ITEM
1. DESCRIPTION OF BUSINESS
As
used in this annual report, the terms “we”, “us”, “our”, “the Company”, means LVPAI,
unless otherwise indicated.
Cautionary
Note Regarding Forward Looking Statements
This
report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements
regarding our ability to locate and acquire an operating business and the resources and efforts we intend to dedicate to such an endeavor,
our development of a viable business plan and commencement of operations, and our ability to locate sources of capital necessary to commence
operations or otherwise meet our business needs and objectives. All statements other than statements of historical facts contained in
this report, including statements regarding our future financial position, liquidity, business strategy and plans and objectives of management
for future operations, are forward-looking statements. The words “believe,” “may,” “estimate,” “continue,”
“anticipate,” “intend,” “should,” “plan,” “could,” “target,”
“potential,” “is likely,” “will,” “expect” and similar expressions, as they relate to
us, are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations
and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business
strategy and financial needs.
The
results anticipated by any or all of these forward-looking statements might not occur. Important factors, uncertainties and risks that
may cause actual results to differ materially from these forward-looking statements include those described in Item 1A. – Risk
Factors. We undertake no obligation to publicly update or revise any forward-looking statements, whether as the result of new information,
future events or otherwise.
Description
of Business
Lvpai
Group Limited (formerly known as Finotec Group Inc.) (“Lvpai”, “the Company”, “we”, “us”)
has been dormant since November 2011. On March 16, 2020, as a result of a custodianship in Clark County, Nevada, Case Number: A-20-809716-B,
Custodian Ventures LLC (“Custodian”) was appointed custodian of the Company.
On
March 17, 2020, Custodian appointed David Lazar as the Company’s Chief Executive Officer, President, Secretary, Chief Financial
Officer, Chief Executive Officer, and Chairman of the Board of Directors.
David
Lazar, 30, has been CEO and Chairman of the Company since May 16, 2018. David Lazar is a private investor. Mr. Lazar has been a partner
at Zenith Partners International since 2013, where he specializes in research and development, sales, and marketing. From 2014 through
2015, David was the Chief Executive Officer of Dico, Inc., which was then sold to Peekay Boutiques. Since February of 2018, Mr. Lazar
has been the managing member of Custodian Ventures LLC, where he specializes in assisting distressed public companies. Since March 2018,
David has acted as the managing member of Activist Investing LLC, which specializes in active investing in distressed public companies.
David has a diverse knowledge of financial, legal, and operations management; public company management, accounting, audit preparation,
due diligence reviews, and SEC regulations.
On
January 25, 2021, as a result of a private transaction, 10,000,000 shares of Series A Preferred Stock, $0.001 par value per share (the
“Shares”) of the Company were transferred from Custodian Ventures, LLC to Yang Fuzhu (the “Purchaser”). Each
share of Series A Preferred Stock is convertible to 200 shares of common stock As a result, the Purchaser became an approximately 86.95%
holder of the voting rights of the issued and outstanding share capital of the Company on a fully-diluted basis of the Company, and became
the controlling shareholder. The consideration paid for the Shares was $250,000. The source of the cash consideration for the Shares
was personal funds of the Purchaser. In connection with the transaction, David Lazar released the Company from $65,503 in debt owed to
him.
On
January 25, 2021, David Lazar, serving as a director and an officer, ceased to be the Company’s Chief Executive Officer, Chief
Financial Officer, President, Treasurer, Secretary, and a Director. At the effective date of the transfer, Yang Fuzhu consented to act
as the new President, CEO, CFO, Treasurer, Secretary and Chairman of the Board of Directors of the Company.
Mr.
