EOSS EOS Inc (PK)

RISK FACTORS

Investing in our securities includes a high degree of risk. Prior to making a decision about investing in our securities, you should consider carefully the specific factors discussed below, together with all of the other information contained in this prospectus. If any of the following risks actually occurs, our business, financial condition, results of operations and future prospects would likely be materially and adversely affected. This could cause the market price of our Common Stock to decline and could cause you to lose all or part of your investment.

RISKS RELATED TO OUR BUSINESS AND INDUSTRY

We have only a limited history upon which an evaluation of our prospects and future performance can be made, and have incurred losses in recent periods. Since we have a limited operating history, it may be difficult to predict our future operating results.

We were incorporated in the State of Nevada on April 3, 2015, and as a result, we have only a limited history upon which an evaluation of our prospects and future performance can be made, and have no history of profitable operations on a consolidated basis. We may continue to sustain losses in the future as we implement our business plan. There can be no assurance that we will ever regain profitability. Investors should evaluate an investment in us in light of the uncertainties encountered by developing companies in a competitive environment. Our business is dependent upon the implementation of our business plan. We may not be successful in implementing such plan, and cannot guarantee that, if implemented, we will ultimately be able to attain profitability.

We will need to obtain additional financing to fund our operations.

We will need additional capital in the future to continue to execute our business plan. In that case, we would be dependent upon additional capital in the form of either debt or equity to continue our operations and commercialize our products. We may not be able to arrange enough investment within the time the investment is required, or, if it is arranged, that it will be on favorable terms.

Failure to raise the necessary capital could restrict our growth, limit our development of new products, and hinder our ability to compete.

Any of these aforementioned consequences would have a materially adverse effect on our business, operations, and financial position. If we cannot obtain the needed capital, we may not be able to become profitable, and may have to curtail or cease our operations.

We have incurred losses, and we anticipate that we will continue to incur losses in the future.

For the three and six months ended June 30, 2019, our net losses were $153,460, and $170,432, respectively, compared to net income of $178,033 and $116,175, respectively, for the corresponding periods in the preceding year. We anticipate continuing to incur substantial additional losses over at least the next twelve months due to, among other factors, our business development of the water purifying machine project in Shanghai, China. We may never regain profitability, and, even if we do, we may not be able to sustain being profitable.

We currently have no customers for the ceramic speakers we plan to sell and no rights to the technology.

Although certain potential purchasers of the ceramic speakers A-Best is developing have tested the product, we need to make certain technical improvements potential purchasers have requested, and we have no commitments to purchase any speakers. While some technologies of the A-Best speakers are protected by certain patents, neither we nor A-Best currently has a license of or rights to such patents. Our failure to make the required technical improvements to and/or to find customers for the A-Best speakers will materially adversely impact our business plan to increase our revenues. In addition, failure to obtain enforceable rights to the technology, we would not be able to sell the speakers without potentially infringing on the rights of the patent holders.

Our acquisition of A-Best may never be consummated.

Although we have entered into a stock purchase agreement pursuant to which we would acquire 31% of the outstanding equity interests in A-Best (the “Acquisition”) and thereupon own 51% of the outstanding equity interests in A-Best, there can be no assurance this acquisition will ever be consummated as expected or at all. In particular, we need to obtain shareholder approval to amend our articles of incorporation to increase the number of authorized shares of our Common Stock to issue 10,000,000 shares as the Stock Consideration under the Stock Purchase Agreement.

Our proposal to develop a business of distributing household water purifying machines may not be successful.

Although we had marketed and distributed household water purifying machines in the past and have experience in this market, currently we have not identified a water purification product we would sell in the future, and have no commitments from either potential suppliers or purchasers. We are actively negotiating with a real estate company based in Shanghai, China, to install and maintain water purifying systems in commercial and office buildings that it develops in the future; however, there can be no assurance that such negotiations will result in any agreement or commitment. In addition, even if we are able to implement the business plan as expected, we cannot assure you that the water purification project will generate income and gross profits as projected above. Failure to find both sources and customers for water purifying machines will materially adversely impact our business plan to increase our revenues.

We may not be successful in identifying new products to market and distribute.

