−Removed: Our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern and, if we are unable to continue our business, our shares may have little or no value.
−Removed: In its audit opinion issued in connection with our consolidated balance sheets as of December 31, 2009 and 2008 and our consolidated statements of operations, stockholders’/member’s equity and cash flows for the years then ended, our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern given our lack of working capital.
−Removed: The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business.
−Removed: The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts of liabilities that might be necessary should we be unable to continue in existence.
−Removed: Our ability to become a profitable operating company is dependent upon obtaining financing adequate to fulfill our research and market introduction activities, and achieving a level of revenues adequate to support our cost structure.
−Removed: We intend to obtain capital primarily through issuances of debt or equity or entering into collaborative arrangements with corporate partners.
−Removed: There can be no assurance that we will be successful in completing additional financing or collaboration transactions or, if financing is available, that it can be obtained on commercially reasonable terms.
−Removed: The doubts raised relating to our ability to continue as a going concern may make our shares an unattractive investment for potential investors.
−Removed: These factors, among others, may make it difficult to raise the necessary amount of capital.
−Removed: We are at a very early operational stage and our success is subject to the substantial risks inherent in the establishment of a new business venture.
−Removed: The implementation of our business strategy is in a very early stage.
−Removed: We are in the process of developing numerous product candidates but none have proven to be commercially successful.
−Removed: Our business and operations should be considered to be in a very early stage and subject to all of the risks inherent in the establishment of a new business venture.
−Removed: Accordingly, our intended business and operations may not prove to be successful in the near future, if at all.
−Removed: Any future success that we might enjoy will depend upon many factors, several of which may be beyond our control, or which cannot be predicted at this time, and which could have a material adverse effect upon our financial condition, business prospects and operations and the value of an investment in our company.
−Removed: We have a very limited operating history and our business plan is unproven and may not be successful.
−Removed: Our company was formed in November 2006 but we began operations in earnest in March 2008 when one of our officers and some of our key employees commenced employment.
−Removed: Since March 2008, our primary activities have been research and development, the identification of collaborative partners, intellectual property protection such as patent applications and capital raising activities.
−Removed: We have not sold any substantial amount of products commercially and have not proven that our business model will allow us to identify and develop commercially feasible products.
−Removed: We have suffered operating losses since inception and we may not be able to achieve profitability.
−Removed: We had an accumulated deficit of $3,420,661 as of December 31, 2009 and we expect to continue to incur significant research and development expenses in the foreseeable future related to the completion of development and commercialization of our products.
−Removed: As a result, we are incurring substantial operating and net losses, and it is possible that we will never be able to sustain or develop the revenue levels necessary to attain profitability.
−Removed: If we fail to generate sufficient revenues to operate profitability, or if we are unable to fund our continuing losses, you could lose all or part of your investment.
−Removed: We may have difficulty raising additional capital, which could deprive us of necessary resources and you may experience dilution or subordinated stockholder rights, privileges and preferences as a result of our financing efforts.
−Removed: We expect to continue to devote significant capital resources to fund research and development.
−Removed: In order to support the initiatives envisioned in our business plan, we will need to raise additional funds through the sale of assets, public or private debt or equity financing, collaborative relationships or other arrangements.
−Removed: Our ability to raise additional financing depends on many factors beyond our control, including the state of capital markets, the market price of our common stock and the development or prospects for development of competitive technology by others.
−Removed: Because our common stock is not listed on a major stock market, many investors may not be willing or allowed to purchase it or may demand steep discounts.
−Removed: Sufficient additional financing may not be available to us or may be available only on terms that would result in further dilution to the current owners of our common stock.
−Removed: We expect to raise additional capital during 2010 but we do not have any firm commitments for funding.
−Removed: If we are unsuccessful in raising additional capital, or the terms of raising such capital are unacceptable, we may have to modify our business plan and/or significantly curtail our planned activities and other operations.
−Removed: Failure to effectively manage our growth could place strains on our managerial, operational and financial resources and could adversely affect our business and operating results.
−Removed: Our growth has placed, and is expected to continue to place, a strain on our managerial, operational and financial resources.
−Removed: Further, if our subsidiaries’ business grows, we will be required to manage multiple relationships.
−Removed: Any further growth by us or our subsidiaries, or an increase in the number of our strategic relationships will increase this strain on our managerial, operational and financial resources.
−Removed: This strain may inhibit our ability to achieve the rapid execution necessary to implement our business plan, and could have a material adverse effect upon our financial condition, business prospects and operations and the value of an investment in our company.
−Removed: Risks Relating to Our Business and Industry
−Removed: There are substantial inherent risks in attempting to commercialize new technological applications, and, as a result, we may not be able to successfully develop products or technology for commercial use.
−Removed: Our company conducts research and development of products in numerous technological and medical fields.
−Removed: Our research scientists are working on developing technology in various stages.
−Removed: However, commercial feasibility and acceptance of such product candidates are unknown.
−Removed: Scientific research and development requires significant amounts of capital and takes an extremely long time to reach commercial viability, if at all.
−Removed: During the research and development process, we may experience technological barriers that we may be unable to overcome.
−Removed: Because of these uncertainties, it is possible that many of our product candidates may never be successfully developed.
−Removed: If we are unable to successfully develop products or technology for commercial use, we will be unable to generate revenue or build a sustainable or profitable business.
−Removed: We will need to achieve commercial acceptance of our products to generate revenues and achieve profitability.
−Removed: Even if our research and development yields technologically feasible applications, we may not successfully develop commercial products, and even if we do, we may not do so on a timely basis.
−Removed: If our research efforts are successful on the technology side, it could take at least several years before this technology will be commercially viable.
−Removed: During this period, superior competitive technologies may be introduced or customer needs may change, which will diminish or extinguish the commercial uses for our applications.
−Removed: We cannot predict when significant commercial market acceptance for our products will develop, if at all, and we cannot reliably estimate the projected size of any such potential market.
−Removed: If markets fail to accept our products, we may not be able to generate revenues from the commercial application of our technologies.
−Removed: Our revenue growth and achievement of profitability will depend substantially on our ability to introduce new products that are accepted by customers.
−Removed: If we are unable to cost-effectively achieve acceptance of our technology by customers, or if the associated products do not achieve wide market acceptance, our business will be materially and adversely affected.
−Removed: We will need to establish additional relationships with collaborative and development partners to fully develop and market our products.
−Removed: We do not possess all of the resources necessary to develop and commercialize products on a mass scale that may result from our technologies.
−Removed: Unless we expand our product development capacity and enhance our internal marketing, we will need to make appropriate arrangements with collaborative partners to develop and commercialize current and future products.
−Removed: Collaborations may allow us to:
−Removed: generate cash flow and revenue;
−Removed: offset some of the costs associated with our internal research and development, preclinical testing, clinical trials and manufacturing;
−Removed: seek and obtain regulatory approvals faster than we could on our own;
−Removed: successfully commercialize product candidates.
−Removed: If we do not find appropriate partners, our ability to develop and commercialize products could be adversely affected.