Yang graduated from Jiangsu Vocational College of Electronics and Information (formerly known as Huaiyin Electronic Industry School)
in year 1997. Mr. Yang has twenty years’ experience in his career in photography. He established “Red Rose Studio”
in 1999, to provide customized photo shooting services such as wedding photo shooting, wedding banquet shooting and portrait photo shooting
etc. He is the Founder and Chairman at Haoye Network Information Consultant Limited Company in Wuxi, China from 2009 to the present date,
where he was responsible for corporate network system construction, website content optimization, online sales personnel training, online
shop system improvement and providing guidance in online industry alliances, etc. From 2011 to the present date, Mr. Yang has served
as Founder and Chairman of Lvpai Culture Communication (Shanghai) Company Limited, where he has set up the online platform (“lvpai.com”)
as online service marketing provider, providing destination wedding photographer business and city brand name establishment and planning.
From 2020 to the present date, Mr. Yang has served as Founder and Chairman of Jiangsu Travel Photography Technology Group Company Limited,
where he is responsible for business management and strategic planning.
From
2008 to the present time, Mr. Yang serves as a member of the council of China Portrait Photography, where he is responsible for integrating
the member resource and member training. Mr. Yang’s business leadership and professional photography expertise has, in the Company’s
estimation, qualified him for his roles as the Company’s President, Chief Executive Officer and Director.
Reverse
Stock Split
Effective
on March 8, 2021, the Company has approved a reverse stock split of the Company’s authorized and issued and outstanding shares
of common stock, par value $0.001 per share, at a ratio of 1-for-3000 (the “Reverse Stock Split”). As a result of the Reverse
Stock Split, the Company’s prior to the Reverse Stock Split, there were 300,134,005 shares of common stock issued and outstanding.
As a result of the Reverse Stock Split, the Company has 103,103 shares of common stock issued and outstanding. The par value remains
unchanged at $0.001 per share, which resulted in a reclassification of capital from par value to additional paid-in capital in excess
of par value. All share and per share amount in the accompanying financial statement for the prior period have been retroactively adjusted
to reflect the Reverse Stock Split.
Competition
and Market Conditions
We
will face substantial competition in our efforts to identify and pursue a business venture. The primary source of competition is expected
to be from other companies organized and funded for similar purposes, including small venture capital firms, blank check companies, and
wealthy investors, many of which may have substantially greater financial and other resources than we do. In light of our limited financial
and human resources, we are at a competitive disadvantage compared to many of our competitors in our efforts to obtain an operating business
or assets necessary to commence our operations in a new field. Additionally, with the economic downturn caused by the coronavirus pandemic,
many venture capital firms and similar firms and individuals have been seeking to acquire businesses at discounted rates, and we therefore
currently face additional competition and resultant difficulty obtaining a business. We expect these conditions to persist at least until
such time as the economy recovers. Further, even if we are successful in obtaining a business or assets for new operations, we expect
there to be enhanced barriers to entry in the marketplace in which we decide to operate as a result of reduced demand and/or increased
raw material costs caused by the pandemic and other economic forces that are beyond our control.
Regulation
As
of the date of this Report, we are required to file reports with the Securities and Exchange Commission (the “SEC”) by Section
13 of the Securities Exchange Act of 1934 (the “Exchange Act”).
Depending
on the direction management decides to take and a business or businesses we may acquire in the future, we may become subject to other
laws or regulations that require us to make material expenditures on compliance including the increasing state level regulation of privacy.
Any such requirements could require us to divert significant human and capital resources on compliance, which could have an adverse effect
on our future operating results.
Employees
As
of the date of this Report, we do not have employees. However, an entity controlled by our Chief Executive Officer provides part-time
consulting services to us without compensation.
ITEM
1A. RISK FACTORS
Risks
Relating to Our Business and Financial Condition
We
currently have no operations, and investors therefore have no basis on which to evaluate the Company’s future prospects.