While we constantly seek new products to market and distribute in the Asia market, there can be no assurance that we will be able to identify, obtain, market or sell any new products on a profitable basis, or at all. Even if we are able to select new products that are deemed appealing to the consumers in certain regions, we may not be able to purchase the new products from the suppliers at competitive prices or find reliable wholesale distribution channel.

We are subject to import and export regulations in Taiwan, and any adverse regulatory action may materially adversely affect our financial condition and business operations.

We import dietary supplements and skin care merchandise from the U.S. and export dietary supplements and skin care products outside Taiwan to Hong Kong and mainland China. Our business is subject to Import and export regulations in Taiwan and other jurisdictions where our products come from or are transported to. Any change in import and export laws and regulations in the pertinent jurisdictions may impose administrative and financial burdens to our operations. In addition, any adverse regulatory actions may delay our business transactions, divert our management attention to ordinary operations and therefore materially and adversely affect our financial condition and performance results.

Instability in international markets, or foreign currency fluctuations could adversely affect our results of operations.

We generate a significant amount of our revenue from outside the United States. As a result, we face currency and other risks associated with our international sales. We are exposed to foreign currency exchange rate fluctuations due to transactions denominated primarily in [NTD], which may potentially reduce the U.S. dollars we receive for sales denominated in any of these foreign currencies, and/or increase the U.S. dollars we report as expenses in these currencies, thereby affecting our consolidated results of operations. Fluctuations between the currencies in which we do business have caused and will continue to cause foreign currency transaction gains and losses. We cannot predict the effects of currency exchange rate fluctuations upon our future operating results because of the number of currencies involved, the variability of currency exposures, and the volatility of currency exchange rates.

In addition to foreign currency exchange rate fluctuations, there are a number of additional risks associated with our international operations, including those related to:

We are subject to anti-bribery, anti-corruption, and anti-money laundering laws, including the U.S. Foreign Corrupt Practices Act, as well as export control laws, customs laws, sanctions laws, and other laws governing our operations. If we fail to comply with these laws, we could be subject to civil or criminal penalties, other remedial measures, and legal expenses, which could adversely affect our business, results of operations, and financial condition.

With our international operations, we will be exposed to trade and economic sanctions and other restrictions imposed by the United States, the European Union, and other governments and organizations. The U.S. Departments of Justice, Commerce, State, and Treasury, and other federal agencies and authorities have a broad range of civil and criminal penalties they may seek to impose against corporations and individuals for violations of economic sanctions laws, export control laws, the U.S. Foreign Corrupt Practices Act (FCPA), and other federal statutes and regulations, including those established by the Office of Foreign Assets Control (OFAC). Under these laws and regulations, as well as other anti-corruption laws, anti-money laundering laws, export control laws, customs laws, sanctions laws, and other laws governing our operations, various government agencies may require export licenses, may seek to impose modifications to business practices (including cessation of business activities in sanctioned countries or with sanctioned persons or entities, and modifications to compliance programs) that may increase compliance costs, and may subject us to fines, penalties, and other sanctions. A violation of these laws or regulations would negatively affect our business, financial condition, and results of operations.

We do not have any policies and procedures designed to ensure compliance by us and our directors, officers, employees, representatives, consultants, and agents with the FCPA, OFAC restrictions, and other export control, anti-corruption, anti-money-laundering, and anti-terrorism laws and regulations. We may implement any policies or procedures regarding these issues in the near future. We cannot assure you, however, that our policies and procedures are or will be sufficient, or that directors, officers, employees, representatives, consultants, and agents have not engaged and will not engage in conduct for which we may be held responsible; nor can we assure you that our business partners have not engaged and will not engage in conduct that could materially affect their ability to perform their contractual obligations to us, or even result in our being held liable for such conduct. Violations of the FCPA, OFAC restrictions, or other export control, anti-corruption, anti-money laundering, and anti-terrorism laws or regulations may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could have a materially adverse effect on our business, financial condition, and results of operations.

We may not be able to compete effectively with larger companies in the resale and distribution space with greater resources and market recognition.

The resale and distribution industry in Taiwan is highly competitive and evolves from time to time as the technologies and consumer trends change. Significant competitive factors in our industry include exclusive and diversified wholesale channels, well-trained sales personnel, competitive pricing, and appealing products.