−Removed: Even if we are able to find collaborative partners, the overall success of the development and commercialization of product candidates in those programs will depend largely on the efforts of other parties and is beyond our control.
−Removed: In addition, in the event we pursue our commercialization strategy through collaboration, there are a variety of attendant technical, business and legal risks, including:
−Removed: a development partner would likely gain access to our proprietary information, potentially enabling the partner to develop products without us or design around our intellectual property;
−Removed: we may not be able to control the amount and timing of resources that our collaborators may be willing or able to devote to the development or commercialization of our product candidates or to their marketing and distribution;
−Removed: disputes may arise between us and our collaborators that result in the delay or termination of the research, development or commercialization of our product candidates or that result in costly litigation or arbitration that diverts our management’s resources.
−Removed: The occurrence of any of the above risks could impair our ability to generate revenues and harm our business and financial condition.
−Removed: Clinical trials for our certain product candidates may be lengthy and expensive and their outcome is uncertain.
−Removed: Certain of our product candidates will be subject to regulatory approval from the FDA or other governmental regulatory agencies including the United States Department of Agriculture (“USDA”).
−Removed: Before obtaining regulatory approval for the commercial sale of such product candidates, we must demonstrate through preclinical testing and clinical trials that such product candidates are safe and effective for use in humans.
−Removed: Conducting clinical trials is a time consuming, expensive and uncertain process and may take years to complete.
−Removed: Historically, the results from preclinical testing and early clinical trials have often not been predictive of results obtained in later clinical trials.
−Removed: Frequently, drugs or products that have shown promising results in preclinical or early clinical trials subsequently fail to establish sufficient safety and efficacy data necessary to obtain regulatory approval.
−Removed: At any time during the clinical trials, we, the participating institutions or FDA might delay or halt any clinical trials for our product candidates for various reasons, including:
−Removed: ineffectiveness of the product candidate;
−Removed: discovery of unacceptable toxicities or side effects;
−Removed: development of disease resistance or other physiological factors;
−Removed: delays in patient enrollment;
−Removed: other reasons that are internal to the businesses of our potential collaborative partners, which reasons they may not share with us.
−Removed: The results of the clinical trials may fail to demonstrate the safety or effectiveness of our product candidates to the extent necessary to obtain regulatory approval or such that commercialization of our product candidates is worthwhile.
−Removed: Any failure or substantial delay in successfully completing clinical trials and obtaining regulatory approval for our product candidates could severely harm our business.
−Removed: We expect to rely on third parties to manufacture our product candidates and our business will suffer if they do not perform.
−Removed: We do not expect to manufacture many of our products and will engage third party contractors to provide manufacturing services.
−Removed: If our contractors do not operate in accordance with regulatory requirements and quality standards, our business will suffer.
−Removed: We expect to use or rely on components and services that are provided by sole source suppliers.
−Removed: The qualification of additional or replacement vendors is time consuming and costly.
−Removed: If a sole source supplier has significant problems supplying our products, our revenues will be hurt until we find a new source of supply.
−Removed: W e expect to rely on third parties for the worldwide marketing and distribution of our product candidates, who may not be successful in selling our products.
−Removed: We currently do not have adequate resources to market and distribute any products worldwide and expect to engage third party marketing and distribution companies to perform these tasks.
−Removed: While we believe that distribution partners will be available, we cannot assure you that the distribution partners, if any, will succeed in marketing our products on a global basis.
−Removed: We may not be able to maintain satisfactory arrangements with our marketing and distribution partners, who may not devote adequate resources to selling our products.
−Removed: If this happens, we may not be able to successfully market our products, which would decrease or eliminate our ability to generate revenues.
−Removed: We may not be successful at marketing and selling HealthAmerica’s technology or products.
−Removed: We effectively acquired the assets of our subsidiary, HealthAmerica, on October 20, 2008.
−Removed: HealthAmerica owns patents and technology related to medical record bar coding and magnetic resonance imaging (MRI) and systems employing its technology have been previously commercially sold and operated.
−Removed: HealthAmerica’s technology was developed years ago and no significant operations and no commercial sales have occurred within the last five years.
−Removed: As a result, the HealthAmerica technology may be outdated by recent technology developments.
−Removed: As of the date of this prospectus we have not devoted any substantial effort or resources to the development of HealthAmerica’s products or technology.
−Removed: We may not be able to market and sell the HealthAmerica technology or products and any financial or research efforts we exert to develop, commercialize or promote such products may not result in revenue or earnings.
−Removed: On an annual basis we will evaluate whether there is any impairment of the acquired HealthAmerica assets and, if so, future impairment charges may need to be recorded.
−Removed: We may lose out to larger and better-established competitors.
−Removed: The medical device and biotechnology industries are intensely competitive.
−Removed: Most of our competitors have significantly greater financial, technical, manufacturing, marketing and distribution resources as well as greater experience in the medical device industry than we have.
−Removed: The particular medical conditions, illnesses or diseases our product lines are intended to address can also be addressed by other medical devices, procedures or drugs.
−Removed: Many of these alternatives are widely accepted by physicians and have a long history of use.
−Removed: Physicians may use our competitors’ products and/or our products may not be competitive with other technologies.
−Removed: If these things happen, our revenues will decline.
−Removed: In addition, our current and potential competitors may establish cooperative relationships with large medical equipment companies to gain access to greater research and development or marketing resources.
−Removed: Competition may result in price reductions, reduced gross margins and loss of market share.
−Removed: Our products may be displaced by newer technology.
−Removed: The medical device and biotechnology industries are undergoing rapid and significant technological change.
−Removed: Third parties may succeed in developing or marketing technologies and products that are more effective than those developed or marketed by us, or that would make our technology and products obsolete or non-competitive.
−Removed: Additionally, researchers could develop new surgical procedures and medications that replace or reduce the importance of the procedures that use our products.
−Removed: Accordingly, our success will depend, in part, on our ability to respond quickly to medical and technological changes through the development and introduction of new products.
−Removed: We may not have the resources to do this.
−Removed: If our product candidates become obsolete and our efforts to develop new products do not result in any commercially successful products, our revenues will decline.
−Removed: We may not have sufficient legal protection against infringement or loss of our intellectual property, and we may lose rights to our licensed intellectual property if diligence requirements are not met.
−Removed: Our success depends, in part, on our ability to secure and maintain patent protection, to preserve our trade secrets, and to operate without infringing on the patents of third parties.
−Removed: While we intend to protect our proprietary positions by filing United States and foreign patent applications for our important inventions and improvements, domestic and foreign patent offices may not issue these patents.
−Removed: We have filed a number of provisional patents with respect to our product candidates.
−Removed: Provisional patents are not reviewed by the USPTO and will not result in the issuance of a patent, unless a regular patent application is filed within one year after the filing of the provisional patent application.
−Removed: Generally, our provisional patent applications do not contain all of the detailed design and other information required by a regular patent application.
−Removed: As a result, it may be uncertain whether the description of the invention in a provisional patent meets the “best mode and enablement” requirements for issuance of a patent.
