ITEM 1. BUSINESS
Overview
Bio-En Holdings Corp.
(formerly Olivia
Inc.)
is a Delaware corporation, incorporated on August 2, 2011. The Company initially intended to participate in the bio-fuel
technology industry. The Company held a license agreement for a portfolio of patents including Gravity Pressure Vessels and supporting
appurtenances (“
Licensed Technology
”).
The Company planned to design and execute
agreements to build, operate and maintain a bio-mass to energy facility on the Island of Malta, utilizing the Licensed Technology
(“
Facility
”).
The Company was not successful in obtaining
the full funding required to establish the Facility. The Company is no longer seeking to exploit the Licensed Technology and/or
pursuing the establishment of the Facility.
As a result of discontinuing its prior
operations relating to the proposed building of the Facility and exploitation of the Licensed Technology, the Company became a
shell company. As discussed below, the Company’s current business plan is to seek and identify a privately-held operating
company desiring to become a publicly held company by combining with the Company through a reverse merger or acquisition type transaction.
Private companies wishing to have their securities publicly traded may seek to merge or effect an exchange transaction with a shell
company that is reporting and eligible for quotation on the over-the-counter market. As a result of the merger or exchange transaction,
the stockholders of the private company will hold a majority of the issued and outstanding shares of the shell company. Typically,
the directors and officers of the private company become the directors and officers of the shell company. Often the name of the
private company becomes the name of the shell company.
Although the Company has not yet determined
what private company, business or assets to acquire, the Company’s Chief Executive Officer is involved in several business
ventures and may ask the board to consider acquiring one or more of such business ventures. Alternatively, the Company may seek
to acquire a private company, business or assets from an unrelated third party.
Our Corporate History and Background
The Company, through its merger (“
Merger
”)
with Bio-En Corp (“
BEC
”), entered into the development stage and devoted substantially all of its efforts to
the development of its business plan, whereby Company intended to participate in the waste to bio-fuel technology industry. The
Company intended to plan, design, and execute agreements to build, operate and maintain a bio-mass to energy operation at the Facility,
the same contingent on sufficient capital funding. The Company’s fiscal year-end is December 31.
New Opportunities
With the inability to raise the necessary
funds we have been forced to reevaluate our business plans. As such, our principal business objective for the next 12 months and
beyond will be to achieve long-term growth potential through starting up a new business or a combination with an existing business.
We will not restrict our potential candidate target companies to any specific business, industry or geographical location and,
thus, may acquire any type of business. Furthermore, we will consider both businesses and opportunities that are under the control
of our chief executive officer, Baruch Adika, and also businesses and opportunities that are under the control of unrelated third
parties.
The analysis of new business opportunities
has and will be undertaken by or under the supervision of our officers and directors. We have unrestricted flexibility in seeking,
analyzing and participating in potential business opportunities. In our efforts to analyze potential acquisition targets, we will
consider the following kinds of factors:
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Potential for growth, indicated by new technology, anticipated market expansion or new products;
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Competitive position as compared to other firms of similar size and experience within the industry
segment as well as within the industry as a whole;
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Strength and diversity of management, either in place or scheduled for recruitment;
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Capital requirements and anticipated availability of required funds, to be provided by us or from
operations, through the sale of additional securities, through joint ventures or similar arrangements or from other sources;
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The cost of participation by us as compared to the perceived tangible and intangible values and
potentials;
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The extent to which the business opportunity can be advanced;
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The accessibility of required management expertise, personnel, raw materials, services, professional
assistance and other required items; and
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Other relevant factors.
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In applying the foregoing criteria, no
one of which will be controlling, we will attempt to analyze all factors and circumstances and make a determination based upon
reasonable investigative measures and available data. Potentially available business opportunities may occur in many different
industries, and at various stages of development, all of which will make the task of comparative investigation and analysis of
such business opportunities extremely difficult and complex. Due to our limited capital available for investigation, we may not
discover or adequately evaluate adverse facts about the opportunity to be acquired.
