ITEM 1. BUSINESS
Company History and Overview
History of Sibannac, Inc., a Nevada
corporation
Sibannac, Inc. ("Sibannac" or
"Company" or "we") was incorporated in June 1999 in the State of Nevada as Naprodis, Inc. for the purpose to
engage in any lawful activity for which corporations may be formed. On August 25, 2014, the Company transferred all of its assets
to Naprodis, Inc., a Colorado corporation (“Colorado Naprodis”). In consideration for the transfer of these assets,
Colorado Naprodis agreed to assume a substantial amount of the Company’s liabilities. On November 25, 2014, the Company changed
its name to Sibannac, Inc.
On August 19, 2015, Sibannac, Inc. (“the
Company” or “Sibannac”), a Nevada corporation, entered into an Asset Acquisition Agreement with Apollo Media
Network, Inc. (“Apollo”), a Delaware corporation, whereby all of the assets of Apollo would be acquired by the Company
from Apollo. Pursuant to the Asset Acquisition Agreement, the closing of the Acquisition was effective August 31, 2015, although
completed later. Apollo issued to the Company an Assignment Agreement and Bill of Sale for the Assets, duly executed by Apollo.
Sibannac, Inc. delivered to Apollo Media Network, Inc. three million, one hundred thousand (3,100,000) shares of the Company’s
Common Stock, duly issued, fully paid and non-assessable which were distributed to its shareholders in liquidation of Apollo pursuant
to IRC Section 368c. There has been no merger, however, the assets and intellectual property of Apollo were transferred in liquidation
to Sibannac.
We have short operating history in the
Apollo business (only in the startup mode in 2015) and no representation is made, nor is there any assurance that our Company will
be able to successfully raise the necessary capital to successfully carry out its business plans.
After fiscal year end we acquired Protection
Cost, Inc. for two million, three hundred thousand (2,300,000) shares which intends to provide labor and accounting management
systems for the cannabis industry.
Proposed Business Plan of Sibannac,
Inc.
Sibannac intends to become a media and
management services company, whose purpose is to service businesses with online marketing, advertising, sales tracking, management
consulting and other informational services. Additionally, Sibannac provides accounting and expense and labor management systems
to assist in compliance in the highly regulated industry environment.
We intend to fully comply with all federal
laws and regulations, including those enforced by the US Drug Enforcement Administration (DEA), United States Department of Agriculture
(USDA), US Food and Drug Administration (FDA) and US Federal Trade Commission (FTC) in our operations. We are NOT a “marijuana”
sales company attempting to operate outside of federal “marijuana” prohibitions.
Divisions of Sibannac, Inc.
1. Sibannac Media
Our division, Sibannac Media, into which
the Apollo assets were merged is in the business of developing and promoting web content. We currently own 15 domains that in total
frequently rank high as 250 visited websites on the web according to Quantcast analytics. We are currently generating revenue from
these sites and expect to expand into offering direct advertising sales in the near future.
a. Overview
Sibannac Media is a media company that
produces websites, targeting specific consumer and B2B interests. It leverages these platforms to sell advertising and to generate
an average audience of over 1 million unique users each month per web site, thereby reaching niche audiences interested in categories
such as science, sports, health, parenting, news and business. Sibannac Media is a wholly owned subsidiary of Sibannac and intends
to develop and drive the advertising and technology side of the Sibannac brands and products.
Sibannac Media intends to leverage technology
to measure audience trend, behavior and social media to best determine desired content and advertiser demand. Sibannac Media intends
to use Real Time Bidding (RTB) networks for media buying and selling of advertising. This is known as programmatic advertising,
which is a system similar to how stocks trade on Wall Street where computers automate the process of buying and selling inventory
and improve results.
According to eMarketer last year programmatic
programming hit approximately $15 billion in advertising revenue accounting for 50% of the US digital display market. However,
eMarketer sees significant growth coming from programmatic direct, which will reach $8.57 billion in spending by 2016 to represent
42.0% of programmatic ad expenditure in the US—up from 8.0% this year.
Sibannac Media has achieved a number of
key business objectives including the successful prototype deployment of Sibannac Media's proprietary marketing tactics, the development
of an expanding customer base, and a clearly identifiable path to profitability, growth, and long-term success. The vision for
Sibannac Media is to develop a network of relevant lifestyle sites to businesses and consumers. The plan for Sibannac Media is
to not only build a top shelf network but to acquire some of the best applications, sites and online technology for this industry.
The plan leverages the online advertising space as it relates to exchanges, ad networks and RTB (
Real Time Bidding
) and
introduces a real value and necessary advertising service to the business community.
The immediate goal is to continue marketing
the completed 15 sites. Each site will generate users interested in a specific content category, advertisers through Sibannac Media’s
ad network will be able to reach these users based on their interests, behavior, geography, time of day and various other methods.
Sibannac Media has launched SibannacIndex.com, LigaStars.com, YouScube.com, FullCourStars.com, CyclerLife.com, DynoMoves.com, LeafExaminer.com,
Live2100.com, ScienceFly.com, MobilityPress.com, Lifeisaboard.com, SpyChatter.com, CagePound.com, ChildCompass.com and nputgaming.com.
Collectively these sites typically generate over 15 million unique users monthly. These sites already have more eyeballs per month
than the Discover.com, msnbc.com and Weedmaps.com (2.1 MUU) a leading site in the marijuana industry. By creating a system of testing
and innovating to increase traffic, Sibannac Media will scale by continuously adding more sites.