−Removed: Failure to adequately describe the invention may result in the loss of certain claims.
−Removed: We intended to file regular patent applications with respect to each of our product candidates during the one-year period of the provisional patents.
−Removed: However, due to a lack of capital, we have been unable to complete and file patent applications.
−Removed: As a result, we may have lost or may lose the right to certain claims.
−Removed: If we do not have the funds or resources to prepare, file and maintain patent applications on any additional or new inventions, we could lose proprietary rights to our technology.
−Removed: Even if we file patent applications and patents are issued, third parties may challenge, invalidate, or circumvent our patents or patent applications in the future.
−Removed: Competitors, many of which have significantly more resources than we have and have made substantial investments in competing technologies, may apply for and obtain patents that will prevent, limit, or interfere with our ability to make, use, or sell our products either in the United States or abroad.
−Removed: In the United States, patent applications are secret until patents are issued, and in foreign countries, patent applications are secret for a time after filing.
−Removed: Publications of discoveries tend to significantly lag the actual discoveries and the filing of related patent applications.
−Removed: Third parties may have already filed applications for patents for products or processes that will make our products obsolete or will limit our patents or invalidate our patent applications.
−Removed: We typically require our employees, consultants, advisers and suppliers to execute confidentiality and assignment of invention agreements in connection with their employment, consulting, advisory, or supply relationships with us.
−Removed: They may breach these agreements and we may not obtain an adequate remedy for breach.
−Removed: Further, third parties may gain access to our trade secrets or independently develop or acquire the same or equivalent information.
−Removed: We could be damaged by product liability claims .
−Removed: Our products are intended to be used in various clinical or surgical procedures and by consumers.
−Removed: If one of our products malfunctions or a physician, patient or consumer misuses it or has a reaction to it and injury results to a patient, operator or consumer, the injured party could assert a product liability claim against our company.
−Removed: We currently do not have product liability insurance and may not be able to obtain such insurance at a rate that is acceptable to us or at all.
−Removed: Furthermore, even if we can obtain insurance, insurance may not be sufficient to cover all of the liabilities resulting from a product liability claim, and we might not have sufficient funds available to pay any claims over the limits of our insurance.
−Removed: Because personal injury claims based on product liability in a medical setting may be very large, an underinsured or an uninsured claim could financially damage our company.
−Removed: We may indemnify our directors and officers against liability to us and our security holders, and such indemnification could increase our operating costs.
−Removed: Our Bylaws allow us to indemnify our directors and officers against claims associated with carrying out the duties of their offices.
−Removed: Our Bylaws also allow us to reimburse them for the costs of certain legal defenses.
−Removed: Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the “Securities Act”) may be permitted to our directors, officers or control persons, we have been advised by the SEC that such indemnification is against public policy and is therefore unenforceable.
−Removed: Since our officers and directors are aware that they may be indemnified for carrying out the duties of their offices, they may be less motivated to meet the standards required by law to properly carry out such duties, which could increase our operating costs.
−Removed: Further, if our officers and directors file a claim against us for indemnification, the associated expenses could also increase our operating costs.
−Removed: Risks Relating to our Stock
−Removed: The sale of the shares of common stock and securities convertible into common stock in private placements could cause the price of our common stock to decline.
−Removed: During 2008, 2009 and 2010, we completed financings in which we issued common stock or securities convertible into common stock to certain private investors.
−Removed: We have registered 5,133,000 shares of common stock for sale by selling stockholders in such offerings and the shares not registered will become available for sale six months after the date of their initial purchase.
−Removed: Additionally, in January 2010 we filed a Registration Statement on Form S-8 to register 7,500,000 shares under our 2008 incentive plan, 6,000,000 shares related to stock options granted in 2009 and 2,700,000 shares issued to a consultant pursuant to a consulting agreement entered into in January 2010.
−Removed: The purchasers of these securities may sell none, some or all of the shares of common stock acquired from us.
−Removed: We have no way of knowing whether or when the selling stockholders will sell the shares acquired in private transactions or covered by these registration statements.
−Removed: Depending upon market liquidity at the time, a sale of shares at any given time could cause the trading price of our common stock to decline.
−Removed: The sale of a substantial number of shares of our common stock, or anticipation of such sales, could make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect sales.
−Removed: Our common stock is traded over the counter, which may deprive stockholders of the full value of their shares.
−Removed: Our common stock is approved for quotation via the OTC Electronic Bulletin Board.
−Removed: Therefore, our common stock is expected to have fewer market makers, lower trading volumes and larger spreads between bid and asked prices than securities listed on an exchange such as the New York Stock Exchange or the NASDAQ Stock Market.
−Removed: These factors may result in higher price volatility and less market liquidity for the common stock.
−Removed: A low market price would severely limit the potential market for our common stock.
−Removed: Since trading commenced, our common stock has traded at a price substantially below $5.00 per share, subjecting trading in the stock to certain SEC rules requiring additional disclosures by broker-dealers.
−Removed: These rules generally apply to any non-NASDAQ equity security that has a market price share of less than $5.00 per share, subject to certain exceptions (a “penny stock”).
−Removed: Such rules require the delivery, prior to any penny stock transaction, of a disclosure schedule explaining the penny stock market and the risks associated therewith and impose various sales practice requirements on broker-dealers who sell penny stocks to persons other than established customers and institutional or wealthy investors.
−Removed: For these types of transactions, the broker-dealer must make a special suitability determination for the purchaser and have received the purchaser’s written consent to the transaction prior to the sale.
−Removed: The broker-dealer also must disclose the commissions payable to the broker-dealer, current bid and offer quotations for the penny stock and, if the broker-dealer is the sole market maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market.
−Removed: Such information must be provided to the customer orally or in writing before or with the written confirmation of trade sent to the customer.
−Removed: Monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
−Removed: The additional burdens imposed upon broker-dealers by such requirements could discourage broker-dealers from effecting transactions in our common stock.
−Removed: FINRA sales practice requirements may also limit a stockholders ability to buy and sell our stock.
−Removed: In addition to the penny stock rules promulgated by the SEC, which are discussed in the immediately preceding risk factor, FINRA rules require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer.
−Removed: Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information.
−Removed: Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers.
−Removed: FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit the ability to buy and sell our stock and have an adverse effect on the market value for our shares.
−Removed: A stockholder’s ability to trade our common stock may be limited by trading volume.
−Removed: A consistently active trading market for our common stock may not occur on the OTC Electronic Bulletin Board.
−Removed: A limited trading volume may prevent our stockholders from selling shares at such times or in such amounts as they may otherwise desire.
−Removed: Our company has a concentration of stock ownership and control, which may have the effect of delaying, preventing, or deterring a change of control.
−Removed: Our common stock ownership is highly concentrated.
−Removed: Through its ownership of shares of our common stock, two stockholders, Tannin J.
−Removed: Fuja, our CEO, and NFG, Inc., beneficially own in excess of 50% of our total outstanding shares of common stock on December 31, 2009.
