Item 2.01 - Completion of Acquisition or Disposition of Assets
Completion of Acquisition of Genomics Integrated Wellness Systems, Inc.
BUSINESS DESCRIPTION
Genomics Integrated Wellness Systems, Inc. ("GIWS")
GIWS was incorporated on November 15, 2012 in the state of Colorado, but has
operations in Colorado, Hawaii and Indiana. GIWS was formed in order to develop
and commercialize a web-based genomic preventative medicine solution using
sophisticated and proprietary algorithms to analyze third party provided data,
on individual patient lifestyle factors such as biometrics, diet,
pharmaceuticals, endocrine and blood tests, and genetic markers.
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In March 2013, GIWS entered into a Software License Agreement with Mr. Charles
Youngren, the developer of the proprietary software behind the web-based Genomic
Preventative Medical Solution. (hereinafter "the Software License.") The
Software License grants GIWS an exclusive world-wide use, modification and
marketing of the software. The Software License has a term of 30 years.
In exchange for the Software license GIWS paid Mr. Youngren $10 and issued
15,000,000 shares of its common stock to Mr. Youngren. As part of the Software
License, Mr. Youngren is to receive a $0.05 per patient for actual usage of the
software for a 180 month period for all paid subscriptions to the service,
starting in 2014.
Genomic Preventive Medical Solution
The Genomic Preventive Medical Solution (hereinafter "the GPM Solution") is a
web-based genomic preventative medical solution in the companion diagnostic
field. Using a blood test, the software, through the use of mathematical
algorithms, analyzes not only an individual's genetic markers, but also by
factoring in such biometrics as diet, pharmaceutical use, lifestyle can provide
the doctor with not only a patient's susceptibility for certain diseases, but
also preventive measures to be instituted by the patient. The GPM Solution
allows, with semi-annual testing, not only preventive suggestions, but also a
way for patients to track the progress and success of the application of the
suggested preventive measures.
The GPM Solution uses companion provided diagnostic, results of a generated
patient profile, and a combination of blood screening and genetic tests and to
provide its analysis to and for use by medical professional for discussion with
the patient. In general, companion diagnostics has until recently focused on
genetic testing in the arenas of cancer and other hereditary diseases. The uses
have focused on the areas of not only predicting an individual's likelihood of
developing a medical condition, but the effects of treatments on the diseases.
Genetic testing studies and analyzes not only an individual's genes, but also
their chromosomes and proteins for certain markers or changes that are
indicative of not only medical conditions, but also can be indicative of the
potential inheritable medical conditions. Genetic testing involves either the
testing of the patient's tissue or through the use of blood analysis. The GPM
solution uses a blood test, rather than a tissue testing.
Currently, testing is most frequently performed at either the request of
individuals who are high risk for genetic medical conditions or in the case of
patients who are being treated for certain medical conditions, such as cancer or
Parkinson's disease. Companion diagnostics has been a focus of pharmaceutical
development, but generally has not been implemented for use by the general
medical community on a wide-scale individual basis, up to now.
With the completion of the Human Genome Project in 2003, it became possible for
the medical community and the health industry to start to take a look at being
able to entertain the possibility of being able to provide genome testing on a
wide-scale individual basis. It is only in recent years, that there has been a
serious and realistic discussion within the medical community as to the
possibilities and opportunities of using such testing as both a diagnostic,
monitoring and preventive treatment tool by medical professionals. The GPM
Solution was developed specifically for this purpose.
2
The GPM Solution provides medical professionals with not only the ability to
estimate a patients probability of developing a medical condition, such as
diabetes, but with such knowledge allows them to develop a preventive treatment
or earlier remediation to both assist the patient in making lifestyle changes to
help lower the probability of the patient developing such condition or
exacerbating the condition. Further, with the use of the test semi-annually,
practitioners have the ability to show patients the effects of their lifestyle
and diet choices. Patients will be able to see the true effects of such
decisions have on not only their current health, but their future health
prognosis.
Operations
The Company will have computer control center with servers located in Indiana.
Our administrative, marketing and sales activities will be located in Colorado.