Form of Acquisition
The manner in which we participate in an
opportunity will depend upon the nature of the opportunity, the respective needs and desires of us and the potential candidates,
and our relative negotiating strength with such candidates. It is likely that we will require its participation in a business opportunity
through the issuance of our common stock or other securities. Although the terms of any such transaction cannot be predicted, it
should be noted that in certain circumstances the criteria for determining whether or not an acquisition is a so-called "tax
free" reorganization under Section 368(a) (1) of the Internal Revenue Code of 1986, as amended (the "
Code
"),
depends upon whether the owners of the acquired business will own 80% or more of the voting stock of the surviving entity. If a
transaction were structured to take advantage of these provisions rather than other "tax free" provisions provided under
the Code, all prior stockholders would, in such circumstances, retain 20% or less of the total issued and outstanding shares. Under
other circumstances, depending upon the relative negotiating strength of the parties, prior stockholders may retain substantially
less than 20% of the total issued and outstanding shares of the surviving entity. This could result in substantial additional dilution
to the equity of those who were our stockholders prior to such transaction.
Our present stockholders may not be left
with control of a majority of our voting shares following the formation of a new business or an acquisition. As part of such a
transaction, all or a majority of our directors and officers may resign and new directors may be appointed.
In the case of an acquisition, the transaction
may be accomplished upon determination of the Company’s Board of Directors (“Board”), without any vote or approval
by stockholders. In the case of a statutory merger or consolidation directly involving us, it may be necessary to call a stockholders'
meeting and obtain the approval of the holders of a majority of the outstanding shares. The necessity to obtain such stockholder
approval may result in delay and additional expense in the consummation of any proposed transaction and will also give rise to
certain appraisal rights to dissenting stockholders. Most likely, we will seek to structure any such transaction so as not to require
stockholder approval.
It is anticipated that the investigation
of specific business opportunities and the negotiation, drafting and execution of relevant agreements, disclosure documents and
other instruments will require substantial time and attention and substantial cost for accountants, attorneys and others. If a
decision were made not to participate in a specific business opportunity, the costs theretofore incurred in the related investigation
would not be recoverable. Furthermore, even if an agreement is reached for the participation in a specific business opportunity,
the failure to consummate that transaction may result in the loss to us of the related costs incurred.
Our chief executive officer, Baruch Adika,
is involved in several different business ventures and may propose to the Company that it acquire the assets or entities that
own one or more of these ventures although no such proposal has been made and Mr. Adika may determine not to make any such proposal
and, instead we may seek to acquire a private company, assets or business from an unrelated third party. Other than as discussed
above, none of our officers or our directors have yet had any preliminary contact or discussions with any representative of any
other entity regarding a business combination with us. Any target business that is selected may be a financially unstable company
or an entity in its early stages of development or growth, including entities without established records of sales or earnings.
In that event, we will be subject to numerous risks inherent in the business and operations of financially unstable and early
stage or potential emerging growth companies. In addition, we may affect a business combination with an entity in an industry
characterized by a high level of risk, and, although our management will endeavor to evaluate the risks inherent in a particular
target business, there can be no assurance that we will properly ascertain or assess all significant risks.
We anticipate that the selection of a business
combination will be complex and extremely risky. Because of general economic conditions, rapid technological advances being made
in some industries and shortages of available capital, our management believes that there are numerous firms seeking even the limited
additional capital that we will have and/or the perceived benefits of becoming a publicly traded corporation. Such perceived benefits
of being a publicly traded corporation include, among other things, facilitating or improving the terms on which additional equity
financing may be obtained, providing liquidity for the principals of and investors in a business, creating a means for providing
incentive stock options or similar benefits to key employees, and offering greater flexibility in structuring acquisitions, joint
ventures and the like through the issuance of stock. Potentially available business combinations may occur in many different industries
and at various stages of development, all of which will make the task of comparative investigation and analysis of such business
opportunities extremely difficult and complex.