We
currently have no operations and will be reliant upon a merger with or acquisition of an operating business to commence operations and
generate revenue. Because we have no operations and have not generated revenues, investors have no basis upon which to evaluate our ability
to achieve our business objective of locating and completing a business combination with a target business. We have no current arrangements
or understandings with any prospective target business concerning a business combination and may be unable to complete a business combination
in a reasonable timeframe, on reasonable terms or at all. If we fail to complete a business combination as planned, we will never generate
any operating revenues.
We
may face difficulties or delays in our search for a business combination, and we may not have access to sufficient capital to consummate
a business combination.
We
may face difficulty identifying a viable business opportunity or negotiating or paying for any resulting business combination. Economic
factors that are beyond our control, including the COVID-19 pandemic and consequent economic downturn, as well as increased competition
for acquisitions of operating entities that we expect to encounter as a result thereof, may hinder our efforts to locate and/or obtain
a business that is suitable for our business goals at a price we can afford and on terms that will enable us to sufficiently grow our
business to generate value to our shareholders. We have limited capital, and we may not be able to take advantage of any available business
opportunities on favorable terms or at all due to the limited availability of capital. There can be no assurance that we will have sufficient
capital to provide us with the necessary funds to successfully develop and implement our plan of operation or acquire a business we deem
to be appropriate or necessary to accomplish our objectives, in which case we may be forced to terminate our business plan and your investment
in the Company could become worthless.
If
we are not successful in acquiring a new business and generating material revenues, investors will likely lose their investment.
If
we are not successful in developing a viable business plan and acquiring a new business through which to implement it, our investors’
entire investment in the Company could become worthless. Even if we are successful in combining with or acquiring the assets of an operating
entity, we can provide no assurances that the Company will be able to generate significant revenue therefrom in the short-term or at
all or that investors will derive a profit from their investment. If we are not successful, our investors will likely lose their entire
investment.
If
we cannot manage our growth effectively, we may not become profitable.
Businesses,
including development stage companies such as ours and/or any operating business or businesses we may acquire, often grow rapidly, and
tend to have difficulty managing their growth. If we are able to acquire an operating business, we will likely need to expand our management
team and other key personnel by recruiting and employing experienced executives and key employees and/or consultants capable of providing
the necessary support.
We
cannot assure you that our management will be able to manage our growth effectively or successfully. Our failure to meet these challenges
could cause us to lose money, and your investment could be lost.
Because
we have limited capital, we may need to raise additional capital in the future by issuing debt or equity securities, the terms of which
may dilute our current investors and/or reduce or limit their liquidation or other rights.
We
may require additional capital to acquire a business. We may not be able to obtain additional capital when required. Future business
development activities, as well as administrative expenses such as salaries, insurance, general overhead, legal and compliance expenses,
and accounting expenses will require a substantial amount of additional capital.
The
terms of securities we issue in future capital raising transactions may be more favorable to new investors, and may include liquidation
preferences, superior voting rights or the issuance of other derivative securities, which could have a further dilutive effect on or
subordinate the rights of our current investors. Any additional capital raised through the sale of equity securities will likely dilute
the ownership percentage of our shareholders. Additionally, any debt securities we issue would likely create a liquidation preference
superior that of our current investors and, if convertible into shares of Common Stock, would also pose the risk of dilution.
We
may be unable to obtain necessary financing if and when required.
Our
ability to obtain financing, if and when necessary, may be impaired by such factors as the capital markets (both in general and in the
particular industry or industries in which we may choose to operate), our limited operating history and current lack of operations, the
national and global economies, and the condition of the market for microcap securities. Further, economic downturns such as the current
global depression caused by the COVID-19 pandemic may increase our requirements for capital, particularly if such economic downturn persists
for an extended period of time or after we have acquired an operating entity, and may limit or hinder our ability to obtain the funding
we require. If the amount of capital we are able to raise from financing activities, together with any revenues we may generate from
future operations, is not sufficient to satisfy our capital needs, we may be required to discontinue our development or implementation
of a business plan, cancel our search for business opportunities, cease our operations, divest our assets at unattractive prices or obtain
financing on unattractive terms. If any of the foregoing should happen, our shareholders could lose some or all of their investment.