An individual will be able to have their medical professional perform the blood
test and then have such sample shipped to a third party the Company's laboratory
facility for analysis. Once analysis is completed the results of the analysis
will them be sent electronically to the Company's secure analysis web connection
and the results of the analysis will be sent to the medical professional for
discussion of the results and determination of treatment and preventative care
with the individuals. Results WILL NOT be sent or disclosed directly to
non-health professionals. We intend to interface solely with the medical
community.
Market
As discussed above, the companion diagnostics market has focused primarily on
the use of testing in either predicting an individual's genetic probability of
contacting a disease or identifying those individuals who are probable to
develop a hereditary disease. The use of testing and analysis has not been
utilized by the general practice of medicine as a preventive tool on a wide
scale basis, but with continued technological advancements and genomic
advancements this concept can be a reality.
The market and adaptation of such testing and analysis is spurred by the
following:
- Regulatory Landscape. Oversight and legislation have continued to
evolve in this area, though it is still at times behind the
advances being made. The Food and Drug Administration (FDA) is
increasing its attention on this area and is starting to provide
greater clarity into the approval process. Recent trends in
regulations show increasing requirements to use companion
diagnostics in the approval of certain therapies. Further, health
care legislation has begun to focus in and consider efforts on
preventive care, rather just solely on treatment.
- Testing Technology. There is a greater availability of not only
testing products, but also have been advances in testing
technology that support a greater and wide-scale use of tests.
- Reimbursement. Historically, the health insurance industry has
provided the largest barrier to the use of such testing and
analytics given the cost, but as the industry has shifted its
focus to the assessment of the cost of total care, these tests and
analysis may be starting to be seen as a preventive measure and a
way to decrease overall care costs.
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- Physician Adoption. Growth is being driven by physicians and other
medical professionals themselves, who have seen the use of such
testing as an essential part of prenatal/neonatal care and
becoming an almost standard of care for certain cancers.
- Bioinformatics. With the continued use of genetic testing,
pharmaceutical development and prediction in genetic hereditary
diseases, there has been a corresponding increase in the
sophistication in and development in the data analytics that are
used. In recent years, the focus has moved from a clinical focus
to more of a bioinformatics focus and how to integrate such large
amounts of data into the electronic health record and for test
results to be aggregated across a patient population for data
mining and trend analysis on a basis that preserves patient
confidentiality under HPAA.
- Consumer Demand. With increased success and coverage of companion
diagnostics potential, individuals themselves will spur growth and
usage as they request such analysis as part of their health care
program. A survey revealed that 81.5% percent of consumers would
like to have their genome sequenced if they could afford it.
("Market Trends in Genetic Services - Impacting Clinical Care
through Better Prediction, Detection and Care Selection",
Timanthie Lislie, Booz Allen Hamilton, March 2013)
While the market is relatively new and has experienced market growth, it is
populated with competitors who have been offering and working with companion
diagnostics in specific medical arenas. There has a been a recent trend in the
industry for such companies to joint venture and partner with each other in the
development of testing technologies.
The Company will be in competition with well-established players in not only the
medical industry, but also those already established commercial laboratories in
the genetic testing market. Such commercial labs as LabCorp and Quest and such
genetic testing companies as Myriad Genetics, Inc. These companies have far
greater resources and more experience in the industry than the Company, but they
are focused on specific diseases and not necessarily on general preventive
health measures, or trend analysis for larger populations of patients.
The Company's direct competition is the direct-to-consumer companies in the
market. Direct-to-consumers (DTC) companies provide testing and results straight
to the consumer, bypassing the clinical environment. These companies primarily
offering testing in the area of disease prediction and normally provide more
information than is medically necessary. These companies provide the date
without interpretation by physicians or without any integration with clinical
care and the supporting information systems.
The best known of these companies is 23andMe. 23andMe has been the dominant
player in the market having nearly 200,000 members, who for $99 receive
information on carrier traits for Mendelian diseases, 20 drug classes, disease
risks and personal trait information. The individual receives a DNA kit and then
sends the kit back to the company who then returns directly to the individual
the analysis. In November 2013, the FDA forced 23andMe to suspend its health
testing, in part due to the fact that such results were not being interpreted by
medical personnel. At this time, 23andMe is only providing an individual's
genetic history on an ancestry basis.