Sibannac Media will pursue three main components
to drive growth:
|
|
1.
|
Digital Media Publishing Company
– This division owns and operates web sites for multi-screen (desktop, mobile, TV, tablet) audiences
|
|
|
2.
|
Ad Network
– As Sibannac Media scales in site development they will build an Ad Network for advertisers to reach their highly targeted online audience.
|
|
|
3.
|
Ad Exchange / Platform
– Sibannac Media will use 3
rd
party platform technology allowing them access to ad exchanges for the purpose of buying and selling ad inventory.
|
The core product of Sibannac Media is the
online audience generated through Sibannac Media’s proprietary ad network through marketing tactics and organic growth. This
online audience generates ad impressions as they visit Sibannac Media’s network of sites. The Sibannac Media advantages are:
|
|
·
|
Cost
— Using 3
rd
party technology and outsourcing platforms Sibannac Media will pass on significant savings to the advertiser without sacrificing quality.
|
|
|
·
|
Quality
— Sibannac Media will be able to match advertiser campaigns to a targeted audience based on behavior, location, time and content. The Sibannac Media network will offer rich media ad units, interstitials, road blocks, sliding home page banners and other unique ad formats to deliver high performing metrics.
|
|
|
·
|
Exposure
— Video mobile and display ads are displayed on a vast network of web pages.
|
|
|
·
|
Reliability
— Sibannac Media uses 3
rd
party anti-fraud technology to provide high quality audiences to advertisers and has an internal human auditing team to ensure traffic quality
|
|
|
·
|
Flexibility
— Sibannac Media plans to allow advertisers an automated system where they can manage their own campaigns or a Sibannac Media account manager to successfully set up and manage their campaigns.
|
b. Sibannac Media Market:
Global digital ad spend is predicted by
eMarketer to rise from $132 billion in 2014 to $194 billion in 2018 surpassing television revenue. The US Internet publishing,
broadcasting, and search portal industry includes about 3,200 companies with combined annual revenue of about $58 billion. The
most significant trend is the emergence of online ad network companies using state-of-the-art cloud computing environments and
high-performance ad server technology to deliver superior returns and savings for both advertisers and website publishers. Three
basic methods marry advertising demand with website publisher supply.
|
|
1.
|
First is the direct sales method. Some website publishers have a sales force that actively sells website real estate. This method is more costly however, generates a higher value for ad inventory.
|
|
|
2.
|
Second is the use of Ad networks. These are systems of lower paying, lower quality advertisements tapped by the publisher to fill remnant inventory. This ensures more ad space is sold and generating revenue, albeit at a fairly low cost. Today, most large online publishers (websites) sell remnant inventory of ad space through ad networks. Typically, 10% to 60% of a large publisher's total inventory is classified as remnant and sold through advertising networks. Smaller publishers often sell their entire inventory through ad networks.
|
|
|
3.
|
Real time bidding (RTB) has emerged as the third method to match the supply of Internet publishers with advertising demand based upon specific user characteristics. Real time bidding (RTB) is an online enabling technology for media purchases.
|
RTB enables media buyers to
find audiences on a massive scale at an advantaged price through much-reduced effort. This, in turn, helps drive performance by
ensuring an advertiser’s ad is seen by the audiences most likely to respond, while minimizing marketing costs and human resource
investment. Website owners are able to make their ad inventory available to a broad array of buyers and to sell their website real
estate to the highest bidder.
The following chart shows the
projected growth of Real Time Bidding market:
c. Sibannac Media Marketing &
Sales Plan
As a business, Sibannac Media's “product”
is essentially websites; an ad network and a software solution combining 3
rd
party technology with custom solutions.
Sibannac Media will offer these solutions in a 100% self-service system that enables customers to do everything including selling
and buying an ad, funding their accounts, and generating real-time reports.
Sibannac Media will sell industry standard
ad units on a Cost Per Thousand (CPM) basis. This is achieved through a programmatic system of Ad Networks and Ad Exchanges using
Agency Trading Desks (ATD), Supply Side Platforms (SSP) and Demand Side Platforms (DSP). Sibannac Media's principal customers are
advertisers that generally fall into three overlapping categories:
|
|
1.
|
Advertising Agencies
— Companies that place ads on behalf of other companies.
|
|
|
2.
|
Direct Advertisers
— Companies that place ads for their own products or services.
|
|
|
3.
|
Ad Networks / Publishers
— Publishers wanting to participate in the Sibannac Media Network and Networks wanting to participate in the Sibannac Media Exchange.
|
Sibannac Media envisions and will pursue a three-phase marketing
program as follows:
1. Phase
One: Sibannac Media develops and markets responsive websites (desktop, mobile, tablet) to generate audiences for the purpose of
generating quality ad inventory, which is monetized through programmatic advertising, direct sales and content marketing services.
Sibannac Media plans to scale from 10 million unique users in the first quarter of operations to 30 million monthly unique users
by end of 2016.
2. Phase
Two: Sibannac Media develops additional marketing tactics, including direct sales, press releases, content updates, article submittals,
testimonials, endorsements, social media marketing (i.e. blogs, podcasts, webinars, and videos), an affiliate program, link campaigns,
and a direct e-mail marketing program (with the help of an e-mail marketing service) to generate greater brand awareness for The
Company and its advertisers.