Employees
We presently have no employees apart from
our management. We have several consultants who currently provide services to us. Some of them are compensated for their
services through the issuance of Company shares, which may result in further dilution to our stockholders. We may hire
additional employees, consultants, and recruit senior executive members as officers and directors, as needed, which persons/entities
may be instrumental in forming a new business or we may acquire another business with a full management team already on board.
ITEM 1A. RISK FACTORS
In addition to the other information in
this Annual Report on Form 10-K, stockholders or prospective investors should carefully consider the following risk factors:
An investment in our common stock involves
a high degree of risk. You should carefully consider the risks described below, together with all of the other information included
in this Report, before making an investment decision. If any of the following risks actually occurs, our business, financial condition
or results of operations could suffer. In that case, the trading price of our shares of common stock could decline, and you may
lose all or part of your investment. You should read the section entitled “Special Note Regarding Forward Looking Statements”
above for a discussion of what types of statements are forward-looking statements, as well as the significance of such statements
in the context of this Report.
Risks Related to Our Company
We are a shell company that is seeking
to acquire an operating business and may fail to do so and, even if we are successful, that business may never achieve profitability.
We need additional capital to maintain our company as a public reporting company and to seek acquisition opportunities and the
failure to raise additional capital could place our continued viability in question.
We currently have no operations. We are
a shell company and we are incurring expenses relating to maintaining our status as a reporting company under the Securities Exchange
Act of 1934. We will require capital to maintain our current status as a reporting shell company and to cover expenses relating
to the investigation of acquisition opportunities and the failure to raise additional capital could place our continued viability
in question. Our chief executive officer, Baruch Adika, has been paying our day-to-day expenses; however, he has no obligation
to continue to do so. If he were to stop covering such expenses, we would need to raise capital from external sources. In particular
we would try to raise additional capital from external sources to carry out our pursued business plan of combining with an operating
business. If we are unable to generate the required additional capital, our ability to meet our financial obligations and to implement
our business plan may be adversely affected. We currently have no commitments to obtain additional capital, and there can
be no assurance that any financing will be available in amounts or on terms acceptable to us, if at all. If we are not
successful in raising additional working capital to support our operations and implement our business plan, we may be forced to
curtail our operations, take additional measures to reduce costs, modify our business plan, and consider strategic alternatives
that could include a sale of our business or filing for bankruptcy protection.
We have no agreement for a business combination and we
do not have any minimum requirements for a business combination.
We have no current arrangement, agreement
or understanding with respect to engaging in a business combination with a specific entity. We may not be successful in identifying
and evaluating a suitable merger candidate or in consummating a business combination. We have not selected a particular industry
or specific business within an industry for a target company. We have not established a specific length of operating history or
a specified level of earnings, assets, net worth or other criteria which we will require a target company to have achieved, or
without which we would not consider a business combination with such business entity.
The loss of the services of Baruch
Adika, our chief executive officer and director, would adversely affect our ability to implement our business plan.
Mr. Adika is primarily responsible for conducting our day-to-day
operations and implementing our business plan. We will rely solely on the judgment of Mr. Adika when selecting a target company.
Mr. Adika will only devote a limited amount of his time each month to our business. Mr. Adika has not entered into a written employment
agreement with us and he is not expected to do so. The loss of the services of Mr. Adika would adversely affect our ability to
implement our business plan.
Conflicts of interest may arise between
us and our stockholders, and our chief executive officer, Mr. Adika, during the implementation of our business plan which may have
a negative impact on our ability to consummate a business transaction.
Our President, Mr. Adika, is not required
to commit his full time to our affairs, which may result in a conflict of interest in allocating his time between our operations
and other businesses. We do not intend to have any full time employees prior to the consummation of a business combination. Mr.
Adika is engaged in several other business endeavors and is not obligated to contribute any specific number of hours to our affairs.
If his other business affairs require him to devote more substantial amounts of time to such interests, it could limit his ability
to devote time to our affairs and could have a negative impact on our ability to consummate a business combination.
Although no determination has been made
regarding the operating business that we plan to require, it is possible that we may acquire an operating company that Mr. Adika
has an ownership interest in or that he is an officer or director of. Mr. Adika is involved in several different business ventures
and he may propose to our company that we acquire one or more of such ventures. If we do acquire any business affiliated with Mr.
