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This
Offering involves a high degree of risk and
should be made by Investors who can afford to
lose their entire investment. Each Investor
should carefully consider the risks and
uncertainties discussed below in this Memorandum
before investing in the Company's securities.
The following does not purport to be exclusive
or to summarize all risks that may be associated
with purchasing or owning the Company's
securities. Each Investor is advised and
expected to conduct its own investigation into
the Company and to arrive at an independent
evaluation of an investment in the shares. This
Memorandum is provided for assistance only and
should be read in its entirety. This Memorandum
is not intended to be, and must not be taken as,
a recommendation to purchase any shares or as
the basis for an investment.
Disclosure Regarding Forward-looking
Statements
This Memorandum contains "forward looking
statements." The words "plans," "will,"
"believes," "proposed," "estimates,"
"anticipates, "expects" and similar expressions
are intended to identify such forward-looking
statements. These statements concern
expectations, beliefs, future plans and
strategies, anticipated events and trends and
similar matters related to the Company
concerning matters that are not historical
facts. Specifically, this Memorandum contains
forward-looking statements regarding, among
other things:
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The Company's proposed strategy and plan of
operations;
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future regulatory matters affecting the
Company
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the Company's products and services;
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the Company's potential customers;
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future developments in the Company’s
industry;
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plans of the Company to implement its
strategy,
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estimates of the capital needed by the
Company to implement its strategy and plan
of operations
These forward-looking statements reflect our
current views about future events and are
subject to risks, uncertainties and assumptions.
We wish to caution readers that certain
important factors may have affected and could in
the future affect our actual results and could
cause actual results to differ from those
expressed in any forward-looking statement. The
most important factors that could prevent us
from achieving our goals, and causing
assumptions underlying forward-looking
statements and the actual results to differ
materially from those expressed in or implied by
those forward-looking statements include, but
are not limited, the risk factors described
below.
COMPANY RISKS
Customers’ Lack of financial capacity May
Adversely Impact our Ability to Generate
Revenues.
We will Depend upon Developing grants, and Joint
Ventures/Licensing Agreements (Revenue Sharing
Alliances), to reduce costs and enhance
revenues.
We are Dependent upon our Ability to Educate the
Government, Their Personnel and establish
Strategic Alliances with Members in within the
Industrial Milieu.
Dependence upon Direct Marketing in order to
keep low infrastructure cost.
Our plan is to develop and maintain
relationships with agricultural industries and
residential builders by establishing direct
relationships with administrators and owners.
Revenue Model is New and May not Succeed
Our strategy is designed to create a profitable
revenue stream through the sale of our unique,
proprietary biotech product to strategic
alliance partners and through licensing
arrangements within the industry milieu, with
the licensees servicing the customer directly.
Our products, and services, marketed to the
relevant target audience, should enable us, if
successful, to generate multiple revenue streams
and consistent profitability derived from the
high gross profit margin proprietary products
and services. However, we are dependent upon our
establishing contractual relationships with the
Government, the agricultural industry and
independent residential builders and owners.
Marketing Strategy is New and We Depend upon
Acceptance of this Strategy.
We have developed what we believe is a highly
effective marketing strategy, built on a
proactive direct marketing campaign with large
facility management and companies that target
the sector for waste product treatment and
reformation . We believe that this will result
in a development of a marketing and distribution
network with extensive coverage of the Company’s
target market at a minimal expense, allowing the
Company to reach profitability. We believe that
our marketing strategy, which we will implement
initially in US and Canada, will permit us to
generate a large customer/end user base; however
there can be no assurance that our estimate
regarding acceptance of our products and
services will be correct.
While we do not Believe we have Competition,
Potential Competitors May Have Greater
Resources.
At
present, the provisioning for waste treatment
and “green” reformation of these
products into renewable fuel sources is
regionalized and, within a given geographic
region of operations, can be competitive.
However, we believe that there are no other
entities that provide scaled-down facilities
targeted at the small agricultural and
residential user. However, there are waste
treatment providers that may elect to enter into
this designated market if business if our model
is successful. We compete on the basis of
quality, cost-effectiveness and the increasingly
comprehensive and specialized nature of our
services, along with the expertise, technology
and professional support we offer. While we
believe that we will have a competitive
advantage by being the first in the market,
there can be no assurance that our assumptions
regarding our competitive position will be
proved to be correct.