3. Phase
Three is all about Sibannac Media leveraging technology and relationships to meet the needs of online publishers, advertisers and
ad agencies. Advertisers and ad agencies are seeking consistent and quality web sites suitable for their brand’s advertising
campaigns. Online publishers are driven to maximize their site’s exposure to select audiences so they can increase their
value to advertisers. Sibannac Media will be a facilitator for both advertisers and publishers to achieve their goals.
Additional elements of the sales plan include:
|
|
·
|
Development of direct response campaigns using Sibannac Media’s network and customized landing pages to measure, optimize and maximize conversion.
|
|
|
·
|
Sibannac Media will use new video ad units and other advanced media formats to augment Sibannac Media sales strategy.
|
|
|
·
|
Sibannac Media plans to develop a strong referral program to reward existing clients and business partners that send potential members to Sibannac Media.
|
|
|
·
|
Sibannac Media plans to explore various promotional tactics to boost Sibannac Media’s standing and generate leads including: telesales; corporate sponsorships; social media, webinars; donations; direct mail; and participation at industry trade shows and conferences.
|
|
|
·
|
Sibannac Media will hire a senior sales executive to sell ad inventory and “content marketing solutions” direct to advertisers and ad agencies.
|
|
|
·
|
Sibannac Media will invest resources towards mobile technology and emerging markets.
|
d. Sibannac Media Competition
Sibannac Media competition falls
into two broad categories; competition for advertisers against other digital advertising platforms and competition for the consumers
(
eyeballs
) that advertisers want to reach against other marijuana industry related websites.
From the standpoint of other digital
advertising platforms, Google attracts 40 percent of total US digital advertising spending, according to eMarketer. Facebook holds
the second-largest share, with about 7 percent. Other market leaders include Microsoft (6 percent), Yahoo! (6 percent), and IAC
(3 percent). Highlights of other advertising networks are presented as follows:
Google AdSense
: Google’s
AdSense is one of the largest and perhaps the best known display advertising network. This platform allows publishers to monetize
standard display ads, mobile and video, and search results as well. It’s free to sign up for AdSense and the program will
accept the smallest of publishers provided they meet certain quality guidelines. AdSense also integrates into other Google products
and generally pays publishers monthly for revenue generated the previous month.
AdBlade
: This network
of premium publishers currently consists of about 1,000 high profile publishers. It offers publishers an opportunity to fill IAB
standard ad units (
such as the 300×250 rectangle or 728×90 leaderboard
) as well as a proprietary “NewsBullet”
unit designed to increase engagement and CPMs. For smaller publishers, AdBlade isn’t much use. This network accepts only
ultra-premium publishers such as Fox News, Daily News, etc.
Advertising.com
: A unit
of AOL, this network has nearly 2 billion impressions monetized daily and offers opportunities for publishers to monetize display
ads, video, mobile, and some custom implementations. It also offers Display University, an online educational resource for publishers
and advertisers looking to learn more about display ads, the process of building a campaign, and executing on creative.
Chitika
: Chitika boasts
a network of more than 300,000 publishers, making it one of the largest networks. Chitika ads can be used on their own, or alongside
ads from other networks (such as AdSense). Chitika is also open to just about anyone, and the process for getting approval and
ad implementation is generally fast. Chitika is a popular alternative for advertisers unable to use or frustrated with AdSense,
with great results in certain niches and less impressive earnings in others.
Clicksor
: Clicksor ads
can be served alongside ads from other networks. If the minimum price of an ad is not met, the placement can be filled with default
ads to ensure a 100% fill rate. When Clicksor is able to provide an ad that meets the specified CPM or CPC threshold, that ad will
run. Clicksor features traditional display ads, inline text links, and more custom implementations such as pop-unders and interstitials.
Publishers get paid every 15 days, can get a revenue split as high as 85%, and can participate in a referral program.
Google became popular with advertisers
in part through the comparative accessibility and affordability of their AdWords program, which essentially made it possible for
nearly anyone to advertise online. Over time, Google's AdWords program has become increasingly complex. Although Yahoo! and Microsoft
deliver much lower click volumes — many advertisers find their conversion rates better than Google, and hence profitability
is higher.
Several issues like these have already
opened the door to a new generation of online marketing providers. New companies (
including Sibannac Media
) can offer better
terms, and have better technology through the use of open-source applications and cloud-based computing environments. Freed from
server and software maintenance and challenging capacity issues — second-generation companies like Sibannac Media are now
able to provide substantially greater ROI for their customers at much more competitive rates.
2. Sibannac HR
We transferred the business assets of PCI
(an acquired business as described in Form 8K/A dated January 15, 2016) to our division Sibannac HR which is dedicated to labor
and accounting management systems for the cannabis industry. Sibannac management understands the wide range of issues that cannabis
businesses encounter, and is applying the systems that it has developed to assist the industry. Key to Sibannac HR’s success
is its alignment with a banking compliance solution. Sibannac HR continues to vigorously pursue these relationships
Sibannac’s initial product offerings
are PEO and insurance services through its subsidiary, Sibannac HR. Sibannac HR is the exclusive sales and marketing arm of National
PEO in the cannabis market.
1. Human Resources management
.
