ITEM
1. DESCRIPTION OF BUSINESS
As
used in this annual report, the terms “we”, “us”, “our”, “the Company”, mean Balincan
International Inc. unless otherwise indicated.
Cautionary
Note Regarding Forward-Looking Statements
This
annual report contains forward-looking statements. These statements relate to future events or our future financial performance.
These statements often can be identified by the use of terms such as “may,” “will,” “expect,”
“believe,” “anticipate,” “estimate,” “approximate” or “continue,”
or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We
wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made.
Any forward-looking statements represent management’s best judgment as to what may occur in the future. However, forward-looking
statements are subject to risks, uncertainties, and important factors beyond our control that could cause actual results and events
to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim
any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such
statement or to reflect the occurrence of anticipated or unanticipated events.
The
results anticipated by any or all of these forward-looking statements might not occur. Important factors, uncertainties, and risks
that may cause actual results to differ materially from these forward-looking statements include those described in Item 1A. –
Risk Factors. We undertake no obligation to publicly update or revise any forward-looking statements, whether as the result of
new information, future events, or otherwise.
Description
of Business
Balincan
International Inc. f/k/a Alpine Auto Brokers, Inc.(“Balincan or the “Company”) was organized as Alpine Auto
Brokers, LLC in the state of Utah in December 2010. The Company sold automobiles and also provided dealer services,
for a fee.
The
Company was incorporated as Alpine Auto Brokers, Inc. on May 12, 2011, in the State of Nevada to locate and purchase used vehicles
at auctions, from private individuals, from other dealers and selling these vehicles specifically to consumers in Salt Lake City,
Utah. On January 1, 2014, the Company acquired 100 percent of the membership interests of Alpine Auto Brokers, LLC, a Utah Limited
Liability Company formed on December 10, 2010. The Company operated through its wholly-owned subsidiary Alpine Auto
Brokers, LLC.
The
acquisition was accounted for as a reverse recapitalization in which the operating entity’s historical financial statements
become those of the “accounting acquirer” in which historical operating results are presented from inception.
The
Company has been dormant since October 27, 2016.
On
August 18, 2021, the Eighth Judicial District Court in Clark County, Nevada Case No: A-20-816619-B appointed Custodian Ventures,
managed by David Lazar as the Company’s Receiver.
David
Lazar, 31, has been CEO and Chairman of the Company since August 18, 2021. David Lazar is a private investor. Mr. Lazar has been
a partner at Zenith Partners International since 2013, where he specializes in research and development, sales, and marketing.
From 2014 through 2015, David was the Chief Executive Officer of Dico, Inc., which was then sold to Peekay Boutiques. Since February
of 2018, Mr. Lazar has been the managing member of Custodian Ventures LLC, where he specializes in assisting distressed public
companies. Since March 2018, David has acted as the managing member of Activist Investing LLC, which specializes in active investing
in distressed public companies. David has a diverse knowledge of financial, legal, and operations management; public company management,
accounting, audit preparation, due diligence reviews, and SEC regulations.
Competition
and Market Conditions
We
will face substantial competition in our efforts to identify and pursue a business venture. The primary source of competition
is expected to be from other companies organized and funded for similar purposes, including small venture capital firms, blank
check companies, and wealthy investors, many of which may have substantially greater financial and other resources than we do.
In light of our limited financial and human resources, we are at a competitive disadvantage compared to many of our competitors
in our efforts to obtain an operating business or assets necessary to commence our operations in a new field. Additionally, with
the economic downturn caused by the coronavirus pandemic, many venture capital firms and similar firms and individuals have been
seeking to acquire businesses at discounted rates, and we therefore currently face additional competition and resultant difficulty
obtaining a business. We expect these conditions to persist at least until the economy recovers. Further, even if we are successful
in obtaining a business or assets for new operations, we expect there to be enhanced barriers to entry in the marketplace in which
we decide to operate as a result of reduced demand and/or increased raw material costs caused by the pandemic and other economic
forces that are beyond our control.