Adika, we may not be able to do so on terms that would be arrived at if the transaction were negotiated on an arms-length basis.
As a result, the stockholders of our company may be adversely affected as compared to a similar transaction with an independent
third party.
Depending upon the nature of a proposed
transaction, our stockholders, other than Mr. Adika, may not be afforded the opportunity to approve or consent to a particular
transaction.
The stockholders of our company will likely
not have the right to vote in favor of or against a proposed business combination. In most cases, a business combination will not
require stockholder approval. Accordingly, stockholders will be relying on the determination of Mr. Adika regarding a business
combination.
To implement our business plan we may be
required to employ accountants, technical experts, appraisers, attorneys, or other consultants or advisors. The selection of any
such advisors will be made by Mr. Adika and their fees will be paid by Mr. Adika if he is willing to do so at the time. We anticipate
that such persons may be engaged on an as needed basis without a continuing fiduciary or other obligation to us.
If Mr. Adika considers it necessary to
hire outside advisors, he may elect to hire persons who are affiliates of his. Such advisors because of their relationship with
Mr. Adika may not fully consider our best interest in rendering advice and services to us.
We have no cash and no operations
and may not have access to sufficient capital to consummate a business combination.
Mr. Adika has been responsible for payment
of our operating expenses and expenses of implementing our business plan however he is not required to continue to do so. We may
not be able to take advantage of any available business opportunities because of the limited and uncertain availability of capital.
There is no assurance that Mr. Adika will have sufficient capital to provide us with the necessary funds to successfully implement
our plan of operation or that he will continue to provide us with capital in the future.
There may be a scarcity of and/or
significant competition for business opportunities and combinations, which may impede our ability to consummate a merger or acquisition.
We are and will continue to be an insignificant
participant in the business of seeking mergers with and acquisitions of privately-held business entities. A large number of established
and well-financed entities, including private equity and venture capital firms, are active in seeking potential merger and acquisition
candidates for their clients and investors. Substantially all such entities have significantly greater financial resources, technical
expertise and managerial capabilities than we have 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 other public shell companies who may have more available funds or other assets that make them a more
attractive candidate for a merger than we are.
Reporting requirements under the
Exchange Act may delay or preclude a merger or acquisition.
The rules and regulations of the SEC require
a reporting shell company to timely provide in a Current Report on Form 8-K financial and other information, including audited
financial statements, of the acquired company if we engage in a business combination, or if there is a change in our control. The
additional time and costs that may be incurred by the potential target company to prepare audited financial statements and other
information may significantly delay or essentially preclude consummation of an otherwise desirable acquisition.
A business combination will result
in a change in control of our company and significantly reduce the ownership interest of our current stockholders.
In conjunction with completion of a business
acquisition, we anticipate that we will issue an amount of our authorized but unissued common stock that will represent a significant
majority of the voting power and equity of our company, which will, in all likelihood, result in stockholders of a target company
obtaining a controlling interest in us and thereby reducing the ownership interest of our current stockholders. We may also issue
preferred stock to the stockholders of a target company. Holders of preferred stock may have rights, preferences and privileges
senior to those of our existing holders of common stock. As a condition of the business combination, persons holding a majority
of our common stock may agree to sell or transfer all or a portion of the common stock they own to provide the target company with
majority control. The resulting change in control will likely result in the removal of our present officers and directors and a
corresponding reduction in, or elimination of, their participation in future business activities.
We may engage in a business combination
with a foreign entity which will subject us to additional business risks.
We may effectuate a business combination
with a merger target whose business operations or even headquarters, place of formation or primary place of business are located
outside the United States of America. In such event, we may face the significant additional risks associated with doing business
in that country. In addition to the language barriers, different presentations of financial information, different business practices,
and other cultural differences and barriers that may make it difficult to evaluate such a merger target, we may encounter ongoing
business risks associated with uncertain legal systems and applications of law, prejudice against foreigners, corrupt practices,
uncertain economic policies and potential political and economic instability that may be exacerbated in various foreign countries.