National PEO develops customized human
resources plans for clients to assure compliance with the latest labor laws and regulations. Additionally, National works with
clients to help develop a culture that will allow clients to develop and retain talent. Ultimately, National helps ensure that
employees are treated fairly and that the employer has an HR foundation that allows for growth and is protected.
|
|
·
|
Employee/Employer Handbook – National develops and maintains employee handbooks as labor laws change or as employer policies dictate in each state in which the client has employees.
|
|
|
·
|
Conflict Resolution – National can act as a resource, mediator or witness for employee employer conflicts, claims or disputes regarding wages, harassment, discipline, etc…
|
|
|
·
|
Benefits Support – Benefits specialists are at the business’s disposal. Whether it is for the group or an individual question or concern, National will provide the answers quickly and efficiently.
|
|
|
·
|
Compliance – National works to ensure clients maintain proper compliance with all labor laws including Americans with Disabilities Act, Immigration and Naturalization Control Act of 1986, FMLA, FLSA and other important regulations.
|
|
|
·
|
Policy and Procedure Development – National experts provide templated policies and procedures that can be adapted to specific client need to ensure a safe, comfortable and productive work environment.
|
2. Employee Benefits: Health Insurance,
Supplemental Insurance, 401k
National’s proprietary plans and
purchasing power enable businesses to affordably attract and retain high quality employees:
|
|
·
|
Health, Dental and Vision: National’s MetLife plan allows clients to provide the finest ancillary benefits available at a competitive price.
|
|
|
·
|
Nexus brokers take each client’s health plan to market with multiple carriers to ensure the best possible plan design and price.
|
|
|
·
|
COBRA compliance assistance
|
|
|
·
|
Section 125 cafeteria plan
|
|
|
·
|
Long and Short-Term Disability Insurance
|
|
|
·
|
No Cost 401k Retirement Plans saving $1,000’s in plan administration
|
3. Workers’ Compensation
Workers’ compensation insurance requires
careful monitoring and administration. When faced with a claim or audit, employers can spend countless hours researching, responding
and coping with the many aspects of workers’ compensation claims. National provides the following workers’ compensation
services:
|
|
·
|
Annual Audits Management
|
|
|
·
|
Certificates of Insurance
|
|
|
·
|
Small/no deposit plans with “pay-as-you-go” premium payments
|
|
|
·
|
Payroll Reporting and Record Keeping
|
4. Payroll Processing
National utilizes state-of the-art, industry
leading technologies to ensure clients have maximum flexibility in their payroll processing. National systems adapt to client needs
including:
|
|
·
|
Pay Frequency – weekly, bi-weekly, semimonthly or monthly.
|
|
|
·
|
Flexible Pay Period Dates
|
|
|
·
|
Pay Method – direct deposit, pay-cards or standard paper checks.
|
|
|
·
|
Reporting – standard and specialized reports, such as job costing, departmental reports or customized reports.
|
5. Workplace Safety
National maintains a robust safety team
that provides risk management, safety consulting, and government compliance. Clients have access to a variety of resources, including
independent safety consultants, advanced safety training for multiple industries, multimedia safety materials, and workers’
compensation loss control specialists. National safety helps ensure clients comply with state and federal workplace safety guidelines
while controlling workers’ compensation costs. Services include:
|
|
·
|
Written Safety Programs
|
|
|
·
|
Claims Administration and Claims Cost Control
|
|
|
·
|
Workplace Safety and Site Reviews
|
|
|
·
|
Onsite Safety Training Programs
|
6. Files, Claims & Audits
National reduces employer risk by assuming
many employer-related responsibilities. Clients can reduce risk and focus on building business while National manages the following:
|
|
·
|
Employee Record Keeping – Gathering, verifying, preparing and maintaining all employee forms such as I-9, W-4, and W-2. Support for employee evaluations, hiring/firing documentation, corrective action, disputes
|
|
|
·
|
Claims – National works with clients on the evaluation, negotiation and resolution of unemployment claims, Workers’ Compensation claims, harassment or other employee/employer related claims.
|
|
|
·
|
Audits – National and its team of subject area experts administer all audits including workers’ compensation, EEOC, DOL and others.
|
|
|
·
|
Unemployment Administration - As the employer of record, National NATIONAL is responsible for the management and resolution of state unemployment claims.
|
7. Insurance Services: Nexus Partners
Insurance Solutions:
Nexus Partners is a full service insurance
agency with numerous affiliates and brokers around the country. Nexus currently utilizes wholesale brokers as its key provider
of business insurance to its cannabis clients. Nexus provides many coverage options from multiple carriers allowing clients to
choose the policy and price that best meets their needs and budget. Nexus serves commercial clients in most industries and geographic
areas.
Business of Our Company
Our Commitment
To our shareholders, employees, patients,
global partners, the environment and other stakeholders, we promise to act on our belief that integrity is the priceless ingredient
of our company. We will operate with high standards of ethical behavior, effective governance, and we will foster a culture of
transparency and dialogue with our stakeholders to improve our understanding of their needs. We take our commitment to economic,
social and environmental sustainability seriously, and extend this expectation to our partners.
We promote a diverse workforce and inclusive
culture. The health, safety, work-life balance, professional development, and equitable, respectful treatment of our employees
are among our highest priorities.
At the date of this filing, 23 states and
the District of Columbia have adopted medical or adult use legislations. Industry analysts estimate 14 more states will follow
suit by 2018.