We are a very small distribution company compared to other companies that we are competing against. Many of our current and potential competitors have substantially greater financial, technical and human resources than we do and significantly more experienced in the marketing, discovery and development of products, which could place us at a significant competitive disadvantage or deny us marketing exclusivity rights. Typically, our competitors will most likely have more capital resources to support their products than we do.

We anticipate that we will face intense and increasing competition when and as A-Best speakers enter the markets, as advanced technologies become available. We consider companies that sell and distribute speakers for consumers, households and industries our competitors.

We sell the majority of the products we purchase to Fortune King and substantially rely on Fortune King’s distribution channel. Fortune King and we have renewed the Fortune King Product Supply Agreement, which remains in full force and effect until September 30, 2021. However, the Fortune King Product Supply Agreement does not provide us any right to sell any products to Fortune King in a certain volume or at a certain price. If Fortune King decides to make purchases from another source or Fortune King’s customers reduce their orders of the products we sell, our sales volume will decline significantly. From time to time, we may have to reduce our resale prices to Fortune King on a case-by-case basis and therefore our revenue would be adversely affected with the assumption of the same volume.

We do not manufacture the products we sell, and we rely on third-party manufacturers and suppliers to produce our products.

We do not own or operate manufacturing facilities for the production of the products we sell, and we lack the resources and the capabilities—and have no intention—to do so. We currently rely on and expect to do so for the foreseeable future third-party manufacturers and/or suppliers to supply our products. Reliance on third-party manufacturers and suppliers entails risks to which we would not be subject if we manufactured our products ourselves, including:

If we do not maintain our key manufacturing and/or supplier relationships, we may fail to find replacement manufacturers or suppliers, and we do not intend to develop our own manufacturing capabilities. If we do find replacement manufacturers or suppliers, we may not be able to enter into agreements with them on terms and conditions favorable to us, and there could be a substantial delay before we could find other sources or other products to sell. The FDA and other foreign regulatory authorities require manufacturers of our A.C. Products at the facilities with the certified good manufacturing practice (“cGMP”). The FDA and corresponding foreign regulators also inspect these facilities to confirm compliance with current standards. Contract manufacturers may face manufacturing or quality control problems causing drug substance production and shipment delays, or a situation where the contractor may not be able to maintain compliance with the applicable good manufacturing practice requirements. Any failure to comply with such requirements, or other FDA and comparable foreign regulatory requirements, could adversely affect our ability to obtain and sell our products. 

We depend on single-source suppliers for some of the products we sell.

Some of our products are currently provided by only one vendor, or a single-source supplier. In addition, we do not have long-term contracts with our third-party suppliers of some of the products we sell, and we do not carry a significant inventory of most of our products. Establishing additional or replacement suppliers for these products could take a substantial amount of time. We may also have difficulty obtaining similar products from other suppliers that are acceptable to the FDA or foreign regulatory authorities. Furthermore, since some of these suppliers are located in the United States and we are located in Taiwan, we are subject to export and import laws and customs and tariff regulations, which could complicate and delay shipments to us.

If we must switch to replacement suppliers, we will face delays, and the delivery of our products could be interrupted for an extended period. Our dependence upon others for the manufacture of our products may adversely affect our future profit margins.

Laws and regulations that could affect the business in which we operate may be enacted, which could result in a delay or cessation of our marketing and sales activities, or the imposition of additional costs that could hinder our ability to achieve and maintain profitable operations.

Current laws and regulations with respect to our business, and additional laws and regulations that may be enacted in the future, could impose new and/or unexpected operational considerations or constraints upon us. Complying with existing laws or regulations may require significant time and resource allocation. We must remain cognizant of the legislative and regulatory landscape in the countries in which we operate. Compliance with these regulations, when applicable, increases the research and development and production costs, and could make our proposed products and services less attractive to potential customers.

Because we sell and distribute all of our products outside of the U.S. and purchase some products in the U.S., the Company is subject to the risks of doing business internationally, including periodic foreign economic downturns and political instability, which may adversely affect the Company’s revenue and cost of doing business in Taiwan.

