ITEM 1. DESCRIPTION OF BUSINESS
As used in this annual report, the terms “we”,
“us”, “our”, “the Company”, mean Uan Power Corp. unless otherwise indicated.
Cautionary Note Regarding Forward-Looking Statements
This annual report contains forward-looking statements.
These statements relate to future events or our future financial performance. These statements often can be identified by the use of terms
such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate,”
“approximate” or “continue,” or the negative thereof. We intend that such forward-looking statements be subject
to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements,
which speak only as of the date made. Any forward-looking statements represent management’s best judgment as to what may occur in
the future. However, forward-looking statements are subject to risks, uncertainties, and important factors beyond our control that could
cause actual results and events to differ materially from historical results of operations and events and those presently anticipated
or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after
the date of such statement or to reflect the occurrence of anticipated or unanticipated events.
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
UAN Power Corp., a Delaware corporation, (“UAN
Power”, “we," "us," or “our”) is a publicly quoted shell company seeking to create value for its
shareholders by merging with another entity with experienced management and opportunities for growth in return for shares of our common
stock.
No potential merger candidate has been identified
at this time.
Our Company was incorporated in the State of Nevada
on May 8, 2009, as Gulf Shore Investments, Inc. We completed a reincorporation of our company in Delaware under the name UAN Power Corp.
on November 14, 2011.
Effective September 4, 2014, we filed with the
Delaware Secretary of State a Certificate of Amendment of Certificate of Incorporation, wherein we have increased our authorized share
capital to 420,000,000 shares of stock which include 400,000,000 shares of common stock, having a par value of $0.00001 per share and
20,000,000 shares of Preferred Stock, having a par value of $0.00001 per share.
Kuan-Yin Cheng resigned as President and Director
on October 26, 2020. Erik Nelson was appointed as President of the Company and a member of the Board of Directors of the Company on October
26, 2020. He is currently the sole director. Yin-Chieh Cheng was appointed Chief Financial Officer of the Company on November 18, 2020.
On November 20, 2020, we filed a Certificate of
Designation, Preferences, and Rights of Series A Preferred Stock with the State of Delaware.
Our fiscal year ends on June 30th.
On June 24, 2022, the Company filed a Definitive
Information Statement to:
· | | To authorize a reverse split of the common stock issued and outstanding on a one new share
for five hundred thousand (500,000) old shares basis as of July 24, 2022. |
· | | To authorize a forward split of the common stock issued and outstanding as of July 24, 2022.
Subsequent to the 1/500,000 reverse split described above, each share of post reverse split-adjusted issued and outstanding Common Stock
shall be forward split on a one for five hundred (500) basis such that each post reverse split old share represents 500 new shares. |
· | | To authorize the Board of Directors to change the name of the corporation to Ridgedale Holdings,
Inc. |
All of these actions require the approval of the
Financial Industry Regulatory Authority (“FINRA”) and have not yet been approved as of the date of this filing.
The Company’s year-end is June 30th.
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 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.
Factors Effecting Future Performance
Rather than being an operating business, our goal
is to obtain debt and/or equity finance meet our ongoing operating expenses and attempt to merge with another entity with experienced
management and opportunities for growth in return for shares of our common stock to create value for our shareholders.
Although there is no assurance that this series
of events will be successfully completed, we believe we can successfully complete an acquisition or merger which will enable us to continue
as a going concern. Any acquisition or merger will most likely be dilutive to our existing stockholders.
The factors affecting our future performance are
listed and explained below under the section “Risk Factors” below:
ITEM 1A. RISK FACTORS
We need to find financing for our business idea
which is uncertain and risky.
Our plan of operation is to obtain debt or equity
finance to meet our ongoing operating expenses and attempt to merge with another entity with experienced management and opportunities
for growth in return for shares of our common stock to create value for our shareholders. There can be no assurance that any of the events
can be successfully completed, that any such business will be identified, or that any stockholder will realize any return on their shares
after such a transaction has been completed. In particular, there is no assurance that any such business will be located or that any stockholder
will realize any return on their shares after such a transaction. Any merger or acquisition completed by us can be expected to have a
significant dilutive effect on the percentage of shares held by our current stockholders.