1
Competition
There are a number of other emerging companies
that are exploring similar services strategies. Sibannac believes that products that they develop will be competitive in the marketplace
with other products serving the same market sectors. Sibannac management believes that our team’s experience bringing products
to market will prevail and the Company will be unaffected at this stage by other developmental companies. Sibannac will strive
to be the first to bring medicines to market in this therapeutic area in order to gain a competitive advantage.
PLAN OF OPERATIONS
Our Budget for operations in next fiscal
year, 2016, is as follows:
|
APPLICATION OF FUNDS (1)
|
|
|
|
|
Working Capital
|
|
$
|
250,000
|
|
|
General & Administrative
|
|
$
|
250,000
|
|
|
Marketing & PR
|
|
$
|
500,000
|
|
|
Total
|
|
$
|
1,000,000
|
|
(1) These items are variable and no commitment
has been obtained from any source.
We may change any or all of the budget categories in the execution of its business model. None of the line items are to be considered
fixed or unchangeable. We may need substantial additional capital to support its budget. We have recognized minimal revenues from
our existing operational activities.
We may need to raise additional funds to
support not only our expected budget, but our continued operations. We cannot make any assurances that we will be able to raise
such funds or whether we would be able to raise such funds with terms that are favorable to us. We may seek to borrow monies from
lenders at commercial rates, but such lenders will probably be at higher than bank rates, which higher rates could, depending on
the amount borrowed, make the net operating income insufficient to cover the interest.
If we are unable to begin to generate enough
revenue to cover our operational costs, we will need to seek additional sources of funds. Currently, we have no committed source
for any funds as of date hereof. No representation is made that any funds will be available when needed. In the event funds cannot
be raised if and when needed, we may not be able to carry out our business plan and could fail in business as a result of these
uncertainties.
We intend to conduct research and development,
market research, product formulation, and will investigate regionally compounding licensed pharmacies for potential acquisition.
______________
1
ArcView Market Research. (2014).
The State of Legal Marijuana Markets, 2nd Edition.
COMPETITION, MARKETS, REGULATION AND
TAXATION
Competitive Conditions
There are competitors in the business services
industry with far greater resources, financial and marketing sources, which might compete with our Company. Such resources could
overwhelm our Company's efforts and cause failure of our Company. (See "Risk Factors")
Title to Property
None. We have no patents at this time.
Government Contracts
None.
Company Sponsored Research and Development
None at this time.
Number of Persons Employed
As of August 31, 2016, our Company has
one full-time employees. Our officers dedicate 10- 40 hours per week to our Company. We have zero part-time employees.
ITEM 1A. RISK FACTORS
An investment in our Company's securities
involves a high degree of risk. You should carefully consider the following risk factors and all the other information contained
in this document before you decide to buy our Company's shares. If any of the following risks related to our Company's business
actually occurs, its business, financial condition and operating results would be adversely affected.
RISKS RELATED TO OUR COMPANY AND THE
BUSINESS
We depend upon our key personnel and
our ability to attract and retain employees.
Our future growth and success depend on
our ability to recruit, retain, manage and motivate our employees. The loss of the services of any member of our senior management
or the inability to hire or retain experienced management personnel could adversely affect our ability to execute our business
plan and harm our operating results.
We expect to face intense competition,
often from companies with greater resources and experience than we have.
The cannabis industry is in turmoil and
subject to rapid change. The industry continues to expand and evolve as an increasing number of competitors and potential competitors
enter the market. Many of these competitors and potential competitors have substantially greater financial, technological, and
experience than we have. Some of these competitors and potential competitors have more experience than we have in the development
of our business. In addition, our services, if successfully developed, will compete with, service offerings from large and well-established
companies that have greater marketing and sales experience and capabilities than we or our collaboration partners have. If we are
unable to compete successfully, we may be unable to grow and sustain our revenue.
We have limited history of operations
and we may incur losses.
As a company with no operating history,
we are subject to all of the risks associated with a new business enterprise. Our prospects must be considered in light of the
risks, expenses and difficulties frequently encountered by companies in their early stages of development, especially in challenging
and competitive industries. We are unable to give you any assurance that we will generate material revenues or that any revenues
generated will be sufficient for us to continue operations or achieve profitability.
We have limited assets.
As of the August 31, 2016, we have limited
assets and net worth of approximately $50,000. Our success will initially depend upon continuing our business and growing our business
by raising the necessary funds to expand operations.
For future additional capital requirements,
we may raise capital by issuing equity or convertible debt securities, and when we do, the percentage ownership of our existing
stockholders may be diluted.
We are an "emerging growth company"
under the Jumpstart Our Business Startups Act. We cannot be certain if the reduced reporting requirements applicable to emerging
growth companies will make our shares of common stock less attractive to investors.
We are and will remain an "emerging
growth company" until the earliest to occur of (a) the last day of the fiscal year during which its total annual revenues
equal or exceed $1 billion (subject to adjustment for inflation), (b) the last day of the fiscal year following the fifth anniversary
of its initial public offering, (c) the date on which we, during the previous three-year period, issued more than $1 billion in
non-convertible debt securities, or (d) the date on which we are deemed a "large accelerated filer" (with at least $700
million in public float) under the Exchange Act.