Because
we are still developing our business plan, we do not have any agreement for a business combination.
We
have no current arrangement, agreement or understanding with respect to engaging in a business combination with any specific entity.
We may not be successful in identifying and evaluating a suitable acquisition candidate or in consummating a business combination. We
are neutral as to what industry or segment for any target company. We have not established specific metrics and criteria we will look
for in a target company, and if and when we do we may face difficulty reaching a mutual agreement with any such entity, including in
light of market trends and forces beyond our control. Given our early-stage status, there is considerable uncertainty and therefore inherent
risk to investors that we will not succeed in developing and implementing a viable business plan.
The
COVID-19 pandemic could materially adversely affect our financial condition, future plans and results of operations.
The
coronavirus disease (COVID-19) pandemic has adversely affected, and other events (such as a significant outbreak of variations thereof
or other infectious diseases could adversely affect), the economies and financial markets worldwide, and the business of any potential
target business with which we consummate an initial business combination could be materially and adversely affected. Furthermore, we
may be unable to complete an initial business combination if concerns relating to COVID-19 continue to restrict travel, limit the ability
to have meetings with potential investors or the target company’s personnel, vendors and services providers are unavailable to
negotiate and consummate a transaction in a timely manner. The extent to which COVID-19 impacts our search for an initial business combination
will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning
the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others.
If
the disruptions posed by COVID-19 continue for an extensive period of time, our ability to consummate an initial business combination,
or the operations of a target business with which we ultimately consummate an initial business combination, may be materially adversely
affected. In addition, our ability to consummate a transaction may be dependent on our ability to raise additional equity and debt financing
which may be impacted by COVID-19 and other events, including as a result of increased market volatility, decreased market liquidity
in third-party financing being unavailable on terms acceptable to us or at all.
Because
we are dependent upon Yang Fuzhu, our Chief Executive Officer and sole director to manage and oversee our Company, the loss of him could
adversely affect our plan and results of operations.
We
currently have a sole director and officer, Yang Fuzhu, who manages the Company and is presently evaluating a viable plan for our future
operations. We will rely solely on his judgment in connection with selecting a target company and the terms and structure of any resulting
business combination. The loss of our Chief Executive Officer, could delay or prevent the achievement of our business objectives, which
could have a material adverse effect upon our results of operations and financial position.
Further,
because Mr. Fuzhu serves as Chief Executive Officer and sole director and also holds a controlling interest in the Company’s Common
Stock, our other shareholders will have limited ability to influence the Company’s direction or management.
In
addition, although not likely, the officers and directors of an acquisition candidate may resign upon completion of a combination with
their business. The departure of a target’s key personnel could negatively impact the operations and prospects of our post-combination
business. The role of a target’s key personnel upon the completion of the transaction cannot be ascertained at this time. Although
we contemplate that certain or all members of a target’s management team may remain associated with the target following a change
of control thereof, there can be no assurance that all of such target’s management team will decide to remain in place. The loss
of key personnel, either before or after a business combination and including management of either us or a combined entity could negatively
impact the operations and profitability of our business.
Risks
Related to a Potential Business Acquisition
We
may encounter difficulty locating and consummating a business combination, including as a result of the competitive disadvantages we
have.
We
expect to face intense competition in our search for a revenue-producing business to combine with or acquire. Given the current economic
climate, venture capital firms, larger companies, blank check companies such as special purpose acquisition companies and other investors
are purchasing operating entities or the assets thereof in high volumes and at relatively discounted prices. These parties may have greater
capital or human resources than we do and/or more experience in a particular industry within which we choose to search. Most of these
competitors have a certain amount of liquid cash available to take advantage of favorable market conditions for prospective business
purchaser such as those caused by the recent pandemic. Any delay or inability to locate, negotiate and enter into a business combination
as a result of the relative illiquidity of our current asset or other disadvantages we have relative to our competitors could cause us
to lose valuable business opportunities to our competitors, which would have a material adverse effect on our business.
