platform, including information technology system failures and network disruptions. Such events could interrupt our customers' access to our services, adversely affect their perception of our services' reliability and consequently reduce our revenue.
Security vulnerabilities in our products and services or any breach of our security measures may injure our reputation and disrupt our business.
We intend to host a digital Cloud platform with various features including document storage. While this Cloud service will have security features, Cloud-based content has been, and continues to be, targeted by malicious cyber-attacks. Should our security features be breached as a result of third-party attacks or due any error, negligence, product defect or otherwise, and should such a breach compromise the confidentiality, integrity or availability of our cloud services, the business may suffer and its reputation may be injured. In addition, if an actual or perceived security breach occurs, we may become subject to significant liability through lawsuits or claims and lose future sales and customers and there is no assurance that our product liability insurance coverage will be sufficient to satisfy any successful claims.
Techniques used to defeat online security measures are constantly evolving and may not be discovered until after the secured information has already been compromised. Therefore, we may be unable to anticipate these techniques, react in a timely manner, or implement adequate preventative measures.
The financial reporting obligations of being a public company in the United States are expensive and time consuming, and may place significant demands on the Company's management.
The obligations of being a public company in the United States require significant expenditures and place certain demands on our management, including costs resulting from public company reporting obligations under the Exchange Act and the rules and regulations regarding corporate governance practices, including those under the Sarbanes-Oxley Act of 2002, and the Dodd-Frank Wall Street Reform and Consumer Protection Act. Our management and other personnel devote a substantial amount of time to ensure that the Company complies with all of these requirements. Moreover, despite recent reforms made possible by the Jumpstart Our Business Startups Act, the reporting requirements, rules and regulations increase the Company's legal and financial compliance costs and will make some activities more time-consuming and costly. Any changes that the Company makes to comply with these obligations may not be sufficient to allow it to satisfy its obligations as a public company on a timely basis, or at all.
We also expect these rules and regulations to make it more difficult and more expensive for it to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. These factors also could make it more difficult for us to attract and retain qualified persons to serve on its board of directors, particularly to serve on its audit and compensation committees, or as executive officers.
Our failure to manage or adequately address any one or more of these risks could result in our business suffering a material adverse effect.