For so long as we remain an "emerging
growth company" as defined in the JOBS Act, we may take advantage of certain exemptions from various reporting requirements
that are applicable to other public companies that are not "emerging growth companies" as described in further detail
in the risk factors below. We cannot predict if investors will find its shares of common stock less attractive because we will
rely on some or all of these exemptions. If potential investors find our shares of common stock less attractive as a result, there
may be a less active trading market for its shares of common stock and its stock price may be more volatile.
Notwithstanding the above, we are also
currently a "smaller reporting company", meaning that we are not an investment company, an asset-backed issuer, or a
majority-owned subsidiary of a parent company that is not a smaller reporting company and have a public float of less than $75
million and annual revenues of less than $50 million during the most recently completed fiscal year.
If we avail ourselves of certain exemptions
from various reporting requirements, the reduced disclosure may make it more difficult for investors and securities analysts to
evaluate our Company and may result in less investor confidence.
We may require substantial additional
financing in the future, but we are uncertain whether such financing will be available to us.
We will require significant additional
capital to expand our operations. We need approximately $500,000 in working capital requirements through 2016 into 2017. We give
no assurance that revenues from operations will generate cash flow sufficient to finance our operations and growth. We can give
you no assurance that we will be able to obtain additional financing or capital on terms we consider to be reasonable.
Additional financing will be sought from
a number of sources, including but not limited to additional sales of equity or debt securities, or loans from banks, other financial
institutions or affiliates of our Company. If additional funds are raised by the issuance of our securities, such as through the
issuance of additional shares, convertible securities, then the ownership interest of our existing shareholders (including investors
in this Offering) may be diluted. If additional funds are raised by the issuance of debt or other equity instruments, we may become
subject to certain operational limitations (i.e., negative operating covenants), and such debt holders may have rights senior to
those of the holders of equity.
If adequate funds are not available on
acceptable terms, we may be unable to fund the expansion of our business.
We depend on our executive management
to operate our Company and the loss of certain members of management would materially and negatively affect us.
Our success materially depends upon the
efforts of our management and other key personnel. If we lose the services of Messrs. Heineck or Kimerer or any other executive
officers or significant employees, our business would likely be materially and adversely affected.
Our future success also depends, in part,
upon our ability to attract and retain qualified management personnel and other employees. Any difficulties in obtaining, retaining
and training qualified employees could have a material adverse effect on us. Any difficulties in obtaining and retaining qualified
officers and employees could have a material adverse effect on us.
We may not realize a profit on our business
acquisitions in a timely manner, which could materially and adversely affect us.
We may not realize a significant cash return
if debt service exceeds net operating income on our business acquisitions. Therefore, if any of our business activities are subject
to delays or operating losses, our growth may be hindered and our results of operations and cash flows may be adversely affected.
In addition, new acquisition activities, regardless of whether or not they are ultimately successful, typically require substantial
time and attention from management. Furthermore, maintaining our management capabilities involves significant expense, including
compensation expense for our personnel and related overhead. Therefore, if we do not realize a positive cash flow return on our
business activities in order to offset these costs and expenses, we could be materially and adversely affected.
Conflicts of Interest
Certain conflicts of interest may exist
between our Company and our officers and directors. They have other business interests to which they devote their attention, and
may be expected to continue to do so although management time should be devoted to the business of our Company. As a result, conflicts
of interest may arise that can be resolved only through exercise of such judgment as is consistent with fiduciary duties to our
Company.
Need for Additional Financing
Our Company has budgeted funds expected
to be enough to carry on the proposed business through the first quarter of 2016. In the event our Company decides to expand our
operations we may have very limited funds to do so. The ultimate success of our Company may depend upon our ability to raise additional
capital. Our Company is continuing to assess the need for additional capital. If additional capital is needed, there is no assurance
that funds will be available from any source or, if available, that they can be obtained on terms acceptable to our Company. If
not available, our Company's operations will be limited to those that can be financed with its modest capital.
Limited Revenue History.
Our Company must be regarded as a new or
development venture with all of the unforeseen costs, expenses, problems, risks and difficulties to which such ventures are subject.
No Assurance of Success or Profitability.
There is no assurance that our Company
will ever operate profitably. There is no assurance that we will generate profits, or that the value of our Company's shares will
be increased thereby.
Lack of Diversification.
Because of the limited financial resources
that we have, it is unlikely that we will be able to diversify our operations. Our probable inability to diversify our activities
into more than one area will subject us to economic fluctuations within our business or industry and therefore increase the risks
associated with our operations.
Dependence upon Management. Limited
Participation of Management
.
Our Company will be heavily dependent upon
our management skills, talents, and abilities, as well as our consultants, to implement our business plan, and may, from time to
time, find that our inability to devote full time attention to the business of our Company results in a delay in progress toward
implementing our business plan.
Dependence upon Outside Advisors.
To supplement the business experience of
our officers and directors, we may be required to employ accountants, technical experts, appraisers, attorneys, or other consultants
or advisors. Our Company's Management, without any input from stockholders, will make the selection of any such advisors. Furthermore,
it is anticipated that such persons may be engaged on an "as needed" basis without a continuing fiduciary or other obligation
to our Company. In the event our Company considers it necessary to hire outside advisors, they may elect to hire persons who are
affiliates, if they are able to provide the required services.
Based on our current cash reserves,
we will have relatively small operational budget for the operations which we cannot expand without additional raising capital
.