−Removed: As a result of the concentrated ownership of the stock, these two stockholders, acting together, will be able to control all matters requiring stockholder approval, including the election of directors and approval of mergers and other significant corporate transactions.
−Removed: This concentration of ownership may have the effect of delaying, preventing or deterring a change in control of our company.
−Removed: It could also deprive our stockholders of an opportunity to receive a premium for their shares as part of a sale of our company and it may affect the market price of our common stock.
−Removed: We have not voluntarily implemented various corporate governance measures, in the absence of which, stockholders may have more limited protections against interested director transactions, conflicts of interest and similar matters .
−Removed: Recent federal legislation, including the Sarbanes-Oxley Act of 2002, has resulted in the adoption of various corporate governance measures designed to promote the integrity of the corporate management and the securities markets.
−Removed: Some of these measures have been adopted in response to legal requirements.
−Removed: Others have been adopted by companies in response to the requirements of national securities exchanges, such as the NYSE or The NASDAQ Stock Market, on which their securities are listed.
−Removed: Among the corporate governance measures that are required under the rules of national securities exchanges and NASDAQ are those that address board of directors’ independence, audit committee oversight and the adoption of a code of ethics.
−Removed: While our Board of Directors has adopted a Code of Ethics and Business Conduct, we have not yet adopted any of these corporate governance measures and, since our securities are not listed on a national securities exchange or NASDAQ, we are not required to do so.
−Removed: It is possible that if we were to adopt some or all of these corporate governance measures, stockholders would benefit from somewhat greater assurances that internal corporate decisions were being made by disinterested directors and that policies had been implemented to define responsible conduct.
−Removed: For example, in the absence of audit, nominating and compensation committees comprised of at least a majority of independent directors, decisions concerning matters such as compensation packages to our senior officers and recommendations for director nominees may be made by a majority of directors who have an interest in the outcome of the matters being decided.
−Removed: Prospective investors should bear in mind our current lack of corporate governance measures in formulating their investment decisions.
−Removed: Our board of directors has the authority to issue shares of “blank check” preferred stock, which may make an acquisition of our company by another company more difficult.
−Removed: We have adopted and may in the future adopt certain measures that may have the effect of delaying, deferring or preventing a takeover or other change in control of our company that a holder of our common stock might consider in its best interest.
−Removed: Specifically, our board of directors, without further action by our stockholders, currently has the authority to issue up to 10,000,000 shares of preferred stock and to fix the rights (including voting rights), preferences and privileges of these shares (“blank check” preferred).
−Removed: Such preferred stock may have rights, including economic rights, senior to our common stock.
−Removed: As a result, the issuance of the preferred stock could have a material adverse effect on the price of our common stock and could make it more difficult for a third party to acquire a majority of our outstanding common stock.
−Removed: Because we will not pay dividends in the foreseeable future, stockholders will only benefit from owning common stock if it appreciates.
−Removed: We have never paid cash dividends on our common stock and we do not intend to do so in the foreseeable future.
−Removed: We intend to retain any future earnings to finance our growth.
−Removed: Accordingly, any potential investor who anticipates the need for current dividends from his investment should not purchase our common stock.
−Removed: Unresolved Staff Comments
+Added: Item 1A - Risk Factors
+Added: Risks Related to Our Company
+Added: We are at an early operational stage, and
+Added: our success is subject to the substantial risks inherent in the establishment of a new business venture.
+Added: Our business and operations are in an early stage
+Added: and subject to all of the risks inherent with new business ventures.
+Added: Our initial operations have been focused on the remediation of soil
+Added: and the extraction of hydrocarbons, such as oil, from properties contaminated by or laden with heavy crude oil and hydrocarbon-based substances.
+Added: We intend to, but have not yet, completed the second stage of our operational strategy, selling the asphaltic cement and/or other petroleum-based
+Added: products we are able to produce from the hydrocarbons we recover.
+Added: Our business and operations may not prove to be
+Added: We have deployed only two RPC units to date, including one unit to Kuwait (for which operations were temporarily suspended
+Added: due to COVID-19) and another to Vernal, Utah (which is presently operating).
+Added: We will need to scale our business beyond these two RPCs
+Added: and demonstrate that our scaled-up recovery and remediation business can be profitable.
+Added: Any future success that we may enjoy will depend
+Added: on many factors, some of which may be beyond our control, and others which cannot be predicted at this time.
+Added: Although we began operations
+Added: in 2008 as a technology acquisition company primarily focused on medical technologies, we have been operating under our current business
+Added: plan focused on soil remediation since 2011, and we have not yet proven to be profitable.
+Added: We have not yet sold any substantial amount
+Added: of products or services commercially and have not proven that our business model will allow us to identify and develop commercially feasible
+Added: products or technologies.
+Added: We have historically suffered net losses,
+Added: and we may not be able to sustain profitability.
+Added: We had an accumulated deficit of $35,731,359 as
+Added: of December 31, 2021, and we expect to continue to incur significant development expenses in the foreseeable future related to the completion
+Added: of the development and commercialization of our products.
+Added: As a result, we are incurring operating and net losses, and it is possible that
+Added: we may never be able to sustain the revenue levels necessary to achieve and sustain profitability.
+Added: If we fail to generate sufficient revenues
+Added: to operate profitably on a consistent basis, or if we are unable to fund our continuing losses, you could lose all or part of your investment.
+Added: We rely upon a few, select key employees
+Added: who are instrumental in our ability to conduct and grow our business.
+Added: In the event any of those key employees would no longer be affiliated
+Added: with the Company, it may have a material detrimental impact as to our ability to successfully operate our business.
+Added: Our future success will depend in large part on
+Added: our ability to attract and retain high-quality management, operations, and other personnel who are in high demand, are often subject to
+Added: competing employment offers, and are attractive recruiting targets for our competitors.
+Added: The loss of qualified executives and key employees,
+Added: or our inability to attract, retain, and motivate high-quality executives and employees required for the planned expansion of our business,
+Added: may harm our operating results and impair our ability to grow.
+Added: We depend on the continued services of our key
+Added: personnel, including Matthew Nicosia, our Chief Executive Officer, Tyler Nelson, our Chief Financial Officer, and Daniel Hashim, our Chief
+Added: Scientific Officer.
+Added: Our work with each of these key personnel are subject to changes and/or termination, and our inability to effectively
+Added: retain the services of our key management personnel, could materially and adversely affect our operating results and future prospects.
+Added: We may have difficulty raising additional
+Added: capital, which could deprive us of necessary resources, and you may experience dilution or subordinate stockholder rights, preferences
+Added: and privileges as a result of our financing efforts.
+Added: We expect to continue to devote significant capital
+Added: resources to fund the continued development of our RPCs and related technologies.
+Added: In order to support the initiatives envisioned in our
+Added: business plan, we will need to raise additional funds through the sale of public or private debt or equity financing or other arrangements.
+Added: Our ability to raise additional financing depends on many factors beyond our control, including the state of capital markets, the market
+Added: price of our common stock and the development or prospects for development of competitive technologies by others.