We
may expend significant time and capital on a prospective business combination that is not ultimately consummated.
The
investigation of each specific target business and any subsequent negotiation and drafting of related agreements, SEC disclosure and
other documents will require substantial amounts of management’s time and attention and material additional costs in connection
with outsourced services from accountants, attorneys, and other professionals. We will likely expend significant time and resources searching
for, conducting due diligence on, and negotiating transaction terms in connection with a proposed business combination that may not ultimately
come to fruition. In such event, all of the time and capital resources expended by the Company in such a pursuit may be lost and unrecoverable
by the Company or its shareholders. Unanticipated issues which may be beyond our control or that of the seller of the applicable business
may arise that force us to terminate discussions with a target company, such as the target’s failure or inability to provide adequate
documentation to assist in our investigation, a party’s failure to obtain required waivers or consents to consummate the transaction
as required by the inability to obtain the required audits, applicable laws, charter documents and agreements, the appearance of a competitive
bid from another prospective purchaser, or the seller’s inability to maintain its operations for a sufficient time to allow the
transaction to close. Such risks are inherent in any search for a new business and investors should be aware of them before investing
in an enterprise such as ours.
Conflicts
of interest may arise between us and our shareholders, directors, or management, which may have a negative impact on our ability to consummate
a business combination or favorable terms or generate revenue.
Our
Chief Executive Officer, Mr. Fuzhu, is not required to commit his full time to our affairs, which may result in a conflict of interest
in allocating his time between managing the Company and other businesses in which he is or may be involved. We do not intend to have
any employees prior to the consummation of a business combination. Mr. Fuzhu is not obligated to contribute any specific number of hours
to our affairs, and he may engage in other business endeavors while he provides consulting services to the Company. If any of his other
business affairs require him to devote substantial amounts of time to such matters, it could materially limit his ability to devote his
time and attention to our business which could have a negative impact on our ability to consummate a business combination or generate
revenue.
It
is possible that we obtain an operating company in which a director or officer of the Company has an ownership interest in or that he
or she is an officer, director, or employee of. If we do obtain any business affiliated with an officer or director, such business combination
may be on terms other than what would be arrived at in an arms-length transaction. If any conflict of interest arises, it could adversely
affect a business combination or subsequent operations of the Company, in which case our shareholders may see diminished value relative
to what would have been available through a transaction with an independent third party.
We
may engage in a business combination that causes tax consequences to us and our shareholders.
Federal
and state tax consequences will, in all likelihood, be a significant factor in considering any business combination that we may undertake.
Under current federal law, such transactions may be subject to significant taxation to the buyer and its shareholders under applicable
federal and state tax laws. While we intend to structure any business combination so as to minimize the federal and state tax consequences
to the extent practicable in accordance with our business objectives, there can be no assurance that any business combination we undertake
will meet the statutory or regulatory requirements of a tax-free reorganization or similar favorable treatment or that the parties to
such a transaction will obtain the tax treatment intended or expected upon a transfer of equity interests or assets. A non-qualifying
reorganization, combination or similar transaction could result in the imposition of significant taxation, both at the federal and state
levels, which may have an adverse effect on both parties to the transaction, including our shareholders.
It
is unlikely that our shareholders will be afforded any opportunity to evaluate or approve a business combination.
It
is unlikely that our shareholders will be afforded the opportunity to evaluate and approve a proposed business combination. In most cases,
business combinations do not require shareholder approval under applicable law, and our Articles of Incorporation and Bylaws do not afford
our shareholders with the right to approve such a transaction. Further, Mr. Fuzhu, our Chief Executive Officer and sole director, owns
the vast majority of our outstanding Common Stock. Accordingly, our shareholders will be relying almost exclusively on the judgement
of our board of directors (“Board”) and Chief Executive Officer and any persons on whom they may rely with respect to a potential
business combination. In order to develop and implement our business plan, may in the future hire lawyers, accountants, technical experts,
appraisers, or other consultants to assist with determining the Company’s direction and consummating any transactions contemplated
thereby. We may rely on such persons in making difficult decisions in connection with the Company’s future business and prospects.