We believe we are an insignificant participant
among the firms which engage in the acquisition of business opportunities. There are many established venture capital and financial concerns
that have significantly greater financial and personnel resources and technical expertise than we have. Given our limited financial resources
and limited management availability, we will continue to be at a significant competitive disadvantage compared to our competitors.
You should be aware that there are various risks
associated with our business, including the risks discussed below. You should carefully consider these risk factors, as well as the other
information contained in this Registration Statement, in evaluating our business and us.
Rather than our previous operating business, our
business is now to seek to raise the debt and/or equity to meet our ongoing operating expenses and attempt to merge with another entity
with experienced management and opportunities for growth in return for shares of our common stock to create value for our shareholders.
There can be no assurance that this series of events will be successfully completed or that any stockholder will realize any return on
their shares after the new business plan has been implemented.
RISKS RELATED TO OUR COMPANY
WE HAVE INCURRED SIGNIFICANT LOSSES AND ANTICIPATE
FUTURE LOSSES.
As of June 30, 2022, we had negative working capital
of $84,042 and an accumulated deficit of $3,557,302.
Future losses are likely to occur as, until we
can merge with another entity with experienced management and opportunities for growth in return for shares of our common stock to create
value for our shareholders as we have no sources of income to meet our operating expenses. As a result of these, among other factors,
we received from our registered independent public accountants in their report for the financial statements for the year ended June 30,
2022 and 2021, an explanatory paragraph stating that there is substantial doubt about our ability to continue as a going concern.
OUR EXISTING FINANCIAL RESOURCES ARE INSUFFICIENT
TO MEET OUR ONGOING OPERATING EXPENSES.
We have no sources of income at this time and
no existing cash balances to meet our ongoing operating expenses. In the short term, unless we are able to raise additional debt and/or
equity we shall be unable to meet our ongoing operating expenses. On a longer-term basis, we intend to raise the debt and/or equity to
meet our ongoing operating expenses and merge with another entity with experienced management and opportunities for growth in return for
shares of our common stock to create value for our shareholders. There can be no assurance that this series of events will be successfully
completed.
WE INTEND TO PURSUE THE ACQUISITION OF AN OPERATING BUSINESS.
Our sole strategy is to acquire an operating business.
Successful implementation of this strategy depends on our ability to identify a suitable acquisition candidate, acquire such company on
acceptable terms and integrate its operations. In pursuing acquisition opportunities, we compete with other companies with similar strategies.
Competition for acquisition targets may result in increased prices of acquisition targets and a diminished pool of companies available
for acquisition. Acquisitions involve a number of other risks, including risks of acquiring undisclosed or undesired liabilities, acquired
in-process technology, stock compensation expense, diversion of management attention, potential disputes with the seller of one or more
acquired entities and possible failure to retain key acquired personnel. Any acquired entity or assets may not perform relative to our
expectations. Our ability to meet these challenges has not been established.
SCARCITY OF, AND COMPETITION FOR, BUSINESS
OPPORTUNITIES AND COMBINATIONS.
We believe we are an insignificant participant
among the firms which engage in the acquisition of business opportunities. There are many established venture capital and financial concerns
that have significantly greater financial and personnel resources and technical expertise than we have. Nearly all such entities have
significantly greater financial resources, technical expertise and managerial capabilities than us and, consequently, we will be at a
competitive disadvantage in identifying possible business opportunities and successfully completing a business combination. Moreover,
we will also compete in seeking merger or acquisition candidates with numerous other small public companies. In view of our limited financial
resources and limited management availability, we will continue to be at a significant competitive disadvantage compared to our competitors.
WE HAVE NOT EXECUTED ANY FORMAL AGREEMENT FOR
A BUSINESS COMBINATION OR OTHER TRANSACTION AND HAVE ESTABLISHED NO STANDARDS FOR BUSINESS COMBINATIONS.
We have not executed any formal arrangement, agreement
or understanding with respect to engaging in a merger with, joint venture with or acquisition of a private or public entity. There can
be no assurance that we will be successful in identifying and evaluating suitable business opportunities or in concluding a business combination.
We have not identified any particular industry or specific business within an industry for evaluation. There is no assurance we will be
able to negotiate a business combination on terms favorable, if at all. We have not established a specific length of operating history
or specified level of earnings, assets, net worth or other criteria which we will require a target business opportunity to have achieved,
and without which we would not consider a business combination. Accordingly, we may enter into a business combination with a business
opportunity having no significant operating history, losses, limited or no potential for earnings, limited assets, negative net worth
or other negative characteristics.