If we are unable to begin to generate enough
revenue to cover our operational costs, we will need to seek additional sources of funds. Currently, we have
no
committed
source for any funds as of date hereof. No representation is made that any funds will be available when needed. In the event funds
cannot be raised if and when needed, we may not be able to carry out our business plan and could fail in business as a result of
these uncertainties.
RISK FACTORS RELATED TO OUR STOCK
We may, in the future, issue more shares
which could cause a loss of control by our present management and current stockholders.
We may issue further shares as consideration
for the cash or assets or services out of our authorized but unissued common stock that would, upon issuance, represent a majority
of the voting power and equity of our Company. The result of such an issuance would be those new stockholders and management would
control our Company, and persons unknown could replace our management at this time. Such an occurrence would result in a greatly
reduced percentage of ownership of our Company by our current shareholders, which could present significant risks to investors.
We have not paid dividends but may in
the future.
We have not paid dividends on our common
stock. While we intend to pay dividends in future after allocating adequate reserves, we do
not
guarantee, commit and undertake
that dividends will be paid in the foreseeable future.
A limited public market exists for our
common stock at this time, and there is no assurance of a future market.
There is a limited public market for our
common stock, and no assurance can be given that a market will continue or that a shareholder ever will be able to liquidate his
investment without considerable delay, if at all. If a market should develop, the price may be highly volatile. Factors such as
those discussed in the "Risk Factors" section may have a significant impact upon the market price of the shares offered
hereby. Due to the low price of our securities, many brokerage firms may not be willing to effect transactions in our securities.
Even if a purchaser finds a broker willing to effect a transaction in our shares, the combination of brokerage commissions, state
transfer taxes, if any, and any other selling costs may exceed the selling price. Further, many lending institutions will not permit
the use of our shares as collateral for any loans.
The regulation of penny stocks by SEC
and FINRA may discourage the tradability of our securities.
We are a "penny stock" company.
None of our securities currently trade in any market and, if ever available for trading, will be subject to a Securities and Exchange
Commission rule that imposes special sales practice requirements upon broker-dealers who sell such securities to persons other
than established customers or Accredited Investors. For purposes of the rule, the phrase "Accredited Investors" means,
in general terms, institutions with assets in excess of $5,000,000, or individuals having a net worth in excess of $1,000,000 or
having an annual income that exceeds $200,000 (or that, when combined with a spouse's income, exceeds $300,000). For transactions
covered by the rule, the broker-dealer must make a special suitability determination for the purchaser and receive the purchaser's
written agreement to the transaction prior to the sale. Effectively, this discourages broker-dealers from executing trades in penny
stocks. Consequently, the rule will affect the ability of purchasers in this offering to sell their securities in any market that
might develop therefore because it imposes additional regulatory burdens on penny stock transactions.
In addition, the Securities and Exchange
Commission has adopted a number of rules to regulate "penny stocks". Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3,
15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities and Exchange Act of 1934, as amended. Because our securities constitute
"penny stocks" within the meaning of the rules, the rules would apply to us and to our securities. The rules will further
affect the ability of owners of shares to sell our securities in any market that might develop for them because it imposes additional
regulatory burdens on penny stock transactions.
Shareholders should be aware that, according
to Securities and Exchange Commission, the market for penny stocks has suffered in recent years from patterns of fraud and abuse.
Such patterns include (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter
or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;
(iii) "boiler room" practices involving high-pressure sales tactics and unrealistic price projections by inexperienced
sales persons; (iv) excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and (v) the wholesale
dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired consequent investor
losses. Our management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect
to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive
within the confines of practical limitations to prevent the described patterns from being established with respect to our securities.
Rule 144 sales in the future may have
a depressive effect on our stock price.
Our shareholders may be able to use Rule
144 as an exemption for resale, but resales under Rule 144 could have a depressive effect on the market trading price, if any.
Investors will have no effective way to combat this.
Rule 144 Sales
All of the outstanding Shares will be "restricted
securities" within the meaning of Rule 144 under the Securities Act of 1933, as amended. As restricted Shares, these Shares
may be resold only pursuant to an effective registration statement or under the requirements of Rule 144 or other applicable exemptions
from registration under the Act and as required under applicable state securities laws.
Our stock will in all likelihood continue
to be thinly traded and as a result you may be unable to sell at or near ask prices or at all if you need to liquidate your shares.
The shares of our common stock may continue
to be thinly-traded on the OTC Pink or OTCQB under the symbol SNNC, meaning that the number of persons interested in purchasing
our common shares at or near ask prices at any given time may be relatively small or non-existent. This situation is attributable
to a number of factors, including the fact that we are a small company which is relatively unknown to stock analysts, stock brokers,
institutional investors and others in the investment community that generate or influence sales volume, and that even if we came
to the attention of such persons, they tend to be risk-averse and would be reluctant to follow an unproven, early stage company
such as ours or purchase or recommend the purchase of any of our Securities until such time as we became more seasoned and viable.
As a consequence, there may be periods of several days or more when trading activity in our Securities is minimal or non-existent,
as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous
sales without an adverse effect on Securities price. We cannot give you any assurance that an active public trading market for
our common Securities will ever develop or be sustained, or that any trading levels will be sustained. Due to these conditions,
we can give investors no assurance that they will be able to sell their shares at or any prices or at all if they need money or
otherwise desire to liquidate their securities of our Company.