We are Dependent upon our Founders
We are highly dependent upon the continued
services of Mr. Russell David Rothman, our
founder, director, chief executive officer and
scientific adviser. At present we do not have
key man insurance on Mr. Russell David Rothman
and our business would be materially adversely
affected if his services were not available to
the Company for any reason. In addition, our
success depends on our ability to attract and
retain qualified business alliances, financial
and scientific personnel to service the
facilities throughout the US, Canada and other
markets, the competition for which may become
intensive. We will also be dependent upon our
ability to hire and retain qualified management
and operational personnel. The loss of key
personnel or the inability to attract, retain or
motivate sufficient numbers of qualified
professionals could adversely affect our
business.
INVESTMENT RISKS
Investors’ Equity Interest Will Be
Substantially Diluted by Additional Issuances of
Shares of Common Stock
Each Investor who purchases shares pursuant to
this Memorandum will likely experience
substantial future dilution of his equity
interest in the Company, because we expect to
issue additional shares of our common stock (and
possibly other classes of our securities) in
connection with future financing, among other
dilutive events. Because there are no preemptive
rights or anti-dilution privileges associated
with the shares being offered hereby, you will
not have any rights to purchase our common stock
in connection with future issuances of common
stock by us or otherwise. As a result, in the
absence of such rights and privileges, your
percentage interest in the equity of the Company
will decrease as other shares of the Company's
common stock are issued. Furthermore, additional
shares of common stock may be issued by us in
the future (including shares issued for
services) for consideration at a price per share
less than the Offering price per share paid by
Investors in this Offering.
Management has Broad Discretion over the Use
of the Proceeds of this Offering.
The net proceeds to be received by us in
connection with this Offering, as set forth
under “Use of Proceeds” below and Appendix B,
are allocated to certain specific purposes,
including equipment purchases and leases,
general working capital, marketing expenses and
professional and consulting fees associated with
this Offering. While we believe that the net
Offering proceeds will be sufficient to meet our
financing requirements for the next 12 months,
Investors will be entrusting their funds to our
management, upon whose judgment they must
depend. Future events may require a reallocation
of the net proceeds of the Offering, which will
be based upon the business judgment of
management. The failure of management to apply
such funds effectively could have a material
adverse effect on our business, prospects,
financial condition and results of operations.
Investors should also understand that the
Company intends to utilize the proceeds from
subscriptions in our Offering as such
subscriptions are accepted. There is no minimum
or maximum subscription and management may in
its sole discretion accept or reject
subscriptions in whole or in part.
The Company Has Not and Does Not Anticipate
Paying Dividends.
The Company has not paid dividends on its common
stock since its incorporation and we do not
anticipate paying any dividends on the common
stock in the foreseeable future, if at all. We
intend to retain any earnings we receive to
finance the expansion of our business, to repay
any future indebtedness and to use for general
corporate purposes.
There Are Restrictions on Transferability of
and There Is No Market for the Shares Offered in
this Memorandum.
The shares being offered pursuant to this
Memorandum have not been registered under the
Act or the applicable securities laws of the
various states and none of these shares may be
resold or distributed unless they are registered
under the Act or an exemption from registration
is available under the Act and under applicable
state securities laws. There is no existing
public or other market for our shares and we do
not intend that any trading market shall
commence after completion of the Offering.
Therefore, it is not anticipated that an
Investor will be able to avail itself of the
ability to sell our shares pursuant to Rule 144
promulgated under the Act or otherwise.
The shares offered hereby will be deemed
"restricted shares" under the Act, and no public
sale of shares acquired pursuant to this
Offering, may be made absent registration of
such shares under the Act. Generally, sales may
be made pursuant to Rule 144 under the Act
provided that: (i) the Company is a reporting
company under the Securities Exchange Act of
1934 (the “Exchange Act”); and (ii) the Company
is current under its Exchange Act reporting
obligations, which includes the filing of an
annual report, quarterly reports and other
periodic reports under the Exchange Act. The
Company does not plan on becoming a reporting
company under the Exchange Act. In addition, no
assurance can be given that a public market for
the Company’s securities shall ever develop or
if developed shall be sustained in the future.
Further, there can be no assurance as to whether
the Company’s shares or other securities shall
be traded on any exchange or quotation system.
Further, an investment in the shares offered
hereunder is an illiquid investment and no
assurance can be given as to the ability of the
holders of such shares to dispose or otherwise
liquidate their position in the Company.
The Offering Price of the Shares Was
Arbitrarily Determined.
The Offering price per share was arbitrarily
determined by our management, was not the result
of any arms-length negotiation between the
Company and any investment banking firm and does
not bear any relationship to the assets, book
value, results of operations, net worth, or
other evaluation criteria applicable to the
Company and should not be considered an
indication of our actual value or the future
price of our shares. Shares of our common stock
were sold prior to this offering at a price
significantly less than the price per share in
this Offering and may in the future be offered
and sold or issued for services at a price per
share less than the price per share herein.