WE MAY BE NEGATIVELY AFFECTED BY ADVERSE GENERAL
ECONOMIC CONDITIONS.
Current conditions in domestic and global economies
are extremely uncertain. Adverse changes may occur as a result of softening global economies, wavering consumer confidence caused by the
threat of terrorism and war, and other factors capable of affecting economic conditions. Such changes could have a material adverse effect
on our business, financial condition, and the results of operations.
BECAUSE OUR PRINCIPAL SHAREHOLDER CONTROLS
OUR ACTIVITIES, HE MAY CAUSE US TO ACT IN A MANNER THAT IS MOST BENEFICIAL TO HIMSELF AND NOT TO OTHER SHAREHOLDERS WHICH COULD CAUSE
US NOT TO TAKE ACTIONS THAT OUTSIDE INVESTORS MIGHT VIEW FAVORABLY.
Our principal shareholder has voting authority
for approximately seventy-eight percent (78%) of our outstanding common stock. As a result, he effectively controls all matters requiring
stockholder approval, including the election of directors, the approval of significant corporate transactions, such as mergers and related
party transaction. These insiders also can delay or perhaps even block, by their ownership of our stock, an unsolicited tender offer.
This concentration of ownership could have the effect of delaying, deterring or preventing a change in control of our company that you
might view favorably.
OUR DIRECTORS MAY HAVE CONFLICTS OF INTEREST
WHICH MAY NOT BE RESOLVED FAVORABLY TO US.
Certain conflicts of interest may exist between
our sole director and us. Our sole Director has other business interests to which he devotes his attention and may be expected to continue
to do so although management time should be devoted to our business. As a result, conflicts of interest may arise that can be resolved
only through exercise of such judgment as is consistent with our fiduciary duties to us. See "Directors and Executive Officers"
(page 26 below), and "Conflicts of Interest." (page 28 below).
WE MAY DEPEND UPON OUTSIDE ADVISORS; WHO MAY
NOT BE AVAILABLE ON REASONABLE TERMS AND AS NEEDED.
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
Board 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 us. In the event we consider it
necessary to hire outside advisors, we may elect to hire persons who are affiliates, if they are able to provide the required services.
WE ARE AN “EMERGING GROWTH COMPANY,”
AND ANY DECISION ON OUR PART TO COMPLY ONLY WITH CERTAIN REDUCED DISCLOSURE REQUIREMENTS APPLICABLE TO “EMERGING GROWTH COMPANIES”
COULD MAKE OUR COMMON STOCK LESS ATTRACTIVE TO INVESTORS.
We are an “emerging growth company,”
as defined in the JOBS Act, and, for as long as we continue to be an “emerging growth company,” we expect and fully intend
to take advantage of exemptions from various reporting requirements applicable to other public companies but not to “emerging growth
companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404
of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements,
and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden
parachute payments not previously approved. We could be an “emerging growth company” for up to five years, or until the earliest
of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii) the date that we become a “large
accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that
is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii)
the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.
In addition, Section 107 of the JOBS Act also
provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)2(B)
of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company”
can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected
to opt into the extended transition period for complying with the revised accounting standards. We have elected to rely on these exemptions
and reduced disclosure requirements applicable to “emerging growth companies” and expect to continue to do so.
WE MAY NOT BE ABLE TO MEET THE FILING AND INTERNAL
CONTROL REPORTING REQUIREMENTS IMPOSED BY THE SEC WHICH MAY RESULT IN A DECLINE IN THE PRICE OF OUR COMMON SHARES AND AN INABILITY TO
OBTAIN FUTURE FINANCING.
As directed by Section 404 of the Sarbanes-Oxley
Act, as amended by SEC Release No. 33-8934 on June 26, 2008, the SEC adopted rules requiring each public company to include a report of
management on the company’s internal controls over financial reporting in its annual reports. In addition, the independent registered
public accounting firm auditing a company’s financial statements may have to also attest to and report on management’s assessment
of the effectiveness of the company’s internal controls over financial reporting. We may be required to include a report of management
on its internal control over financial reporting. The internal control report must include a statement
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Of management’s responsibility for establishing and maintaining adequate internal control over its financial reporting; |
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Of management’s assessment of the effectiveness of its internal control over financial reporting as of year-end; and |
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Of the framework used by management to evaluate the effectiveness of our internal control over financial reporting. |
Furthermore, our independent registered public
accounting firm may be required to file its attestation on whether it believes that we have maintained, in all material respects, effective
internal control over financial reporting.