Regulation
As
of the date of this Report, we are required to file reports with the Securities and Exchange Commission (the “SEC”)
by Section 13 of the Securities Exchange Act of 1934 (the “Exchange Act”).
Depending
on the direction management decides to take and a business or businesses we may acquire in the future, we may become subject to
other laws or regulations that require us to make material expenditures on compliance including the increasing state-level regulation
of privacy. Any such requirements could require us to divert significant human and capital resources on compliance, which could
have an adverse effect on our future operating results.
Employees
As
of the date of this Report, we do not have employees. However, an entity controlled by our Chief Executive Officer provides part-time
consulting services to us without compensation.
ITEM
1A. RISK FACTORS
Risks
Relating to Our Business and Financial Condition
We
currently have no operations, and investors therefore have no basis on which to evaluate the Company’s future prospects.
We
currently have no operations and will be reliant upon a merger with or acquisition of an operating business to commence operations
and generate revenue. Because we have no operations and have not generated revenues, investors have no basis upon which to evaluate
our ability to achieve our business objective of locating and completing a business combination with a target business. We have
no current arrangements or understandings with any prospective target business concerning a business combination and may be unable
to complete a business combination in a reasonable timeframe, on reasonable terms, or at all. If we fail to complete a business
combination as planned, we will never generate any operating revenues.
We
may face difficulties or delays in our search for a business combination, and we may not have access to sufficient capital to
consummate a business combination.
We
may face difficulty identifying a viable business opportunity or negotiating or paying for any resulting business combination.
Economic factors that are beyond our control, including the COVID-19 pandemic and consequent economic downturn, as well as increased
competition for acquisitions of operating entities that we expect to encounter as a result thereof, may hinder our efforts to
locate and/or obtain a business that is suitable for our business goals at a price we can afford and on terms that will enable
us to sufficiently grow our business to generate value to our shareholders. We have limited capital, and we may not be able to
take advantage of any available business opportunities on favorable terms or at all due to the limited availability of capital.
There can be no assurance that we will have sufficient capital to provide us with the necessary funds to successfully develop
and implement our plan of operation or acquire a business we deem to be appropriate or necessary to accomplish our objectives,
in which case we may be forced to terminate our business plan and your investment in the Company could become worthless.
If
we are not successful in acquiring a new business and generating material revenues, investors will likely lose their investment.
If
we are not successful in developing a viable business plan and acquiring a new business through which to implement it, our investors’
entire investment in the Company could become worthless. Even if we are successful in combining with or acquiring the assets of
an operating entity, we can provide no assurances that the Company will be able to generate significant revenue therefrom in the
short-term or at all or that investors will derive a profit from their investment. If we are not successful, our investors will
likely lose their entire investment.
If
we cannot manage our growth effectively, we may not become profitable.
Businesses,
including development-stage companies such as ours and/or any operating business or businesses we may acquire, often grow rapidly,
and tend to have difficulty managing their growth. If we can acquire an operating business, we will likely need to expand our
management team and other key personnel by recruiting and employing experienced executives and key employees and/or consultants
capable of providing the necessary support.
We
cannot assure you that our management will be able to manage our growth effectively or successfully. Our failure to meet these
challenges could cause us to lose money, and your investment could be lost.
Because
we have limited capital, we may need to raise additional capital in the future by issuing debt or equity securities, the terms
of which may dilute our current investors and/or reduce or limit their liquidation or other rights.
We
may require additional capital to acquire a business. We may not be able to obtain additional capital when required. Future business
development activities, as well as administrative expenses such as salaries, insurance, general overhead, legal and compliance
expenses, and accounting expenses, will require a substantial amount of additional capital. The terms of securities we issue in
future capital raising transactions may be more favorable to new investors and may include liquidation preferences, superior voting
rights, or the issuance of other derivative securities, which could have a further dilutive effect on or subordinate the rights
of our current investors. Any additional capital raised through the sale of equity securities will likely dilute the ownership
percentage of our shareholders. Additionally, any debt securities we issue would likely create a liquidation preference superior
to that of our current investors and, if convertible into shares of Common Stock, would also pose the risk of dilution.