The selection of any such persons will be made by our Board, and any expenses incurred or decisions made based on any of the foregoing
could prove to be adverse to the Company in hindsight, the result of which could be diminished value to our shareholders.
Because
our search for a business combination is not presently limited to a particular industry, sector or any specific target businesses, prospective
investors will be unable to evaluate the merits or risks of any particular target business’ operations until such time as they
are identified and disclosed.
We
are still determining the Company’s business plan, and we may seek to complete a business combination with an operating entity
in any number of industries or sectors. Because we have not yet entered into any letter of intent or agreement to acquire a particular
business, prospective investors currently have no basis to evaluate the possible merits or risks of any particular target business’s
operations, results of operations, cash flows, liquidity, financial condition, prospects or other metrics or qualities they deem appropriate
in considering to invest in the Company. Further, if we complete a business combination, we may be affected by numerous risks inherent
in the operations of the business we acquire. For example, if we acquire a financially unstable business or an entity lacking an established
operating history, we may be affected by the risks inherent in the business and operations of a new business or a development stage entity.
Although our management intends to evaluate and weigh the merits and risks inherent in a particular target business and make a decision
based on the Company and its shareholders’ interests, there can be no assurance that we will properly ascertain or assess all the
significant risks inherent in a target business, that we will have adequate time to complete due diligence or that we will ultimately
acquire a viable business and generate material revenue therefrom. Furthermore, some of these risks may be outside of our control and
leave us with no ability to reduce the likelihood that those risks will adversely impact a target business or mitigate any harm to the
Company caused thereby. Should we select a course of action, or fail to select a course of action, that ultimately exposes us to unknown
or unidentified risks, our business will be harmed and you could lose some or all of your investment.
Past
performance by our management and their affiliates may not be indicative of future performance of an investment in us.
While
our Chief Executive Officer has prior experience in advising businesses, his past performance, the performance of other entities or persons
with which he is involved, or the performance of any other personnel we may retain in the future will not necessarily be an indication
of either (i) that we will be able to locate a suitable candidate for our initial business combination or (ii) the future operating results
of the Company including with respect to any business combination we may consummate. You should not rely on the historical record of
him or any other of our personnel or their affiliates’ performance as indicative of our future performance or that an investment
in us will be profitable. In addition, an investment in the Company is not an investment in any entities affiliated with our management
or other personnel. While management intends to endeavor to locate a viable business opportunity and generate shareholder value, there
can be no assurance that we will succeed in this endeavor.
We
may seek business combination opportunities in industries or sectors that are outside of our management’s area of expertise.
We
will consider a business combination outside of our management’s area of expertise if a business combination candidate is presented
to us and we determine that such candidate offers an attractive opportunity for the Company. Although management intends to endeavor
to evaluate the risks inherent in any particular business combination candidate, we cannot assure you that we will adequately ascertain
or assess all the significant risks, or that we will accurately determine the actual value of a prospective operating entity to acquire.
In the event we elect to pursue an acquisition outside of the areas of our management’s expertise, our management’s ability
to evaluate and make decisions on behalf of the Company may be limited, or we may make material expenditures on additional personnel
or consultants to assist management in the Company’s operations. Investors should be aware that the information contained herein
regarding the areas of our management’s expertise will not necessarily be relevant to an understanding of the business that we
ultimately elect to acquire. As a result, our management may not be able to adequately ascertain or assess all the significant risks
or strategic opportunities that may arise. Accordingly, any shareholders in the Company following a business combination could suffer
a reduction in the value of their shares, and any resulting loss will likely not be recoverable.