While we expect to expend significant resources
in developing the necessary documentation and testing procedures required by Section 404 of the Sarbanes-Oxley Act, there is a risk that
we may not be able to comply timely with all of the requirements imposed by this rule. In the event that we are unable to receive a positive
attestation from our independent registered public accounting firm with respect to our internal controls, investors and others may lose
confidence in the reliability of our financial statements and our stock price and ability to obtain equity or debt financing as needed
could suffer.
In addition, in the event that our independent
registered public accounting firm is unable to rely on our internal controls in connection with its audit of our financial statements,
and in the further event that it is unable to devise alternative procedures in order to satisfy itself as to the material accuracy of
our financial statements and related disclosures, it is possible that we would be unable to file our Annual Report on Form 10-K with the
SEC, which could also adversely affect the market price of our common stock and our ability to secure additional financing as needed.
REPORTING REQUIREMENTS UNDER THE EXCHANGE ACT
AND COMPLIANCE WITH THE SARBANES-OXLEY ACT OF 2002, INCLUDING ESTABLISHING AND MAINTAINING ACCEPTABLE INTERNAL CONTROLS OVER FINANCIAL
REPORTING, ARE COSTLY AND MAY INCREASE SUBSTANTIALLY.
The rules and regulations of the SEC require a
public company to prepare and file periodic reports under the Exchange Act, which will require that the Company engage legal, accounting,
auditing and other professional services. The engagement of such services is costly. Additionally, the Sarbanes-Oxley Act of 2002 (the
“Sarbanes-Oxley Act”) requires, among other things, that we design, implement and maintain adequate internal controls and
procedures over financial reporting. The costs of complying with the Sarbanes-Oxley Act and the limited technically qualified personnel
we have may make it difficult for us to design, implement and maintain adequate internal controls over financial reporting. In the event
that we fail to maintain an effective system of internal controls or discover material weaknesses in our internal controls, we may not
be able to produce reliable financial reports or report fraud, which may harm our overall financial condition and result in loss of investor
confidence and a decline in our share price.
As a public company, we will be subject to the
reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Act of 2010 and other applicable securities rules and
regulations. Despite recent reforms made possible by the JOBS Act, compliance with these rules and regulations will nonetheless increase
our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems
and resources, particularly after we are no longer an “emerging growth company.” The Exchange Act requires, among other things,
that we file annual, quarterly, and current reports with respect to our business and operating results.
We are working with our legal, accounting and
financial advisors to identify those areas in which changes should be made to our financial and management control systems to manage our
growth and our obligations as a public company. These areas include corporate governance, corporate control, disclosure controls and procedures
and financial reporting and accounting systems. We have made, and will continue to make, changes in these and other areas. However, we
anticipate that the expenses that will be required in order to adequately prepare for being a public company could be material. We estimate
that the aggregate cost of increased legal services; accounting and audit functions; personnel, such as a chief financial officer familiar
with the obligations of public company reporting; consultants to design and implement internal controls; and financial printing alone
will be a few hundred thousand dollars per year and could be several hundred thousand dollars per year. In addition, if and when we retain
independent directors and/or additional members of senior management, we may incur additional expenses related to director compensation
and/or premiums for directors’ and officers’ liability insurance, the costs of which we cannot estimate at this time. We may
also incur additional expenses associated with investor relations and similar functions, the cost of which we also cannot estimate at
this time. However, these additional expenses individually, or in the aggregate, may also be material.
In addition, being a public company could make
it more difficult or more costly for us to obtain certain types of insurance, including directors’ and officers’ liability
insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or
similar coverage. The impact of these events could also make it more difficult for us to attract and retain qualified persons to serve
on our board of directors, our board committees or as executive officers.
The increased costs associated with
operating as a public company may decrease our net income or increase our net loss and may cause us to reduce costs in other areas
of our business or increase the prices of our products or services to offset the effect of such increased costs. Additionally, if
these requirements divert our management’s attention from other business concerns, they could have a material adverse effect
on our business, financial condition and results of operations.