We may engage in a business combination
that may have tax consequences to us and our stockholders.
Federal and state tax consequences will,
in all likelihood, be major considerations in any business combination that we may undertake. Currently, such transactions may
be structured so as to result in tax-free treatment to both companies and their stockholders, pursuant to various federal and state
tax provisions. We intend to structure any business combination so as to minimize the federal and state tax consequences to both
our company and the target entity and their stockholders. However, there can be no assurance that such business combination will
meet the statutory requirements of a tax-free reorganization or that the parties will obtain the intended tax-free treatment upon
a transfer of stock or assets. A non-qualifying reorganization could result in the imposition of both federal and state taxes,
which may have an adverse effect on both parties to the transaction.
Our management will be subject to
greater demands and we will incur increased costs as a result of being a public company, which could affect our profitability and
operating results. Our accounting, internal audit and other management systems and resources may not be adequately prepared
for these demands.
We are a public reporting company in the
United States subject to the information and reporting requirements of the Securities Exchange Act of 1934 and the compliance obligations
of the Sarbanes-Oxley Act of 2002. As a public reporting company, we incur significant legal, accounting, investor relations and
other expenses. These significant expenses could affect our profitability and our results of operations.
Section 404 of the Sarbanes-Oxley Act requires
annual management assessment of the effectiveness of our internal controls over financial reporting and a report by our independent
auditors addressing these assessments. These reporting and other obligations will place significant demands on our management,
administrative, operational, internal audit and accounting resources. We anticipate that we will eventually need to upgrade our
systems; implement additional financial and management controls, reporting systems and procedures; implement an internal audit
function; and hire additional accounting, internal audit and finance staff. If we are unable to then accomplish these objectives
in a timely and effective fashion, our ability to comply with our financial reporting requirements and other rules that apply to
reporting companies could be impaired. Any failure to maintain effective internal controls could have a material adverse effect
on our business, operating results and stock price.
We are dependent upon our officers
for management and direction, and the loss of any of these persons could adversely affect our operations and results.
We are dependent upon our officers for
the successful management for our operations and the execution of our business plan(s). We do not have employment agreements with
our officers or other key personnel. The loss of any of our officers could delay or prevent the achievement of our
business objectives, which could have a material adverse effect upon our results of operations and financial position.
It may be more difficult for us to
retain or attract officers and directors due to the Sarbanes-Oxley Act of 2002.
The Sarbanes-Oxley Act of 2002 was enacted
in response to public concerns regarding corporate accountability in connection with certain accounting scandals. The stated goals
of the Sarbanes-Oxley Act are to increase corporate responsibility, to provide for enhanced penalties for accounting and auditing
improprieties at publicly traded companies, and to protect investors by improving the accuracy and reliability of corporate disclosures
pursuant to the securities laws. The Sarbanes-Oxley Act generally applies to all companies that file or are required to file periodic
reports with the SEC under the Securities Exchange Act of 1934. The enactment of the Sarbanes-Oxley Act of 2002 led to a
series of rules and regulations by the SEC that significantly increases the responsibilities and potential liabilities of directors
and executive officers. Because of the perceived increased personal risk associated with acting as an executive officer
or director of a public company, we may be unable, or it may be significantly more expensive, to attract and retain qualified executive
officers and directors.
Our directors and officers devote
time to other ventures, which may adversely impact the time they can devote to our Company and its operations.
Some of our officers and directors also
serve as officers and/or directors of other companies, and they devote only that portion of their time, which, in their judgment
and experience, is reasonably required for the management and operation of our Company and our business. Executive
management may have conflicts of interest in allocating management time, services and functions among our Company and any current
and future ventures in which they are engaged. If our officers and directors are unable to devote adequate time to manage
our operations successfully, our potential to succeed as a business and the value of your shares may be adversely affected.
The market price of our common stock
may be particularly volatile and our stockholders may be unable to sell their common stock at or above their purchase price, which
may result in substantial losses to a stockholder.