We
may attempt to complete a business combination with a private target company about which little information is available, and such target
entity may not generate revenue as expected or otherwise by compatible with us as expected.
In
pursuing our search for a business to acquire, we will likely seek to complete a business combination with a privately held company.
Very little public information generally exists about private companies, and the only information available to us prior to making a decision
may be from documents and information provided directly to us by the target company in connection with the transaction. Such documents
or information or the conclusions we draw therefrom could prove to be inaccurate or misleading. As such, we may be required to make our
decision on whether to pursue a potential business combination based on limited, incomplete, or faulty information, which may result
in our subsequent operations generating less revenue than expected, which could materially harm our financial condition and results of
operations.
Our
ability to assess the management of a prospective target business may be limited and, as a result, we may acquire a target business whose
management does not have the skills, qualifications, or abilities to enable a seamless transition, which could, in turn, negatively impact
our results of operations.
When
evaluating the desirability of a potential business combination, our ability to assess the target business’s management may be
limited due to a lack of time, resources, or information. Our management’s assessment of the capabilities of the target’s
management, therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities expected. Further,
in most cases the target’s management may be expected to want to manage us and replace our Chief Executive Officer. Should the
target’s management not possess the skills, qualifications, or abilities necessary to manage a public company or assist with their
former entity’s merger or combination into ours, the operations and profitability of the post-acquisition business may be negatively
impacted and our shareholders could suffer a reduction in the value of their shares.
Any
business we acquire will likely lack diversity of operations or geographical reach, and in such case we will be subject to risks associated
with dependence on a single industry or region.
Our
search for a business will likely be focused on entities with a single or limited business activity and/or that operate in a limited
geographic area. While larger companies have the ability to manage their risk by diversifying their operations among different industries
and regions, smaller companies such as ours and the entities we anticipate reviewing for a potential business combination generally lack
diversification, in terms of both the nature and geographic scope of their business. As a result, we will likely be impacted more acutely
by risks affecting the industry or the region in which we operate than we would if our business were more diversified. In addition to
general economic risks, we could be exposed to natural disasters, civil unrest, technological advances, and other uncontrollable developments
that will threaten our viability if and to the extent our future operations are limited to a single industry or region. If we do not
diversify our operations, our financial condition and results of operations will be at risk.
Changes
in laws or regulations, or a failure to comply with the laws and regulations applicable to us, may adversely affect our business, ability
to negotiate and complete a business combination, and results of operations.
We
are subject to laws and regulations enacted by federal, state, and local governments. In addition to SEC regulations, any business we
acquire in the future may be subject to substantial legal or regulatory oversight and restrictions, which could hinder our growth and
expend material amounts on compliance. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming
and costly. Those laws and regulations and their interpretation and application by courts and administrative judges may also change from
time to time, and any such changes could be unfavorable to us and could have a material adverse effect on our business, investments,
and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could result
in material defense or remedial costs and/or damages have a material adverse effect on our financial condition.
Risks
Related to Our Common Stock
Due
to factors beyond our control, our stock price may be volatile.
There
is currently a limited market for our Common Stock, and there can be no guarantee that an active market for our Common Stock will develop,
even if we are successful in consummating a business combination. Recently, the price of our Common Stock has been volatile for no reason.