We
may be unable to obtain the necessary financing if and when required.
Our
ability to obtain financing, if and when necessary, may be impaired by such factors as the capital markets (both in general and
in the particular industry or industries in which we may choose to operate), our limited operating history, and current lack of
operations, the national and global economies, and the condition of the market for microcap securities. Further, economic downturns
such as the current global depression caused by the COVID-19 pandemic may increase our requirements for capital, particularly
if such economic downturn persists for an extended period of time or after we have acquired an operating entity, and may limit
or hinder our ability to obtain the funding we require. If the amount of capital we can raise from financing activities, together
with any revenues we may generate from future operations, is not sufficient to satisfy our capital needs, we may be required to
discontinue our development or implementation of a business plan, cancel our search for business opportunities, cease our operations,
divest our assets at unattractive prices or obtain financing on unattractive terms. If any of the foregoing should happen, our
shareholders could lose some or all of their investment.
Because
we are still developing our business plan, we do not have any agreement for a business combination.
We
have no current arrangement, agreement, or understanding with respect to engaging in a business combination with any specific
entity. We may not be successful in identifying and evaluating a suitable acquisition candidate or in consummating a business
combination. We are neutral as to what industry or segment for any target company. We have not established specific metrics and
criteria we will look for in a target company, and if and when we do we may face difficulty reaching a mutual agreement with any
such entity, including in light of market trends and forces beyond our control. Given our early-stage status, there is considerable
uncertainty and therefore inherent risk to investors that we will not succeed in developing and implementing a viable business
plan.
The
COVID-19 pandemic could materially adversely affect our financial condition, future plans, and results of operations.
This
COVID-19 pandemic has had a significant adverse effect on the economy in the United States and on most businesses. The Company
is not able to predict the ultimate impact that COVID -19 will have on its business; however, if the pandemic and government action
in response thereto impose limitations on our operations or result in a prolonged economic recession or depression, the Company’s
development and implementation of its business plan and our ability to commence and grow our operations, as well as our ability
to generate material revenue therefrom, will be hindered, which would have a material negative impact on the Company’s financial
condition and results of operations.
Because
we are dependent upon David Lazar, our Chief Executive Officer, and sole director to manage and oversee our Company, the loss
of him could adversely affect our plan and results of operations.
We
currently have a sole director and officer, David Lazar, who manages the Company and is presently evaluating a viable plan for
our future operations. We will rely solely on his judgment in connection with selecting a target company and the terms and structure
of any resulting business combination. The loss of our Chief Executive Officer 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. Further, because
Mr. Lazar serves as Chief Executive Officer and sole director and also holds a controlling interest in the Company’s Common
Stock, our other shareholders will have limited ability to influence the Company’s direction or management.
In
addition, although not likely, the officers and directors of an acquisition candidate may resign upon completion of a combination
with their business. The departure of a target’s key personnel could negatively impact the operations and prospects of our
post-combination business. The role of a target’s key personnel upon the completion of the transaction cannot be ascertained
at this time. Although we contemplate that certain or all members of a target’s management team may remain associated with
the target following a change of control thereof, there can be no assurance that all of such target’s management team will
decide to remain in place. The loss of key personnel, either before or after a business combination and including management of
either us or a combined entity could negatively impact the operations and profitability of our business.
Risks
Related to a Potential Business Acquisition
We
may encounter difficulty locating and consummating a business combination, including as a result of the competitive disadvantages
we have.
We
expect to face intense competition in our search for a revenue-producing business to combine with or acquire. Given the current
economic climate, venture capital firms, larger companies, blank check companies such as special purpose acquisition companies,
and other investors are purchasing operating entities or the assets thereof in high volumes and at relatively discounted prices.