THE JOBS ACT ALLOWS US TO DELAY THE ADOPTION
OF NEW OR REVISED ACCOUNTING STANDARDS THAT HAVE DIFFERENT EFFECTIVE DATES FOR PUBLIC AND PRIVATE COMPANIES.
Since, we have elected to use the extended transition
period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act, this election allows us to delay
the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards
apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with
public company effective dates.
WE HAVE A MATERIAL WEAKNESS IN OUR CONTROLS
AND PROCEDURES.
We have conducted an evaluation of our internal
control over financial reporting based on the framework in “Internal Control Integrated Framework” issued by the Committee
of Sponsoring Organizations for the Treadway Commission (“COSO”) and published in 2013, and subsequent guidance prepared by
COSO specifically for smaller public companies. Based on that evaluation, management concluded that our internal control over financial
reporting was not sufficient as of June 30, 2022 and 2021 for the reasons discussed below:
A significant deficiency is a deficiency, or combination
of deficiencies in internal control over financial reporting, that adversely affects the entity’s ability to initiate, authorize,
record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there
is more than a remote likelihood that a misstatement of the entity’s financial statements that is more than inconsequential will
not be prevented or detected by the entity’s internal control.
A material weakness is a deficiency or a
combination of deficiencies in internal control over financial reporting such that there is a reasonable possibility that
a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.
Management identified the following material
weakness and significant deficiencies in its assessment of the effectiveness of internal control over financial reporting
as of June 30, 2022:
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The Company did not maintain effective controls over certain aspects of the financial reporting process because we lacked personnel with accounting expertise and an adequate supervisory review structure that is commensurate with our financial reporting requirements. |
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Material Weakness – Inadequate segregation of duties. |
The management of the Company believes that these
material weaknesses will remain until such time that the Company has the resources to increase the number of personnel committed to the
performance of its financial duties that such weaknesses can be specifically addressed. This will include, but not limited to, the following:
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Hiring of additional personnel to adequately segregate financial reporting duties. |
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The retention of outside consultants to review our controls and procedures. |
RISKS RELATED TO OUR SECURITIES
REDUCTION OF PERCENTAGE SHARE OWNERSHIP FOLLOWING
BUSINESS COMBINATION AND DILUTION TO STOCKHOLDERS.
Our primary plan of operation is based upon a
business combination with a private concern which, in all likelihood, would result in us issuing securities to stockholders of such private
company. The issuance of previously authorized and unissued shares of our common stock would result in reduction in percentage of shares
owned by present and prospective stockholders and may result in a change in control or management. In addition, any merger or acquisition
can be expected to have a significant dilutive effect on the percentage of the shares held our stockholders.
THE REGULATION OF PENNY STOCKS BY SEC AND NASD
MAY HAVE AN EFFECT ON THE TRADABILITY OF OUR SECURITIES.
Our securities are currently traded on the Over
the Counter market with a designation of Pink No Information, and we are seeking to have them upgraded to Pink – Current Information.
Our shares are 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. Consequently, the rule may affect the ability of broker-dealers to sell our securities and also may affect the ability of
purchasers in this offering to sell their securities in any market that might develop, therefore.
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 may further affect the ability of owners
of shares to sell our securities in any market that might develop for them.
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.
The shares of our common stock may be thinly traded
on the Pink Sheets, meaning that the number of persons interested in purchasing our shares of common stock 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 our shares of
common stock 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 shares of common stock 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.
OUR STOCK WILL IN ALL LIKELIHOOD 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.
We cannot give you any assurance that a broader
or more active public trading market for our shares of common stock will 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 of common stock at or near ask
prices or at all if you need money or otherwise desire to liquidate your shares of common stock of our Company.
OTC MARKETS CURRENTLY DISPLAYS A PINK LIMITED
INFORMATION SIGN.
OTC Markets Group designates certain securities
as “Pink No Information” and places a YIELD Sign icon next to the stock symbol to inform investors that the Company has posted
limited information through the OTC Markets Disclosure & News service or is late in its filing obligations with the SEC. This is to
inform investors there may be reason to exercise additional caution and perform thorough due diligence before making an investment decision
in that security.