Our common stock market prices may be
volatile, which substantially increases the risk that you may not be able to sell your Securities at or above the price that you
may pay for the security
.
Because of the limited trading market for
our common stock and because of the possible price volatility, you may not be able to sell your shares of common stock when you
desire to do so. The inability to sell your Securities in a rapidly declining market may substantially increase your risk of loss
because of such illiquidity and because the price for our Securities may suffer greater declines because of our price volatility.
The price of our common stock that will
prevail in the market after this offering may be higher or lower than the price you may pay. Certain factors, some of which are
beyond our control, that may cause our share price to fluctuate significantly include, but are not limited to the following:
|
·
|
|
Variations in our quarterly operating results;
|
|
·
|
|
Loss of a key relationship or failure to complete significant transactions;
|
|
·
|
|
Additions or departures of key personnel; and
|
|
·
|
|
Fluctuations in stock market price and volume.
|
Additionally, in recent years the stock
market in general, and the personal care markets in particular, have experienced extreme price and volume fluctuations. In some
cases, these fluctuations are unrelated or disproportionate to the operating performance of the underlying company. These market
and industry factors may materially and adversely affect our stock price, regardless of our operating performance. In the past,
class action litigation often has been brought against companies following periods of volatility in the market price of those companies
common stock. If we become involved in this type of litigation in the future, it could result in substantial costs and diversion
of management attention and resources, which could have a further negative effect on your investment in our stock.
Our business is highly speculative and
the investment is therefore highly risky.
Due to the speculative nature of our business,
it is probable that the investment in shares offered hereby will result in a total loss to the investor. Investors should be able
to financially bear the loss of their entire investment. Investment should, therefore, be limited to that portion of discretionary
funds not needed for normal living purposes or for reserves for disability and retirement.
Any economic downturn and uncertainty
in the financial markets and other adverse changes in general economic or political conditions may adversely affect our industry,
business and results of operations.
The global credit and financial markets
have continued to experience disruptions, including diminished liquidity and credit availability, declines in consumer confidence,
declines in economic growth, increases in unemployment rates, and uncertainty about economic stability. There can be no assurance
that there will not be future deterioration in credit and financial markets and confidence in economic conditions. These economic
uncertainties affect businesses such as ours in a number of ways, making it difficult to accurately forecast and plan our future
business activities. We are unable to predict the likely duration and severity of any disruptions in the credit and financial markets
and adverse global economic conditions, and if any uncertain economic conditions continue or further deteriorate, our business
and results of operations could be materially and adversely affected.
Potential changes in accounting practices
and/or taxation may adversely affect our financial results.
We cannot predict the impact that future
changes in accounting standards or practices may have on our financial results. New accounting standards could be issued that change
the way we record revenues, expenses, assets and liabilities. These changes in accounting standards could adversely affect our
reported earnings. Increases in direct and indirect income tax rates could affect after tax income. Equally, increases in indirect
taxes could affect our products affordability and reduce our sales.
We will rely on third parties for services
in conducting our business and any disruption of these relationships could adversely affect our business.
We will have contracts with third parties.
If these relationships are disrupted for any reason our results of operation and financial condition could be adversely affected.
There is a risk that shareholders will
never receive dividends.
We do
not
guarantee, commit or undertake
to issue a dividend to shareholders for the next several years even if cash were available to do so as we would re-invest those
available funds back into the operations of our Company. We cannot assure shareholders that we will achieve results or maintain
a tax status that allow any specified level of cash distribution or year-to-year increases in cash distribution.
Highly Speculative Nature of Investment.
Due to the highly speculative nature of
our business, it is likely that the investment in the shares offered hereby will result in a total loss to the investor. Investors
should be able to financially bear the loss of their entire investment. Investment should, therefore, be limited to that portion
of discretionary funds not needed for normal living purposes or for reserves for disability and retirement.
Reporting Information.
Our Company is not subject to the full
reporting requirements under the Securities and Exchange Act of 1934, only reporting under Section 15(d). As a result, shareholders
will not have access to the all of the information required to be reported by publicly held Section 12g registered companies under
the Securities and Exchange Act and the regulations thereunder. Our Company intends to provide our shareholders with annual reports
containing financial information prepared in accordance with Generally Accepted Accounting Principles as required by Sec. 13 of
the Securities Exchange Act of 1934.
Long Term Nature of Investment
Investors should be aware of the long-term
nature of an investment in our Company. Each investor will be required to represent that the securities purchased are for their
own account, for investment purposes only and not with a view towards resale or distribution. The securities offered hereby may
not be negotiated, assigned, or transferred without an opinion of counsel acceptable to our Company that transfer may be made without
registration under the securities laws of the United States and applicable state laws. The securities offered hereby are restricted
securities under the applicable securities laws of the United States or of the various states unless an exemption from registration
is available. Therefore, the securities offered hereby may have to be held for an indefinite period of time. Investors who do not
wish or who are not financially able to remain as investors for a substantial and indefinite period of time are advised against
investment in the shares offered hereby.
Limited Financing – Lack of Loan
Availability
There is no assurance that additional monies
or financing will be available in the future or, if available, will be at terms favorable to our Company.
Our Company may borrow money to finance
its operations on terms to be determined. Any such borrowing will increase the risk of loss to the investor in the event our Company
is unsuccessful in repaying such loans.
Capital Resources
The only capital resources of our Company
are our shares.