These parties may have greater capital or human resources than we do and/or more experience in a particular industry within which
we choose to search. Most of these competitors have a certain amount of liquid cash available to take advantage of favorable market
conditions for prospective business purchasers such as those caused by the recent pandemic. Any delay or inability to locate,
negotiate and enter into a business combination as a result of the relative illiquidity of our current asset or other disadvantages
we have relative to our competitors could cause us to lose valuable business opportunities to our competitors, which would have
a material adverse effect on our business.
We
may expend significant time and capital on a prospective business combination that is not ultimately consummated.
The
investigation of each specific target business and any subsequent negotiation and drafting of related agreements, SEC disclosure,
and other documents will require substantial amounts of management’s time and attention and material additional costs in
connection with outsourced services from accountants, attorneys, and other professionals. We will likely expend significant time
and resources searching for, conducting due diligence on, and negotiating transaction terms in connection with a proposed business
combination that may not ultimately come to fruition. In such an event, all of the time and capital resources expended by the
Company in such a pursuit may be lost and unrecoverable by the Company or its shareholders. Unanticipated issues which may be
beyond our control or that of the seller of the applicable business may arise that force us to terminate discussions with a target
company, such as the target’s failure or inability to provide adequate documentation to assist in our investigation, a party’s
failure to obtain required waivers or consents to consummate the transaction as required by the inability to obtain the required
audits, applicable laws, charter documents and agreements, the appearance of a competitive bid from another prospective purchaser,
or the seller’s inability to maintain its operations for a sufficient time to allow the transaction to close. Such risks
are inherent in any search for a new business and investors should be aware of them before investing in an enterprise such as
ours.
Conflicts
of interest may arise between us and our shareholders, directors, or management, which may have a negative impact on our ability
to consummate a business combination or favorable terms or generate revenue.
Our
Chief Executive Officer, Mr. Lazar, is not required to commit his full time to our affairs, which may result in a conflict of
interest in allocating his time between managing the Company and other businesses in which he is or may be involved. We do not
intend to have any employees prior to the consummation of a business combination. Mr. Lazar is not obligated to contribute any
specific number of hours to our affairs, and he may engage in other business endeavors while he provides consulting services to
the Company. If any of his other business affairs require him to devote substantial amounts of time to such matters, it could
materially limit his ability to devote his time and attention to our business which could have a negative impact on our ability
to consummate a business combination or generate revenue.
It
is possible that we obtain an operating company in which a director or officer of the Company has an ownership interest in or
that he or she is an officer, director, or employee of. If we do obtain any business affiliated with an officer or director, such
business combination may be on terms other than what would be arrived at in an arms-length transaction. If any conflict of interest
arises, it could adversely affect a business combination or subsequent operations of the Company, in which case our shareholders
may see diminished value relative to what would have been available through a transaction with an independent third party.
We
may engage in a business combination that causes tax consequences to us and our shareholders.
Federal
and state tax consequences will, in all likelihood, be a significant factor in considering any business combination that we may
undertake. Under current federal law, such transactions may be subject to significant taxation to the buyer and its shareholders
under applicable federal and state tax laws. While we intend to structure any business combination so as to minimize the federal
and state tax consequences to the extent practicable in accordance with our business objectives, there can be no assurance that
any business combination we undertake will meet the statutory or regulatory requirements of a tax-free reorganization or similar
favorable treatment or that the parties to such a transaction will obtain the tax treatment intended or expected upon a transfer
of equity interests or assets. A non-qualifying reorganization, combination, or similar transaction could result in the imposition
of significant taxation, both at the federal and state levels, which may have an adverse effect on both parties to the transaction,
including our shareholders.
It
is unlikely that our shareholders will be afforded any opportunity to evaluate or approve a business combination.