+Added: Sufficient additional
+Added: financing may not be available to us or may be available only on terms that would result in further dilution to the current owners of
+Added: our common stock.
+Added: We expect to obtain additional capital during
+Added: 2022 through financing lease structures for our RPCs or other financing structures related to our RPCs.
+Added: We also expect that our current
+Added: cash position, will enable us to fund our operating expenses and capital expenditure requirements for the next twelve months.
+Added: unless we can achieve and sustain profitability, we anticipate that we will need to raise additional capital to fund our operations while
+Added: we implement and execute our business plan.
+Added: Any future equity financing may involve substantial
+Added: dilution to our then existing shareholders.
+Added: Any future debt financing could involve restrictive covenants relating to our capital raising
+Added: activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue
+Added: business opportunities.
+Added: There can be no assurance that such additional capital will be available, on a timely basis, or on terms acceptable
+Added: If we are unsuccessful in raising additional capital or the terms of raising such capital are unacceptable, then we may have to
+Added: modify our business plan and/or curtail our planned activities and other operations.
+Added: If we raise additional funds through government
+Added: or other third-party funding, collaborations, strategic alliances, licensing arrangements or marketing and distribution arrangements,
+Added: we may have to relinquish valuable rights to our technologies, future revenue stream or grant licenses on terms that may not be favorable
+Added: If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce
+Added: or terminate our product development or future commercialization efforts or grant rights to develop and market products that we would
+Added: otherwise prefer to develop and market ourselves.
+Added: Additionally, we have certain potential dilutive
+Added: instruments, of which the conversion of these instruments could result in dilution to shareholders:
+Added: As of April 5, 2022, the maximum
+Added: potential dilution is 664,560, and includes convertible notes payable convertible into approximately 14,560 shares of common stock, stock
+Added: options granted to employees of 183,333 shares of common stock.
+Added: Stock options granted to Board members or consultants of 466,667 shares
+Added: of common stock were granted as of April 5, 2022.
+Added: The COVID-19 pandemic has had and may continue
+Added: to have a negative impact on our business and operations.
+Added: Our Kuwait operations were suspended to comply
+Added: with the social distancing measures implemented in Kuwait.
+Added: Our Utah operations were temporarily suspended from March through May 2020,
+Added: but have since resumed in full.
+Added: These suspensions have had a negative impact on our business and there can be no guaranty that we will
+Added: not need to suspend operations again in the future as a result of the pandemic.
+Added: We are closely monitoring the COVID-19 pandemic and the
+Added: directives from federal and local authorities in the United States and in Kuwait affecting not only our workforce, but those of companies
+Added: with whom we work.
+Added: Economic conditions in the current period
+Added: of disruption and instability could adversely affect our ability to access the capital markets, in both the near and long term, and thus
+Added: adversely affect our business and liquidity.
+Added: The current economic conditions related to the
+Added: COVID-19 pandemic have had, and likely will continue to have for the foreseeable future a negative impact on the capital markets.
+Added: if we are able to raise capital, it may not be at a price or on terms that are favorable to us.
+Added: We cannot predict the occurrence of future
+Added: disruptions or how long the current conditions may continue.
+Added: Failure to effectively manage our expected
+Added: growth could place strains on our managerial, operational and financial resources and could adversely affect our business and operating
+Added: Our expected growth could place a strain on our
+Added: managerial, operational and financial resources.
+Added: Further, if our subsidiaries’ businesses grow, then we will be required to manage
+Added: multiple relationships.
+Added: Any further growth by us or our subsidiaries, or any increase in the number of our strategic relationships, will
+Added: increase the strain on our managerial, operational and financial resources.
+Added: This strain may inhibit our ability to achieve the rapid execution
+Added: necessary to implement our business plan and could have a material adverse effect on our financial condition, business prospects and operations
+Added: and the value of an investment in our company.
+Added: We will need to achieve commercial acceptance
+Added: of our products to continue to generate revenues and sustain profitability.
+Added: Our goal is to ultimately produce asphaltic cement
+Added: and/or other petroleum-based products from the hydrocarbons we recover and sell these products to customers;
+Added: however, we may not be able
+Added: to successfully commercialize our products, and even if we do, we may not be able to do so on a timely basis.
+Added: Superior competitive technologies
+Added: may be introduced, or customer needs may change, which will diminish or extinguish the commercial uses for our applications.
+Added: predict when significant commercial market acceptance for our products will develop, if at all, and we cannot reliably estimate the projected
+Added: size of any such potential market.
+Added: If the markets fail to accept our products, then we may not be able to generate revenues from the commercial
+Added: application of our technologies.
+Added: Our revenue growth and profitability will depend substantially on our ability to manufacture and deploy
+Added: additional RPCs and produce asphaltic cement to the specifications required by each of our potential customers.
+Added: We have identified
+Added: a material weakness in our internal control over financial reporting.
+Added: Failure to maintain effective internal controls could cause our
+Added: investors to lose confidence in us and adversely affect the market price of our common stock.
+Added: If our internal controls are not effective,
+Added: we may not be able to accurately report our financial results or prevent fraud.
+Added: Section 404 of the Sarbanes-Oxley
+Added: Act of 2002 (“Section 404”) requires that we maintain internal control over financial reporting that meets applicable standards.
+Added: We may err in the design or operation of our controls, and all internal control systems, no matter how well designed and operated, can
+Added: provide only reasonable assurance that the objectives of the control system are met.
+Added: Because there are inherent limitations in all control
+Added: systems, there can be no assurance that all control issues have been or will be detected.
+Added: If we are unable, or are perceived as unable,
+Added: to produce reliable financial reports due to internal control deficiencies, investors could lose confidence in our reported financial
+Added: information and operating results, which could result in a negative market reaction and a decrease in our stock price.
+Added: We have identified a
+Added: material weakness in our internal controls related to the segregation of duties within our internal controls.
+Added: We believe that we will
+Added: have substantially resolved our previously identified material weakness in our internal controls as we continue to hire personnel to fulfill
+Added: the duties related to the growth in our business.
+Added: There can be no assurances that weakness in our internal controls will not occur in
+Added: If we identify new material
+Added: weaknesses in our internal control over financial reporting, if we are unable to comply with the requirements of Section 404 in a timely
+Added: manner, if we are unable to assert that our internal control over financial reporting is effective, or if our independent registered public
+Added: accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting (if and when
+Added: required), we may be late with the filing of our periodic reports, investors may lose confidence in the accuracy and completeness of our
+Added: financial reports and the market price of our common stock could be negatively affected.
+Added: As a result of such failures, we could also become
+Added: subject to investigations by the stock exchange on which our securities are listed, the SEC, or other regulatory authorities, and become
+Added: subject to litigation from investors and stockholders, which could harm our reputation, financial condition or divert financial and management
+Added: resources from our core business, and would have a material adverse effect on our business, financial condition and results of operations.
+Added: A major portion of our business is dependent
+Added: on the oil industry, which is subject to numerous worldwide variables.