We sell and distribute all of our products outside the U.S. and purchase some products in the U.S. U.S. or Asian economic downturns may affect our results of operations in the future. Additionally, other facts relating to the operations of the Company’s business outside of the U.S. may have a material adverse effect on the Company’s business, financial condition and results of operations, including:

As the Company continues to operate its business globally, its success will depend in part, on its ability to anticipate and effectively manage these risks. The impact of any one or more of these factors could materially and adversely affect the Company’s business, financial condition and results of operations.

We depend on our key management personnel for our future success.

Our success depends largely on the skills of our key management and sales and marketing personnel. The loss of one or more of our key management and sales and marketing personnel may materially and adversely affect business and results of operations. We do not maintain key person insurance for any of our employees. We cannot guarantee that we will be able to replace any of our key management personnel in the event that their services become unavailable.

 The lease for our principal office in Taipei may be terminated due to our use of the premises.  

We have a lease agreement (the “Taipei Lease”) for our principal office in Taipei for a period of two years ending June 14, 2021. Article 8 of the Taipei Lease provided that the leased premises should be used for residential purposes only; however, we use the premises for business operations. The lessor of the Taipei Lease shall have the right to terminate such Lease as stated therein. If the lessor of our Taipei Lease chooses to do so, we will have very limited time to find a new space for our office and we cannot ensure that we will be able to find a new space successfully or on commercially reasonable terms. Any abrupt changes of our Taipei Lease may cause material disturbance to our business and therefore adversely affect the results of our operations.

Our executive officers beneficially own a significant percentage of our outstanding capital stock, and will have the ability to significantly influence our affairs.

Our chief executive officer, He-Siang Yang, beneficially owns approximately 13.5% of our issued and outstanding common stock, and our Director and General Manager, Yu Cheng Yang, beneficially owns approximately 40.5% of our issued and outstanding common stock. Mr. He-Siang Yang is the father of Mr. Yu Cheng Yang. By virtue of their holdings, these persons may significantly influence the election of the members of our board of directors, our management, and our affairs, and other corporate transactions (such as mergers, consolidations, or the sale of all or substantially all of our assets) that are submitted to shareholders for approval, and that may not be favorable from our standpoint or that of our other shareholders.

We only have a limited number of employees to manage and operate our business.

As of the date of this prospectus, we employ a total of nine full-time employees. We cannot assure you that we will be able to retain adequate staffing levels to run our operations and/or to accomplish all of the objectives that we otherwise would seek to accomplish.

We may be subject to product liability claims, and may not have sufficient product liability insurance to cover any such claims, which may expose us to substantial liabilities.

We may be exposed to product liability claims from users of our products. [We currently do not have any product liability insurance.] It is possible that any product liability insurance coverage we obtain will be insufficient to protect us from future claims. Further, we may not be able to obtain or maintain insurance on acceptable terms, or guarantee that such insurance would be sufficient to cover any potential product liability claim or recall. Failure to obtain or maintain sufficient insurance coverage could have a materially adverse effect on our business, prospects, and results of operations if claims are made that exceed our coverage.

We are an “emerging growth company,” and the reduced disclosure requirements applicable to emerging growth companies may make our common stock less attractive to investors.

We qualify as an “emerging growth company” under the JOBS Act. As a result, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements. For so long as we are an emerging growth company, we will not be required to:

In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.

For as long as we continue to be an “emerging growth company,” we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to “emerging growth companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of Sarbanes-Oxley of 2002, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

Notwithstanding the above, we are also currently a “smaller reporting company.” Similar to “emerging growth companies”, “smaller reporting companies” are able to provide simplified executive compensation disclosures in their filings; are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting; are not required to conduct say-on-pay and frequency votes until annual meetings ; and have certain other decreased disclosure obligations in their SEC filings, including, among other things, only being required to provide two years of audited financial statements in annual reports. Decreased disclosures in its SEC filings due to its status as an “emerging growth company” or “smaller reporting company” may make it harder for investors to analyze the Company’s results of operations and financial prospects.

If we fail to maintain proper and effective internal control over financial reporting in the future, our ability to produce accurate and timely financial statements could be impaired, which could harm our operating results.