It
is unlikely that our shareholders will be afforded the opportunity to evaluate and approve a proposed business combination. In
most cases, business combinations do not require shareholder approval under applicable law, and our Articles of Incorporation
and Bylaws do not afford our shareholders with the right to approve such a transaction. Further, Mr. Lazar, our Chief Executive
Officer, and sole director owns the vast majority of our outstanding Common Stock. Accordingly, our shareholders will be relying
almost exclusively on the judgment of our board of directors (“Board”) and Chief Executive Officer and any persons
on whom they may rely with respect to a potential business combination. In order to develop and implement our business plan, may
in the future hire lawyers, accountants, technical experts, appraisers, or other consultants to assist with determining the Company’s
direction and consummating any transactions contemplated thereby. We may rely on such persons in making difficult decisions in
connection with the Company’s future business and prospects. The selection of any such persons will be made by our Board,
and any expenses incurred or decisions made based on any of the foregoing could prove to be adverse to the Company in hindsight,
the result of which could be diminished value to our shareholders.
Because
our search for a business combination is not presently limited to a particular industry, sector, or any specific target businesses,
prospective investors will be unable to evaluate the merits or risks of any particular target business’s operations until
such time as they are identified and disclosed.
We
are still determining the Company’s business plan, and we may seek to complete a business combination with an operating
entity in any number of industries or sectors. Because we have not yet entered into any letter of intent or agreement to acquire
a particular business, prospective investors currently have no basis to evaluate the possible merits or risks of any particular
target business’s operations, results of operations, cash flows, liquidity, financial condition, prospects or other metrics
or qualities they deem appropriate in considering to invest in the Company. Further, if we complete a business combination, we
may be affected by numerous risks inherent in the operations of the business we acquire. For example, if we acquire a financially
unstable business or an entity lacking an established operating history, we may be affected by the risks inherent in the business
and operations of a new business or a development stage entity. Although our management intends to evaluate and weigh the merits
and risks inherent in a particular target business and make a decision based on the Company and its shareholders’ interests,
there can be no assurance that we will properly ascertain or assess all the significant risks inherent in a target business, that
we will have adequate time to complete due diligence or that we will ultimately acquire a viable business and generate material
revenue therefrom. Furthermore, some of these risks may be outside of our control and leave us with no ability to reduce the likelihood
that those risks will adversely impact a target business or mitigate any harm to the Company caused thereby. Should we select
a course of action, or fail to select a course of action, that ultimately exposes us to unknown or unidentified risks, our business
will be harmed and you could lose some or all of your investment.
Past
performance by our management and their affiliates may not be indicative of future performance of an investment in us.
While
our Chief Executive Officer has prior experience in advising businesses, his past performance, the performance of other entities
or persons with which he is involved, or the performance of any other personnel we may retain in the future will not necessarily
be an indication of either (i) that we will be able to locate a suitable candidate for our initial business combination or (ii)
the future operating results of the Company including with respect to any business combination we may consummate. You should not
rely on the historical record of him or any other of our personnel or their affiliates’ performance as indicative of our
future performance or that an investment in us will be profitable. In addition, an investment in the Company is not an investment
in any entities affiliated with our management or other personnel. While management intends to endeavor to locate a viable business
opportunity and generate shareholder value, there can be no assurance that we will succeed in this endeavor.
We
may seek business combination opportunities in industries or sectors that are outside of our management’s area of expertise.
We
will consider a business combination outside of our management’s area of expertise if a business combination candidate is
presented to us and we determine that such candidate offers an attractive opportunity for the Company. Although management intends
to endeavor to evaluate the risks inherent in any particular business combination candidate, we cannot assure you that we will
adequately ascertain or assess all the significant risks, or that we will accurately determine the actual value of a prospective
operating entity to acquire. In the event we elect to pursue an acquisition outside of the areas of our management’s expertise,
our management’s ability to evaluate and make decisions on behalf of the Company may be limited, or we may make material
expenditures on additional personnel or consultants to assist management in the Company’s operations. Investors should be
aware that the information contained herein regarding the areas of our management’s expertise will not necessarily be relevant
to an understanding of the business that we ultimately elect to acquire. As a result, our management may not be able to adequately
ascertain or assess all the significant risks or strategic opportunities that may arise. Accordingly, any shareholders in the
Company following a business combination could suffer a reduction in the value of their shares, and any resulting loss will likely
not be recoverable.