If we are successful in acquiring an operating
business and if a public market for our common stock develops, it may be characterized by significant price volatility when compared
to seasoned issuers. We expect that if we succeed in acquiring an operating business our share price will continue to be more volatile
than a seasoned issuer for the indefinite future. Fluctuations in share price could be based on various factors in
addition to those otherwise described in this report, including:
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The operating performance of the business we acquire and the performance of its competitors;
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The public’s reaction to our press releases, our other public announcements and our filings with the Securities and Exchange Commission;
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Changes in earnings estimates of the business that we acquire or recommendations by research analysts who follow us or other companies in industry of the business that we acquire;
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Variations in general economic conditions;
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The number of shares of our company’s common stock that are publicly traded in the future;
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Actions of our existing stockholders, including sales of common stock by our directors and executive officers;
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The arrival or departure of key personnel; and
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Other developments affecting us, the industry of the company we may acquire or its competitors.
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Many of these factors are beyond our control
and may decrease the market price of our common stock, regardless of our operating performance and financial condition.
The market price of our common stock
may decline if a substantial number of shares of our common stock are sold at once or in large blocks.
There is presently no active public market
for our common stock. If an active public market for our shares develops in the future, many of our stockholders may,
subject only to the volume, manner of sale and notice requirements of Rule 144 of the Securities Act of 1933 in the case of some
stockholders, desire to sell their shares. Sales of a substantial number of these shares in the public market, or the perception
that these sales could occur, could cause the market price of our common stock to decline. In addition, the sale of these shares
could impair our ability to raise capital through the sale of additional equity securities.
Future issuance
of our common stock could dilute the interests of existing stockholders.
We may issue additional
shares of our common stock in the future. The issuance of a substantial amount of common stock could have the effect of substantially
diluting the interests of our stockholders. In addition, the sale of a substantial amount of common stock in the public market,
either in the initial issuance or in a subsequent resale by the target company in an acquisition which received such common stock
as consideration or by investors who acquired such common stock in a private placement could have an adverse effect on the market
price of our common stock.
We have no plans to pay dividends.
To date, we have paid no cash dividends on our common shares. For the foreseeable future, earnings generated
from the operations of any business that we may acquire in the future will be retained for use in our business and not to pay dividends.
The application
of the Securities and Exchange Commission’s “penny stock” rules to our common stock could limit trading activity
in the market, and our stockholders may find it more difficult to sell their stock.
It is expected
our common stock will be trading at less than $5.00 per share and is therefore subject to the SEC penny stock rules. Penny stocks
generally are equity securities with a price of less than $5.00. Penny stock rules require a broker-dealer, prior to a transaction
in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information
about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and
offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly
account statements showing the market value of each penny stock held in the customer’s account. The broker-dealer must also
make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s
written agreement to the transaction. These requirements may have the effect of reducing the level of trading activity, if any,
in the secondary market for a security that becomes subject to the penny stock rules. The additional burdens imposed upon broker-dealers
by such requirements may discourage broker-dealers from effecting transactions in our securities, which could severely limit their
market price and liquidity of our securities. These requirements may restrict the ability of broker-dealers to sell our common
stock and may affect the ability of a stockholder to resell our common stock.
We incur
increased costs as a public company which may affect the profitability of any business we may acquire in the future.
As a public company, we incur significant
legal, accounting and other expenses that we did not incur as a private company. We are subject to the SEC’s rules and regulations
relating to public disclosure. SEC disclosures generally involve a substantial expenditure of financial resources. Compliance with
these rules and regulations will significantly increase our legal and financial compliance costs and some activities will
become more time-consuming and costly. Management may need to increase compensation for senior executive officers, engage additional
senior financial officers who are able to adopt financial reporting and control procedures, allocate a budget for an investor and
public relations program, and increase our financial and accounting staff in order to meet the demands and financial reporting
requirements as a public reporting company. Such additional personnel, public relations, reporting and compliance costs may negatively
impact our financial results.