OTC Markets will continue to display Pink Limited
Information on its securities OTC Markets pages until adequate current information is made available by the issuer pursuant to the Alternative
Reporting Standard or by the SEC Reporting Standard, and until OTC Markets believes there is no longer a public interest concern. Investors
are encouraged to use caution and due diligence in their investment decisions.
The Company is approved for the OTC Markets for
its OTC IQ disclosure program. The Company may or may not necessarily continue to disclose information through the OTC IQ program.
RULE 144 IS NOT AVAILABLE TO DEVELOPMENT STAGE
(SHELL) COMPANIES.
Rule 144 provides an exemption from registration
allowing for the resale of previously unregistered securities subject to certain conditions being met. However, Rule 144 is unavailable
to securities of issuers with no or nominal operations and no or nominal non-cash assets. As a result, holders of our securities which
have not been previously registered, or received an exemption from registration, will not be able to sell their securities until such
time as the conditions required by Rule 144 have been met.
RULE 144 SALES IN THE FUTURE MAY HAVE A DEPRESSIVE
EFFECT ON OUR STOCK PRICE.
Rule 144 provides in essence that a person who
has held restricted securities for one year may, under certain conditions, sell every three months, in brokerage transactions, a number
of Shares that does not exceed the greater of 1.0% of a company's outstanding common stock or the average weekly trading volume during
the four calendar weeks prior to the sale. There is no limit on the amount of restricted securities that may be sold by a nonaffiliate
after the owner has held the restricted securities for a period of two years. A sale under Rule 144 or under any other exemption from
the Act, may have a depressive effect upon the price of the common stock in any market that may develop.
THE PRICE OF OUR COMMON STOCK COULD BE HIGHLY
VOLATILE.
Our shares are currently listed on the Over the
Counter (OTC) market. Due to this listing on the OTC market it is likely that our common stock will be subject to price volatility, low
volumes of trades and large spreads in bid and ask prices quoted by market makers. Due to the low volume of shares traded on any trading
day, persons buying or selling in relatively small quantities may easily influence prices of our common stock. This low volume of trades
could also cause the price of our stock to fluctuate greatly, with large percentage changes in price occurring in any trading day session.
Holders of our common stock may also not be able to readily liquidate their investment or may be forced to sell at depressed prices due
to low volume trading. If high spreads between the bid and ask prices of our common stock exist at the time of a purchase, the stock would
have to appreciate substantially on a relative percentage basis for an investor to recoup their investment. Broad market fluctuations
and general economic and political conditions may also adversely affect the market price of our common stock. No assurance can be given
that an active market in our common stock will develop or be sustained. If an active market does not develop, holders of our common stock
may be unable to readily sell the shares they hold or may not be able to sell their shares at all.
LOSS OF CONTROL BY OUR PRESENT MANAGEMENT AND
STOCKHOLDERS MAY OCCUR UPON ISSUANCE OF ADDITIONAL SHARES.
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 our
voting power and equity. The result of such an issuance would be those new stockholders and management would control us, and persons unknown
could replace our management at this time. Such an occurrence would result in a greatly reduced percentage of ownership of us by our current
Shareholders.
IF THE REGISTRATION OF OUR COMMON STOCK IS
REVOKED IN THE FUTURE, OUR BUSINESS OPPORTUNITIES WILL CEASE TO EXIST.
In the event our securities registration was to
be revoked, we would not have the ability to raise money through the issuance of shares and would lose the ability to continue the business
plan set out in this filing. Common stock issued and outstanding at that time would no longer be tradable.
WE DO NOT ANTICIPATE PAYING CASH DIVIDENDS
ON OUR COMMON STOCK.
We do not anticipate paying any cash dividends
on our common stock in the foreseeable future.
WE MAY BE UNSUCCESSFUL IN FINDING A MERGER
THAT CAN BE ACCOMPLISHED WITH POSITIVE LONG-TERM RESULTS.
The business of selecting and entering into a
merger is fraught with all kinds of issues. For instance, the business may need capital that is never achieved, the management is not
capable of carrying the business forward successfully, the business plan is ill-conceived, and not executed, or competitive factors cause
business failure. There are many other factors in addition to these, as may have been discussed above in “Risk Factors” which
could cause our Company to fail and the investor’s capital will be at risk.