Pursuant to Section 404 of the Sarbanes-Oxley Act, our management is required to report upon the effectiveness of our internal control over financial reporting. When and if we become a “large accelerated filer” or an “accelerated filer” and are no longer a “smaller reporting company,” each as defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”), our independent registered public accounting firm will be required to attest to the effectiveness of our internal control over financial reporting. For so long as we remain a smaller reporting company, however, we intend to take advantage of certain exemptions from various reporting requirements that are applicable to smaller reporting companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404. Once we are no longer a smaller reporting company, or if, prior to such date, we opt to no longer take advantage of the applicable exemption, we will be required to include an opinion from our independent registered public accounting firm on the effectiveness of our internal controls over financial reporting. The rules governing the standards that must be met for management to assess our internal control over financial reporting are complex and require significant documentation, testing, and possible remediation.

If we discover material weaknesses or other deficiencies in our internal control and accounting procedures, our stock price could decline significantly, and raising capital could be more difficult.

If we fail to comply with the rules under the Sarbanes-Oxley Act of 2002 related to disclosure controls and procedures, or if we fail to remediate the material weaknesses or other deficiencies in our internal control and accounting procedures in a timely fashion, our stock price could decline significantly, and raising capital could be more difficult. Moreover, effective internal controls are necessary for us to produce reliable financial reports, and are important to helping prevent financial fraud. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our common stock could drop significantly. In addition, we cannot be certain that material weaknesses or significant deficiencies in our internal controls will not be discovered in the future.

Our internal computer systems, or those of our third-party service providers, licensees, licensors, collaborators, or other contractors or consultants, may fail or suffer security breaches, which could result in a material disruption in our business and operations.

Despite the implementation of security measures, our internal computer systems and those of our current and future service providers, licensees, licensors, collaborators, and other contractors and consultants are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war, and telecommunication and electrical failures. While we are not aware of any such material system failure, accident, or security breach to date, if such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our development programs and business operations. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liabilities.

If we are unable to maintain our sales and marketing capabilities, our business may be harmed.

We have a very small sales and marketing staff. To be successful in selling our products, we must have a sufficient sales and marketing infrastructure. Our sales force competes with the experienced and well-funded marketing and sales operations of our larger and more established competitors.

We depend on our officers, and if we are not able to retain them or recruit additional qualified personnel, our business will suffer.

Due to the specialized knowledge each of our officers possesses with respect to our business and operations, the loss of service of any of our officers could delay or prevent the successful implementation of our business plan. Each of our officers may terminate their employment without notice and without cause or good reason. We currently do not have any employment agreements with any of the officers or employees.

We may become subject to claims of infringement of the intellectual property rights of others, which could prohibit us from developing our treatment, require us to obtain licenses from third parties or to develop non-infringing alternatives, and subject us to substantial monetary damages.

We currently do not own or have any right in any patents. Third parties could assert that our products infringe upon their patents or other intellectual property rights. Whether a process, product or technology infringes upon a patent or other intellectual property involves complex legal and factual issues, the determination of which is often uncertain. We cannot be certain that we will not be found to have infringed upon the intellectual property rights of others. Because patent applications may remain unpublished for certain periods of time and may take years to be issued as patents, there may be applications now pending of which we are unaware, and/or that do not currently contain claims of concern but may later result in issued patents that our products will infringe upon. There may be existing patents that our products infringe upon, of which infringement we are not aware. Third parties could also assert ownership over our trademarks and other intellectual property. Such an ownership claim could cause us to incur significant costs to litigate the ownership issues. If an ownership claim by a third party were upheld as valid, we may be unable to obtain a license from the third party on acceptable terms, to continue to use or sell technology, trademarks or other intellectual property free from claims by that third party of infringement upon the third party’s intellectual property. Intellectual property law in some jurisdictions outside the United States is uncertain, and, in many countries, is currently undergoing review and revisions. The laws of some countries do not protect some intellectual property rights to the same extent as United States laws.

RISKS RELATED TO OUR COMMON STOCK

Our shares are very thinly traded with wide share price fluctuations, low share process, and minimal liquidity.

Our shares of common stock began trading on the OTCQB market under the symbol “EOSS” since January, 2017, and have experienced limited trading activity. The share price may be volatile, with wide fluctuations in response to several factors, including:

In addition, if our shares are quoted on another trading platform or exchange for which we qualify, our share price may be affected by factors that are unrelated or disproportionate to our operating performance. Our share price might be affected by general economic, political, and market conditions such as recessions, interest rates, or international currency fluctuations. In addition, stocks traded over the OTC Markets quotation system are usually thinly traded, highly volatile, and not followed by analysts. These factors, which are not under our control, may have a material effect on our share price, and cause the share price to drop below the price you pay in this offering.