We
may attempt to complete a business combination with a private target company about which little information is available, and
such target entity may not generate revenue as expected or otherwise be compatible with us as expected.
In
pursuing our search for a business to acquire, we will likely seek to complete a business combination with a privately held company.
Very little public information generally exists about private companies, and the only information available to us prior to making
a decision may be from documents and information provided directly to us by the target company in connection with the transaction.
Such documents or information or the conclusions we draw therefrom could prove to be inaccurate or misleading. As such, we may
be required to make our decision on whether to pursue a potential business combination based on limited, incomplete, or faulty
information, which may result in our subsequent operations generating less revenue than expected, which could materially harm
our financial condition and results of operations.
Our
ability to assess the management of a prospective target business may be limited and, as a result, we may acquire a target business
whose management does not have the skills, qualifications, or abilities to enable a seamless transition, which could, in turn,
negatively impact our results of operations.
When
evaluating the desirability of a potential business combination, our ability to assess the target business’s management
may be limited due to a lack of time, resources, or information. Our management’s assessment of the capabilities of the
target’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications, or abilities
expected. Further, in most cases, the target’s management may be expected to want to manage us and replace our Chief Executive
Officer. Should the target’s management not possess the skills, qualifications, or abilities necessary to manage a public
company or assist with their former entity’s merger or combination into ours, the operations and profitability of the post-acquisition
business may be negatively impacted and our shareholders could suffer a reduction in the value of their shares.
Any
business we acquire will likely lack diversity of operations or geographical reach, and in such a case, we will be subject to
risks associated with dependence on a single industry or region.
Our
search for a business will likely be focused on entities with a single or limited business activity and/or that operate in a limited
geographic area. While larger companies can manage their risk by diversifying their operations among different industries and
regions, smaller companies such as ours and the entities we anticipate reviewing for a potential business combination generally
lack diversification, in terms of both the nature and geographic scope of their business. As a result, we will likely be impacted
more acutely by risks affecting the industry or the region in which we operate than we would if our business were more diversified.
In addition to general economic risks, we could be exposed to natural disasters, civil unrest, technological advances, and other
uncontrollable developments that will threaten our viability if and to the extent our future operations are limited to a single
industry or region. If we do not diversify our operations, our financial condition and results of operations will be at risk.
Changes
in laws or regulations, or a failure to comply with the laws and regulations applicable to us, may adversely affect our business,
ability to negotiate and complete a business combination, and results of operations.
We
are subject to laws and regulations enacted by federal, state, and local governments. In addition to SEC regulations, any business
we acquire in the future may be subject to substantial legal or regulatory oversight and restrictions, which could hinder our
growth and expend material amounts on compliance. Compliance with, and monitoring of, applicable laws and regulations may be difficult,
time-consuming, and costly. Those laws and regulations and their interpretation and application by courts and administrative judges
may also change from time to time, and any such changes could be unfavorable to us and could have a material adverse effect on
our business, investments, and results of operations. In addition, a failure to comply with applicable laws or regulations, as
interpreted and applied, could result in material defense or remedial costs and/or damages have a material adverse effect on our
financial condition.
Risks
Related to Our Common Stock
Due
to factors beyond our control, our stock price may be volatile.