+Added: Our prospective customers are concentrated in
+Added: the oil industry.
+Added: As a result, we will be subject to the success of the oil industry, which is subject to substantial volatility based
+Added: on numerous worldwide factors.
+Added: A decline in the oil industry may have a material adverse effect on our business, financial condition,
+Added: results of operations and cash flows.
+Added: The oil and gas industry is competitive in all its phases.
+Added: Competition in the oil and gas industry
+Added: We will compete with other participants in the search for oil sand properties and in the marketing of oil and other hydrocarbon
+Added: Our customers could include competitors such as oil and gas companies that have substantially greater financial resources, staff
+Added: and facilities than those of our customers and lessees.
+Added: Competitive factors in the distribution and marketing of oil and other hydrocarbon
+Added: products include price and methods and reliability of delivery.
+Added: Within the oil remediation market, demand for
+Added: our services will be limited to a specific customer base and highly correlated to the oil industry.
+Added: The oil industry’s demand for
+Added: equipment is affected by a number of factors including the volatile nature of the oil industry’s business, increased use of alternative
+Added: types of energy and technological developments in the oil extraction process.
+Added: A significant reduction in the target market’s demand
+Added: for oil would reduce the demand for the equipment, which would have a material adverse effect upon our business, financial condition,
+Added: results of operations and cash flows.
+Added: Low oil prices may substantially impact
+Added: our ability to generate revenues.
+Added: Low oil prices may negatively impact our ability
+Added: The demand for our products and services depend, in part, on the price of oil and the margins oil producers receive on the
+Added: Oil prices are volatile and can fluctuate widely based upon a number of factors beyond our control.
+Added: Any decline in the prices
+Added: of and demand for oil could have a material adverse effect on our business, financial condition, results of operations and cash flows.
+Added: We require a variety of permits to operate
+Added: our business.
+Added: If we are not successful in obtaining and/or maintaining those permits it will adversely impact our operations.
+Added: Our business requires permits to operate.
+Added: inability to obtain permits in a timely manner could result in substantial delays to our business.
+Added: In addition, our customers may not
+Added: receive permitting for our equipment’s specific use and we may be unable to adjust our equipment to meet our customer’s permitting
+Added: The issuance of permits is dependent on the applicable government agencies and is beyond our control and that of our customers.
+Added: There can be no assurance that we and/or our customers will receive the permits necessary to operate, which could substantially and adversely
+Added: affect our operations and financial condition.
+Added: We are required to pay permit and approval
+Added: fees to operate in certain business segments and locations.
+Added: If we are not able to pay those fees it would adversely impact our business.
+Added: We are required to pay various types of permit
+Added: and approval fees to the applicable governmental and quasi-governmental agencies to operate our business.
+Added: These fees are subject to change
+Added: at the discretion of the various agencies.
+Added: Our inability to pay these permit and approval fees could substantially and adversely affect
+Added: our operations and financial condition.
+Added: We, and our customers and prospective customers,
+Added: are subject to numerous governmental regulations, both domestically and internationally.
+Added: In order to operate successfully we must be able
+Added: comply with these regulations.
+Added: Current and future government laws, regulations
+Added: and other legal requirements may increase the costs of doing business or restrict business operations.
+Added: Laws, regulations and other legal
+Added: requirements, such as those relating to the protection of the environment and natural resources, health, business and tax have an effect
+Added: on our cost of operation or those of our customers.
+Added: Such governmental regulation may result in delays, cause us to incur substantial compliance
+Added: and other costs and prohibit or severely restrict our business or that of our customers, which could have an adverse effect on our business,
+Added: financial condition, results of operations and cash flows.
+Added: Based on the nature of our business we currently depend and are
+Added: likely to continue to depend on a limited number of customers for a significant portion of our revenues.
+Added: We currently have two customers in Utah and a
+Added: single customer in Kuwait.
+Added: The failure to obtain additional customers or the loss of all or a portion of the revenues attributable to
+Added: any current or future customer as a result of competition, creditworthiness, inability to negotiate extensions or replacement of contracts
+Added: or otherwise could have a material adverse effect on our business, financial condition, results of operations and cash flows.
+Added: If our customers do not enter into, extend or
+Added: honor their contracts with us, our profitability could be adversely affected.
+Added: Our ability to receive payment for production depends on
+Added: the continued solvency and creditworthiness of our customers and prospective customers.
+Added: If any of our customers’ creditworthiness
+Added: suffers, we may bear an increased risk with respect to payment defaults.
+Added: If customers refuse to accept our equipment or make payments
+Added: for which they have a contractual obligation, our revenues could be adversely affected.
+Added: In addition, if a substantial portion of our contracts
+Added: are modified or terminated and we are unable to replace the contracts (or if new contracts are priced at lower levels), our results of
+Added: operations will be adversely affected.
+Added: Our primary business is impacted by the
+Added: oil industry and the manufacturing industry, which are subject to uncertain economic conditions.
+Added: The global economy is subject to fluctuation and
+Added: it is unclear how stable the oil industry and the manufacturing industry will be in the future.
+Added: As a result, there can be no assurance
+Added: that the business will achieve anticipated cash flow levels.
+Added: Further, recent world events evolving out of trade disputes, increased terrorist
+Added: activities and political and military action, and the COVID-19 pandemic, among other events, have created an air of uncertainty concerning
+Added: the stability of the global economy.
+Added: Historically, such events have resulted in disturbances in financial markets, and it is impossible
+Added: to determine the likelihood of future events.
+Added: Any negative change in the general economic conditions in the United States and globally
+Added: could adversely affect the financial condition and operating results of the business.
+Added: We plan to expand our level of operations.
+Added: economic activity, concerns about inflation or deflation, decreased consumer confidence, reduced corporate profits and capital spending,
+Added: adverse business conditions and liquidity concerns in the general economy and recent international conflicts and terrorist and military
+Added: activity have resulted in a downturn in worldwide economic conditions, especially in the United States.
+Added: Political and social turmoil related
+Added: to international conflicts and terrorist acts may place further pressure on economic conditions in the United States and worldwide.
+Added: political, social and economic conditions make it extremely difficult for us to accurately forecast and plan future business activities.
+Added: If such conditions continue or worsen, then our business, financial condition and results of operations could be materially and adversely
+Added: We will continue to be subject to competition
+Added: in our business .
+Added: Our oil remediation equipment utilizes specific
+Added: technology to extract oil from sand.
+Added: Oil producers are continually investigating alternative oil production technologies with a view to
+Added: reduce production costs.
+Added: In addition, industries that compete with the oil industry, such as the electric power industry, also continue
+Added: to innovate and create products that compete with the oil industry.
+Added: There can be no assurance that superior alternative technologies will
+Added: emerge, which could reduce the demand for and price of our product and services.
+Added: The market for our products and services is highly
+Added: competitive and is becoming more so, which could hinder our ability to successfully market our products and services.
+Added: We may not have
+Added: the resources, expertise or other competitive factors to compete successfully in the future.
+Added: We expect to face additional competition
+Added: from existing competitors and new market entrants in the future.