Further, even if an active market for our Common Stock develops, it will likely be subject to by significant price volatility when compared
to more seasoned issuers. We expect that the price of our Common Stock will continue to be more volatile than more seasoned issuers for
the foreseeable future. Fluctuations in the price of our Common Stock can be based on various factors in addition to those otherwise
described in this Report, including:
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General
speculative fever; |
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prospective business combination and the terms and conditions thereof; |
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The
operating performance of any business we acquire, including any failure to achieve material revenues therefrom; |
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The
performance of our competitors in the marketplace, both pre- and post-combination; |
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The
public’s reaction to our press releases, SEC filings, website content and other public announcements and information; |
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Changes
in earnings estimates of any business that we acquire or recommendations by any research analysts who may follow us or other companies
in the industry of a business that we acquire; |
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Variations
in general economic conditions, including as may be caused by uncontrollable events such as the COVID-19 pandemic and the resulting
decline in the economy; |
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The
public disclosure of the terms of any financing we disclose in the future; |
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The
number of shares of our Common Stock that are publicly traded in the future; |
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Actions
of our existing shareholders, including sales of Common Stock by our then directors and then executive officers or by significant
investors; and |
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The
employment or termination of key personnel. |
Many
of these factors are beyond our control and may decrease the market price of our Common Stock, regardless of whether we can consummate
a business combination and of our current or subsequent operating performance and financial condition. In the past, following periods
of volatility in the market price of a company’s securities, securities class action litigation has often been instituted. A securities
class action suit against us could result in substantial costs and divert our management’s time and attention, which would otherwise
be used to benefit our business.
Because
trading in our Common Stock is so limited, investors who purchase our Common Stock may depress the market if they sell Common Stock.
Our
Common Stock trades on the OTC Pink Market, the successor to the pink sheets. The OTC Pink Market generally is illiquid and most stocks
traded there are of companies that are not required to file reports with the SEC under the Exchange Act. Our Common Stock itself infrequently
trades.
The
market price of our Common Stock may decline if a substantial number of shares of our Common Stock are sold at once or in large blocks.
Presently
the market for our Common Stock is limited. If an active market for our shares develops in the future, some or all of our shareholders
may sell their shares of our Common Stock which may depress the market price. Any sale of a substantial number of these shares in the
public market, or the perception that such a sale could occur, could cause the market price of our Common Stock to decline, which could
reduce the value of the shares held by our other shareholders.
Future
issuance of our Common Stock could dilute the interests of our existing shareholders, particularly in connection with an acquisition
and any resulting financing.
We
may issue additional shares of our Common Stock in the future. The issuance of a substantial amount of our Common Stock could substantially
dilute the interests of our shareholders. In addition, the sale of a substantial amount of Common Stock in the public market, either
in the initial issuance or in a subsequent resale by the target company in a business combination which received our Common Stock as
consideration or by investors who has previously acquired such Common Stock could have an adverse effect on the market price of our Common
Stock.
Due
to recent changes to Rule 15c2-11 under the Securities Exchange Act of 1934, our Common Stock may become subject to limitations or reductions
on stock price, liquidity, or volume.
On
September 16, 2020, the SEC adopted amendments to Rule 15c2-11 under the Securities Exchange Act of 1934 (the “Exchange Act”).
This Rule applies to broker-dealers who quote securities listed on over-the-counter markets such as our Common Stock. The Rule as amended
prohibits broker-dealers from publishing quotations on OTC markets for an issuer’s securities unless they are based on current
publicly available information about the issuer. When it becomes effective, the amended Rule will also limit the Rule’s “piggyback”
exception, which allows broker-dealers to publish quotations for a security in reliance on the quotations of a broker-dealer that initially
performed the information review required by the Rule, to issuers with current publicly available information or issuers that are up-to-date
in their Exchange Act reports. As of this date, we are uncertain as what actual effect the Rule may have on us.
The
Rule changes could harm the liquidity and/or market price of our Common Stock by either preventing our shares from being quoted or driving
up our costs of compliance. Because we are a voluntary filer under Section 15(d) of the Exchange Act and not a public reporting company,
the practical impact of these changes is to require us to maintain a level of periodic disclosure we are not presently required to maintain,
which would cause us to incur material additional expenses. Further, if we cannot or do not provide or maintain current public information
about our company, our stockholders may face difficulties in selling their shares of our Common Stock at desired prices, quantities,
or times, or at all, as a result of the amendments to the Rule.