Because we can issue additional shares of common stock, purchasers of our common stock may suffer immediate dilution, and may experience further dilution in the future.

We are authorized to issue up to 75,000,000 shares of common stock. As of October 1, 2019, 74,122,997 shares of common stock were issued and outstanding. Our board of directors has the authority to mandate the issuance of additional shares of common stock without the consent of any of our shareholders as long as we have enough authorized common stock. Consequently, our shareholders may experience further dilution of their ownership in the Company in the future, which could have an adverse effect on the trading market for our common stock. We are in the process of acquiring the control stake in A-Best and will need the approval of our shareholders to increase the number of authorized shares of our Common Stock to consummate the transactions contemplated in the Stock Purchase Agreement. When and if we can and do issue additional shares of our Common Stock pursuant to the Stock Purchase Agreement with A-Best, the current majority shareholder of A-Best, our existing shareholders may suffer immediate dilution.

We have not paid cash dividends in the past, and do not expect to pay dividends in the future. Any return on investment may be limited to the value of our common stock.

We have never paid cash dividends on our common stock, and do not anticipate doing so in the foreseeable future. The payment of dividends on our common stock will depend on earnings, financial condition, and other business and economic factors affecting us at such time as our board of directors may consider relevant. If we do not pay dividends, our common stock may be less valuable because a return on your investment will only occur if our stock price appreciates.

If we are not successful in listing our common stock on the Nasdaq Capital Market or other national securities exchanges, our common stock is deemed a “penny stock,” which would make it more difficult for our investors to sell their shares.

Our common stock is subject to the “penny stock” rules adopted under Section 15(g) of the Securities Exchange Act. The penny stock rules generally apply to companies whose common stock is not listed on the Nasdaq Capital Market or other national securities exchanges, and trades at less than $4.00 per share (other than companies that have had average revenue of at least $6,000,000 for the last three years, or that have tangible net worth of at least $5,000,000 ($2,000,000 if the company has been operating for three or more years). These rules require, among other things, that brokers who trade penny stocks to persons other than “established customers” complete certain documentation, make suitability inquiries of investors, and provide investors with certain information concerning trading in the security, including a risk disclosure document and quote information under certain circumstances. Many brokers have decided not to trade penny stocks because of the requirements of the penny stock rules, and, as a result, the number of broker-dealers willing to act as market makers in such securities is limited. If we remain subject to the penny stock rules for any significant period, it could have an adverse effect on the market, if any, for our securities. If our securities are subject to the penny stock rules, investors will find it more difficult to dispose of our securities. We intend to apply to have our common stock listed on the Nasdaq Capital Market under the symbol “[ ].” Our current common stock price does not meet the minimum bid price requirement of the Listing Rules of the Nasdaq Capital Market. We may effect a reverse stock split in the future to enhance our stock trading price. However, there is no guarantee that our common stock price will meet the minimum bid price requirement of the Listing Rules of the Nasdaq Capital Market after the reverse stock split. We cannot provide any assurance whether and when such listing may be achieved.

Our stock price may be volatile; you may not be able to resell your shares at or above your purchase price.

The market prices for our securities and the securities of companies similar to ours have been highly volatile, with price and volume fluctuations, and may continue to be highly volatile in the future. The following factors, in addition to other risk factors described in this section, may have a significant impact on the market price of our common stock, some of which are beyond our control:

Anti-takeover provisions may impede the acquisition of our Company.

Certain provisions of the Nevada Revised Statutes have anti-takeover effects and may inhibit a non-negotiated merger or other business combination. These provisions are intended to encourage any person interested in acquiring us to negotiate with, and to obtain the approval of, our board of directors in connection with such a transaction. But certain of these provisions may discourage a future acquisition of us, including an acquisition in which the stockholders might otherwise receive a premium for their shares. As a result, stockholders who might desire to participate in such a transaction may not have the opportunity to do so, which could cause our stock price to decline.