+Added: Many of our competitors have greater name recognition and more established
+Added: relationships in the industry than we do.
+Added: As a result, these competitors may be able to:
+Added: develop and expand their product offerings more rapidly;
+Added: adapt to new or emerging changes in customer requirements more quickly;
+Added: take advantage of acquisition and other opportunities more readily;
+Added: devote greater resources to the marketing and sale of their products and adopt more aggressive pricing policies than we can.
+Added: We carry insurance coverage against liabilities
+Added: for personal injury, death and property damage, but there is no guarantee this coverage will be sufficient to cover us against all claims.
+Added: Although, we maintain insurance coverage against
+Added: liability for personal injury, death and property damage.
+Added: There can be no assurance that this insurance will be sufficient to cover any
+Added: such liabilities.
+Added: We may not be insured or fully insured against the losses or liabilities that could arise from a casualty in the business
+Added: In addition, there can be no assurance that particular risks that are currently insurable will continue to be insurable on
+Added: an economical basis or that the current levels of coverage will continue to be available.
+Added: If a loss occurs that is partially or completely
+Added: uninsured, we may incur a significant liability.
+Added: We may be unable to adequately protect our proprietary rights.
+Added: Our ability to compete partly depends on the superiority,
+Added: uniqueness and value of our intellectual property.
+Added: To protect our proprietary rights, we will rely on a combination of patents, copyrights
+Added: and trade secrets, confidentiality agreements with our employees and third parties, and protective contractual provisions.
+Added: Despite these
+Added: efforts, any of the following occurrences may reduce the value of our intellectual property:
+Added: Our applications for patents relating to our business may not be granted and, if granted, may be challenged or invalidated;
+Added: Issued patents may not provide us with any competitive advantages;
+Added: Our efforts to protect our intellectual property rights may not be effective in preventing misappropriation of our technology;
+Added: Our efforts may not prevent the development and design by others of products or technologies similar to or competitive with, or superior
+Added: to those we develop;
+Added: Another party may obtain a blocking patent and we would need to either obtain a license or design around the patent in order to continue
+Added: to offer the contested feature or service in our products.
+Added: We may become involved in lawsuits to protect
+Added: or enforce our patents that would be expensive and time consuming.
+Added: In order to protect or enforce our patent rights,
+Added: we may initiate patent litigation against third parties.
+Added: In addition, we may become subject to interference or opposition proceedings
+Added: conducted in patent and trademark offices to determine the priority and patentability of inventions.
+Added: The defense of intellectual property
+Added: rights, including patent rights through lawsuits, interference or opposition proceedings, and other legal and administrative proceedings,
+Added: would be costly and divert our technical and management personnel from their normal responsibilities.
+Added: An adverse determination of any
+Added: litigation or defense proceedings could put our pending patent applications at risk of not being issued.
+Added: Furthermore, because of the substantial amount
+Added: of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could
+Added: be compromised by disclosure during this type of litigation.
+Added: For example, during the course of this type of litigation, confidential information
+Added: may be inadvertently disclosed in the form of documents or testimony in connection with discovery requests, depositions or trial testimony.
+Added: This disclosure could have a material adverse effect on our business and our financial results.
+Added: Our primary business operations rely on
+Added: our ability to transport our equipment to different locations.
+Added: Any impact on the cost, availability and reliability of transportation
+Added: could adversely affect our business.
+Added: The availability and reliability of transportation
+Added: and fluctuation in transportation costs could negatively impact the business.
+Added: Transportation logistics play an important role in the sale
+Added: of our products and services and in the oil industry generally.
+Added: Delays and interruptions of transportation services because of accidents,
+Added: failure to complete construction of infrastructure, infrastructure damage, lack of capacity, weather-related problems, governmental regulation,
+Added: terrorism, strikes, lock-outs, third-party actions or other events could impair the operations of our customers and may also directly
+Added: impair our ability to commence or complete production or services, which could have a material adverse effect on our business, financial
+Added: condition, results of operations and cash flows.
+Added: The lands on which we conduct our business
+Added: operations must be properly zoned for our services.
+Added: If they aren’t then it could impact our business.
+Added: The lands on which we conduct our business operates
+Added: must comply with applicable zoning regulations.
+Added: Any unknown or future violations could limit or require us to cease operations.
+Added: Data security breaches are increasing worldwide.
+Added: If we are the victim of such a breach it will materially impact our business.
+Added: We will collect and retain certain personal information
+Added: provided by our employees and investors.
+Added: We intend to implement certain protocols designed to protect the confidentiality of this information
+Added: and periodically review and improve our security measures;
+Added: however, these protocols may not prevent unauthorized access to this information.
+Added: Technology and safeguards in this area are consistently changing and there is no assurance that we will be able to maintain sufficient
+Added: protocols to protect confidential information.
+Added: Any breach of our data security measures and disbursement of this information may result
+Added: in legal liability and costs (including damages and penalties), as well as damage to our reputation, that could materially and adversely
+Added: affect our business and financial performance.
+Added: We may indemnify our directors and officers
+Added: against liability to us and holders of our securities, and such indemnification could increase our operating costs.
+Added: Our bylaws allow us to indemnify our directors
+Added: and officers against claims associated with carrying out the duties of their offices.
+Added: Our bylaws also allow us to reimburse them for the
+Added: costs of certain legal defenses.
+Added: Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the “Securities
+Added: Act”) may be permitted to our directors, officers or control persons, we have been advised by the SEC that such indemnification
+Added: is against public policy and is therefore unenforceable.
+Added: If our officers and directors file a claim against us for indemnification, the
+Added: associated expenses could also increase our operating costs.
+Added: We may be subject to liability if our equipment does not perform
+Added: We may be exposed to liability in the event our
+Added: equipment does not perform as expected.
+Added: We intend to enter into contracts with customers, which will grant certain rights with respect
+Added: to the condition and use of our products.
+Added: Certain contractual and legal claims could arise in the event the equipment does not perform
+Added: as expected and in the event of personal injury, death or property damage as a result of the use of our equipment.
+Added: There can be no assurance
+Added: that particular risks are insured or, if insured, will continue to be insurable on an economical basis or that current levels of coverage
+Added: will continue to be available.
+Added: We may be liable for any defects in the equipment or its products and services and uninsured or underinsured
+Added: personal injury, death or property damage claims.
+Added: Our business depends on our ability to manufacture
+Added: various pieces of equipment, many of which are quite large.
+Added: Any disruption in our manufacturing ability will adversely affect our business
+Added: and operations.
+Added: Our business involves manufacturing and plant
+Added: operation risks of delay that may be outside of our control.
+Added: Production or services may be delayed or prevented by factors such as adverse
+Added: weather, strikes, energy shortages, shortages or increased costs of materials, inflation, environmental conditions, legal matters and
+Added: other unknown contingencies.
+Added: Our business also requires certain manufacturing apparatus to manufacture the equipment.