There
is currently a limited market for our Common Stock, and there can be no guarantee that an active market for our Common Stock will
develop, even if we are successful in consummating a business combination. Recently, the price of our Common Stock has been volatile
for no reason. Further, even if an active market for our Common Stock develops, it will likely be subject to significant price
volatility when compared to more seasoned issuers. We expect that the price of our Common Stock will continue to be more volatile
than more seasoned issuers for the foreseeable future. Fluctuations in the price of our Common Stock can be based on various factors
in addition to those otherwise described in this Report, including:
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General
speculative fever;
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A
prospective business combination and the terms and conditions thereof;
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The
operating performance of any business we acquire, including any failure to achieve material revenues therefrom;
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The
performance of our competitors in the marketplace, both pre-and post-combination;
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The
public’s reaction to our press releases, SEC filings, website content, and other public announcements and information;
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Changes
in earnings estimates of any business that we acquire or recommendations by any research analysts who may follow us or other
companies in the industry of a business that we acquire;
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Variations
in general economic conditions, including as may be caused by uncontrollable events such as the COVID-19 pandemic and the
resulting decline in the economy;
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The
public disclosure of the terms of any financing we disclose in the future;
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The
number of shares of our Common Stock that are publicly traded in the future;
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Actions
of our existing shareholders, including sales of Common Stock by our then directors and then executive officers or by significant
investors; and
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The
employment or termination of key personnel.
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Many
of these factors are beyond our control and may decrease the market price of our Common Stock, regardless of whether we can consummate
a business combination and of our current or subsequent operating performance and financial condition. In the past, following
periods of volatility in the market price of a company’s securities, securities class action litigation has often been instituted.
A securities class action suit against us could result in substantial costs and divert our management’s time and attention,
which would otherwise be used to benefit our business.
Because
trading in our Common Stock is so limited, investors who purchase our Common Stock may depress the market if they sell Common
Stock.
Our
Common Stock trades on the OTC Pink Market, the successor to the pink sheets. The OTC Pink Market generally is illiquid, and most
stocks traded there are of companies that are not required to file reports with the SEC under the Exchange Act. Our Common Stock
itself infrequently trades.
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.
Presently
the market for our Common Stock is limited. If an active market for our shares develops in the future, some or all of our shareholders
may sell their shares of our Common Stock which may depress the market price. Any sale of a substantial number of these shares
in the public market, or the perception that such a sale could occur, could cause the market price of our Common Stock to decline,
which could reduce the value of the shares held by our other shareholders.
Future
issuance of our Common Stock could dilute the interests of our existing shareholders, particularly in connection with an acquisition
and any resulting financing.
We
may issue additional shares of our Common Stock in the future. The issuance of a substantial amount of our Common Stock could
substantially dilute the interests of our shareholders. 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 a business combination which received
our Common Stock as consideration or by investors who has previously acquired such Common Stock could have an adverse effect on
the market price of our Common Stock.
Due
to recent changes to Rule 15c2-11 under the Securities Exchange Act of 1934, our Common Stock may become subject to limitations
or reductions on stock price, liquidity, or volume.
On
September 16, 2020, the SEC adopted amendments to Rule 15c2-11 under the Securities Exchange Act of 1934 (the “Exchange
Act”). This Rule applies to broker-dealers who quote securities listed on over-the-counter markets such as our Common Stock.
The Rule as amended prohibits broker-dealers from publishing quotations on OTC markets for an issuer’s securities unless
they are based on current publicly available information about the issuer. When it becomes effective, the amended Rule will also
limit the Rule’s “piggyback” exception, which allows broker-dealers to publish quotations for a security in
reliance on the quotations of a broker-dealer that initially performed the information review required by the Rule, to issuers
with current publicly available information or issuers that are up-to-date in their Exchange Act reports. As of this date, we
are uncertain as to what actual effect the Rule may have on us.
The
Rule changes could harm the liquidity and/or market price of our Common Stock by either preventing our shares from being quoted
or driving up our costs of compliance. Because we are a voluntary filer under Section 15(d) of the Exchange Act and not a public
reporting company, the practical impact of these changes is to require us to maintain a level of periodic disclosure we are not
presently required to maintain, which would cause us to incur material additional expenses. Further, if we cannot or do not provide
or maintain current public information about our company, our stockholders may face difficulties in selling their shares of our
Common Stock at desired prices, quantities, or times, or at all, as a result of the amendments to the Rule.