RISKS RELATED TO THIS OFFERING

Investors in this offering will suffer immediate and substantial dilution.

Because the price per share of our common stock being offered is substantially higher than the net tangible book value per share of our common stock, you will suffer substantial dilution in the net tangible book value of the common stock you purchase in this offering. If you purchase shares of common stock in this offering, you will suffer immediate and substantial dilution of $[______] per share at minimum, or $[______] per share at maximum in the net tangible book value of the common stock. See the section entitled “Dilution” below for a more detailed discussion of the dilution you will incur if you purchase common stock in this offering. 

Management will have broad discretion as to the use of the net proceeds from this offering, and we may not use these proceeds effectively.

Our management will have broad discretion in the application of the net proceeds from this offering, and could spend the proceeds in ways that do not improve our results of operations or enhance the value of our common stock. Accordingly, you will be relying on the judgment of our management with regard to the use of these net proceeds, and you will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used appropriately. Our failure to apply these funds effectively could have a materially adverse effect on our business and cause the price of our common stock to decline.

Future sales or issuances of our common stock may cause the market price of our common stock to decline.

The sale of substantial amounts of our common stock, whether directly by us or in the secondary market by existing security holders (including holders of our outstanding warrants and convertible debt), as well as the perception that such sales could occur, or the availability for future sale of shares of our common stock or securities convertible into (or exchangeable or exercisable for) our common stock could materially and adversely affect the market price of our common stock, and our ability to raise capital through future offerings of equity or equity-related securities. Any such sales may result in significant dilution to our existing shareholders, including you. We cannot assure you that we will be able to sell shares or other securities in any other offering at a price per share that is equal to or greater than the price per share paid by investors in this offering. In addition, investors purchasing shares or other securities in the future could have rights superior to existing stockholders, which will result in additional dilution to you.

There is no guarantee that we will be accepted for listing on the Nasdaq Capital Market. If we are accepted, but are not at any point able to comply with the applicable continued listing requirements or standards of the Nasdaq Capital Market, the Nasdaq Capital Market could delist our common stock.

We have applied to have our common stock listed on the Nasdaq Capital Market under the symbol “[____]”. Although we believe we will satisfy the Nasdaq Capital Market listing requirements, no assurance can be given that such listing will be achieved in a timely manner, or at all. In the event we successfully list our common stock on the Nasdaq Capital Market, in order to maintain that listing, we must satisfy minimum financial and other continued listing requirements and standards, including those regarding director independence and independent committee requirements, minimum stockholders’ equity, minimum share price, and certain corporate governance requirements. There can be no assurances that we will be able to comply with the applicable listing standards.

In the event that our common stock is delisted from the Nasdaq Capital Market and is not eligible to be listed on another national securities exchanges, trading of our common stock could be conducted in the over-the-counter market, or on an electronic bulletin board established for unlisted securities such as the OTC Pink or OTCQB. In such event, it could become more difficult to dispose of or obtain accurate price quotations for our common stock, and there would likely also be a reduction in our coverage by securities analysts and the news media, which could cause the price of our common stock to decline further. Also, it may be difficult for us to raise additional capital if we are not listed on a major exchange.

If our common stock is not listed on a national securities exchange, compliance with applicable state securities laws may be required for current and subsequent offers, transfers, and sales of the shares of common stock offered hereby. 

The securities offered hereby are being offered pursuant to one or more exemptions from registration and qualification under applicable state securities laws. We intend to have our common stock listed on the Nasdaq Capital Market under the symbol “[____]”. Although we believe we will satisfy the Nasdaq Capital Market listing requirements, no assurance can be given that such listing will be achieved in a timely manner, or at all. No assurance can be given that our application will be approved, and as such we are not required to register or qualify in any state the subsequent offer, transfer, or sale of the common stock, until such time as is necessary. If our common stock does not qualify for listing on the Nasdaq Capital Market or is delisted from the Nasdaq Capital Market and is not eligible to be listed on another national securities exchange, subsequent transfers of the shares of our common stock offered hereby by U.S. holders may not be exempt from state securities laws. In such event, it will be the responsibility of the holder of shares to register or qualify the shares for any subsequent offer, transfer, or sale in the United States, or to determine that any such offer, transfer, or sale is exempt under applicable state securities laws.