+Added: If the manufacturing
+Added: apparatus were to suffer major damage or are destroyed by fire, abnormal wear, flooding, incorrect operation or otherwise, we may be unable
+Added: to replace or repair such apparatus in a timely manner or at a reasonable cost, which would impact the our ability to stay in production
+Added: Any significant downtime of the equipment manufacturing could impair our ability to produce for or serve customers and materially
+Added: and adversely affect our results of operations.
+Added: In addition, changes in the equipment plans and specifications, delays due to compliance
+Added: with governmental requirements or impositions of fees or other delays could increase production costs beyond those budgeted for the business.
+Added: If any cost overruns exceed the funds budgeted for operations, the business would be negatively impacted.
+Added: Any accident at our manufacturing facilities could subject us
+Added: to substantial liability.
+Added: The manufacturing and operation of the equipment
+Added: involves hazards and risks which could disrupt operations, decrease production and increase costs.
+Added: The occurrence of a significant accident
+Added: or other event that is not fully insured could adversely affect our business, financial condition, results of operations and cash flows.
+Added: If critical components become unavailable
+Added: or our suppliers delay their production of our key components, our business will be negatively impacted.
+Added: Our ability to get key components to build our
+Added: equipment is crucial to our ability to manufacture our products.
+Added: These components are supplied by certain third-party manufacturers, and
+Added: we may be unable to acquire necessary amounts of key components at competitive prices.
+Added: If we are successful in our growth, outsourcing
+Added: the production of certain parts and components would be one way to reduce manufacturing costs.
+Added: We plan to select these particular manufacturers
+Added: based on their ability to consistently produce these products according to our requirements in an effort to obtain the best quality product
+Added: at the most cost-effective price.
+Added: However, the loss of all or any one of these suppliers or delays in obtaining shipments would have an
+Added: adverse effect on our operations until an alternative supplier could be found, if one may be located at all.
+Added: If we get to that stage of
+Added: growth, such loss of manufacturers could cause us to breach any contracts we have in place at that time and would likely cause us to lose
+Added: Any shortage of skilled labor would have
+Added: a detrimental impact on our ability to provide our products and services.
+Added: The manufacturing and operating of the equipment
+Added: requires skilled laborers.
+Added: In the event there is a shortage of labor, including skilled labor, it could have an adverse impact on our
+Added: productivity and costs and our ability to expand production in the event there is an increase in demand for our product or services.
+Added: We rely on third party contractors for some of our operations.
+Added: If we are unable to find quality contractors, it would severely impact our business.
+Added: We outsource certain aspects of our business to
+Added: third party contractors.
+Added: We are subject to the risks associated with such contractors’ ability to successfully provide the necessary
+Added: services to meet the needs of our business.
+Added: If the contractors are unable to adequately provide the contracted services, and we are unable
+Added: to find alternative service providers in a timely manner, our ability to operate the business may be disrupted, which may adversely affect
+Added: our business, financial condition, results of operations and cash flows.
+Added: Union activities could adversely impact our business.
+Added: While none of our employees are currently members
+Added: of unions, we may become adversely effected by union activities.
+Added: We are not subject to any collective bargaining or union agreement;
+Added: it is possible that future employees may join or seek recognition to form a labor union or may be required to become a labor agreement
+Added: If some or all of our employees become unionized, it could adversely affect productivity, increase labor costs and increase
+Added: the risk of work stoppages.
+Added: If a work stoppage were to occur, it could interfere with the business operations and have a material adverse
+Added: effect on our business, financial condition, results of operations and cash flows.
+Added: Although we do
+Added: not believe that we are, or will be, an investment company covered by the Investment Company Act of 1940, if we are deemed to be an investment
+Added: company, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult
+Added: for us to engage in strategic transactions.
+Added: A company that, among
+Added: other things, is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting,
+Added: owning, trading or holding certain types of securities would be deemed an investment company under the Investment Company Act of 1940,
+Added: as amended, (the “Investment Company Act”).
+Added: Additionally, a company that is not and does hold itself out as being engaged
+Added: primarily in the business of investing, reinvesting, owning, trading or holding certain types of securities may nevertheless be deemed
+Added: an investment company under the Investment Company Act if more than 40% of such company’s assets are deemed to be “investment
+Added: We are not in the business
+Added: of buying and selling securities of other companies.
+Added: As our strategy had involved the Company investing in other companies, including
+Added: Scepter Holdings and Odyssey Group International, it is possible that we could be deemed an investment company, although, given the nature
+Added: and extent of our business operations, we do not believe that we are or will be subject us to the Investment Company Act.
+Added: Our investments
+Added: in Scepter Holdings and Odyssey Group International arose from loan agreements that were settled in the form of equity because cash was
+Added: not available for the borrowers, and we have recently sold, in a private transaction, all of our shares of Odyssey Group International.
+Added: The Company has not traded or sold any securities of other companies that it has acquired.
+Added: For those LLCs for which the Company serves
+Added: as manager, it has been disclosed in the business plan of these LLCs that their primary business is manufacturing heavy machinery or to
+Added: provide the Company with cash to specifically manufacture or purchase heavy machinery in exchange for a royalty from the production of
+Added: the heavy machinery.
+Added: These entities do not engage in activities such as investing, reinvesting, owning, holding or trading “investment
+Added: securities,” and neither the units of ownership for these entities, nor rights to royalties, have any market and are not traded,
+Added: and such interests are accounted for at cost.
+Added: In order not to be regulated as an investment
+Added: company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged primarily in a business
+Added: other than investing, reinvesting or trading in securities and that our activities do not include investing, reinvesting, owning, holding
+Added: or trading “investment securities” constituting more than 40% of our total assets (exclusive of U.S.
+Added: government securities
+Added: and cash items) on an unconsolidated basis.
+Added: Presently, our “investment securities,” which include our holdings in Scepter
+Added: Holdings, as well as certain entities described in our corporate structure, comprise approximately 7% of our total assets, which is below
+Added: such 40% threshold.
+Added: As our business continues to develop and production increases, the percentage of our total assets comprised of investment
+Added: securities is expected to decline substantially;
+Added: however, in the event that the percentage of our holdings in investment securities increases,
+Added: we risk exceeding such 40% threshold and being deemed an investment company.
+Added: We do not plan to buy businesses or assets with a view to
+Added: resale or profit from their resale.
+Added: We do not plan to buy unrelated businesses or assets or to be a passive investor.
+Added: If we are nevertheless
+Added: deemed to be an investment company under the Investment Company Act, we may be subject to certain restrictions that may make it more difficult
+Added: for us to complete a business combination, including:
+Added: restrictions on the nature of our investments;
+Added: restrictions on the issuance of securities.
+Added: In addition, we may have
+Added: imposed upon us certain burdensome requirements, including:
+Added: registration as an investment company;
+Added: adoption of a specific form of corporate structure;
+Added: reporting, record keeping, voting, proxy, compliance policies and procedures and disclosure requirements and other rules and regulations.
+Added: with these additional regulatory burdens would require additional expense for which we have not allotted.
+Added: Item 1B - Unresolved Staff Comments
+Added: Not applicable.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.