Our Chief Executive Officer, Whose Interests May
Differ from Other Shareholders, does not have
the Ability to Exercise Significant Control over
Us.
Mr. Russell David Rothman, President and CEO,
and his spouse, Jennifer Kehler, currently own a
significant amount (approximately 38%) of the
issued and outstanding common stock directly.
Accordingly, Mr. Russell David Rothman,
alongside with his spouse, Jennifer Kehler will
not be able to control all matters requiring
approval by our shareholders, including the
election of all directors and the approval of
significant corporate transactions, including a
change of control of our Company. In the event
that the offering is fully subscribed, Mr.
Russell D. Rothman and his spouse, Jennifer
Kehler, will have even less control via the
dilution.
Financial Projections
The financial projections in this Memorandum are
based on what management believes are reasonable
and achievable. They are arbitrary and there can
be no assurance that we will be able to achieve
our financial projections. Prospective investors
should not rely solely on these projections.
We cannot predict whether we will be
Successful; Our Business Model is New.
We are in the process of developing and refining
our business model and there is a risk that the
business model will be unsuccessful. As
currently proposed our business model depends
upon our ability to establish strategic
alliances for probable joint ventures and/or
licensing agreements to generate multiple
revenue streams. The potential profitability of
our business model is unproven, and, to be
successful, we must, among other things, develop
and market our proprietary products and services
to achieve broad market acceptance. Our business
model is substantially dependent upon such
acceptance. Moreover, there can be no assurance
that the industry/public will embrace our
business model or that the marketing of our
products and services will achieve broad market
acceptance sufficient to make our business
profitable or even viable. Accordingly, no
assurance can be given that our business model
will be successful or that we can sustain
revenue growth or achieve or sustain
profitability.
We May Incur Losses.
We may incur net losses, at least for our
initial year of operations and perhaps for the
foreseeable future, notwithstanding our
projections. The extent of these losses will
depend, in part, on the amount and rates of
growth in our revenue from our efforts in
establishing our revenue sharing model via joint
ventures/licensing and the costs of obtaining
these milestones. We expect our operating
expenses to increase, especially in the areas of
diversified prototype generation and marketing
thereto. Consequently, to achieve profitability
we will need to generate increased revenue. As a
result of our early stage of development, we
believe that period-to-period comparisons of our
operating results will not necessarily be
meaningful and that our results of operations
for any period should not be relied upon as an
indication of future performance. To the extent
that (a) revenue does not grow at anticipated
rates, (b) increases in our operating expenses
precede or are not subsequently followed by
commensurate increases in revenue or (c) we are
unable to adjust operating expense levels
accordingly, our business, prospects, financial
condition and results of operations will be
materially and adversely affected. There can be
no assurance that our operating losses will not
increase in the future or that we will ever
achieve or sustain profitability relative to
viability of the strategic alliances and related
performance of market penetration via inherent
node infrastructure of strategic partners.
We may Need Significant Additional Funds.
Assuming we generate $1,000,000 in gross
proceeds in this Offering, we believe that with
the net proceeds therefrom, together with
revenues generated from our operations, we will
have sufficient funds to meet our anticipated
cash needs for working capital, capital
expenditures and business expansion on a reduced
basis for the next 12 months assuming no
additional funds are needed. (Refer to Appendix
B”). Our belief is based on our business model,
which in turn is based on assumptions, which may
prove to be incorrect. As a result, our
financial resources may not be sufficient to
satisfy our capital requirements for this
period. We may need to raise additional funds.
If we raise additional funds through the
issuance of equity, equity-related or debt
securities, such securities may have rights,
preferences or privileges senior to those of the
rights of the common stock and our shareholders
may experience additional dilution. We cannot be
certain that additional financing will be
available to us on favorable terms, when
required, or at all. If adequate funds are not
available or not available on acceptable terms,
we may not be able to fund our expansion,
promote our brand as we desire, take advantage
of unanticipated acquisition opportunities,
develop or further enhance and/or optimize our
products and services or respond to competitive
pressures. To the extent that less than
$1,000,000 is raised in this Offering, our
ability to implement our business plan will be
affected as we will not have available all of
the funds necessary for marketing , development
of our projects, expanding our infrastructure,
capital expenditures, acquisitions and other
general corporate and working capital purposes.
We anticipate that we will require additional
funding in the form of debt, equity or any
combination following this 12-month period even
if $1,000,000 is generated in this Offering.
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