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Management believes that it is able to compete with existing direct-to-consumer
companies, as they intend to market solely to medical professionals in the
health industry, who then provide the service to the patient. Further, GIWS
offers a product that is different from those currently offered, in that the
Company not only provides prevention and prediction, but also involve clinical
diagnosis and intervention by the medical professional's advice. GIWS, by
marketing solely to the physicians and medical service providers, GIWS, will
allow the patient's physician, to be able to provide the patient with the
clinical interpretation of the data with the necessary recommendations as to
changes in diet, lifestyle, pharmaceuticals, or medication intervention.
GIWS intends to build relationships with medical marketing firms, rather than
marketing the GPM Solution on its own, since management does not have existing
relationships in the medical industry. With this in mind, GIWS will attempt to
build a relationship with firms that specialize in marketing in the medical
industry, who have existing relationships with clinics and doctors. We
anticipate that if such a relationship was developed, we would most likely be
marketing the GPM Solution under that firm's label. At the time of this filing,
no such relationship has been developed or finalized.
Government Regulation
The services that we provide are regulated by federal, state and foreign
governmental authorities. Failure to comply with the applicable laws and
regulations can subject us to repayment of amounts previously paid to us,
significant civil and criminal penalties, loss of licensure, certification, or
accreditation, or exclusion from government health care programs. The
significant areas of regulation are summarized below.
Food and Drug Administration
We believe that our service is not within the regulatory scope of the Food and
Drug Administration (FDA), as our sole function is to provide algorithmic
analysis and data to medical professional on tests provided by third party FDA
licensed vendors.
HIPAA and other privacy laws
The Health Insurance Portability and Accountability Act of 1996, or HIPAA,
established for the first time comprehensive federal protection for the privacy
and security of health information. The HIPAA standards apply to three types of
organizations, or "Covered Entities": health plans, healthcare clearing houses,
and healthcare providers which conduct certain healthcare transactions
electronically. Title II of HIPAA, the Administrative Simplification Act,
contains provisions that address the privacy of health data, the security of
health data, the standardization of identifying numbers used in the healthcare
system and the standardization of certain healthcare transactions. The privacy
regulations protect medical records and other protected health information by
limiting their use and release, giving patients the right to access their
medical records and limiting most disclosures of health information to the
minimum amount necessary to accomplish an intended purpose. The HIPAA security
standards require the adoption of administrative, physical, and technical
safeguards and the adoption of written security policies and procedures. HIPAA
requires Covered Entities to obtain a written assurance of compliance from
individuals or organizations who provide services to Covered Entities involving
the use or disclosure of protected health information ("Business Associates").
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On February 17, 2009, Congress enacted Subtitle D of the Health Information
Technology for Economic and Clinical Health Act, or HITECH, provisions of the
American Recovery and Reinvestment Act of 2009. HITECH amends HIPAA and, among
other things, expands and strengthens HIPAA, creates new targets for
enforcement, imposes new penalties for noncompliance and establishes new breach
notification requirements for Covered Entities and Business Associates.
Regulations implementing major provisions of HITECH were finalized on January
25, 2013 through publication of the HIPAA Omnibus Rule (the "Omnibus Rule"). The
Omnibus Rule contained significant changes for Covered Entities and Business
Associates with respect to permitted uses and disclosures of Protected Health
Information.
Under HITECH's new breach notification requirements, Covered Entities must
report breaches of protected health information that has not been encrypted or
otherwise secured in accordance with guidance from the Secretary of the U.S.
Department of Health and Human Services (the "Secretary"). Required breach
notices must be made as soon as is reasonably practicable, but no later than 60
days following discovery of the breach. Reports must be made to affected
individuals and to the Secretary and in some cases, they must be reported
through local and national media, depending on the size of the breach.
We will be subject to the HIPAA regulations and will maintain an active
compliance program. We are subject to audit under HHS's HITECH-mandated audit
program. We may also be audited in connection with a privacy complaint. We are
subject to prosecution and/or administrative enforcement and increased civil and
criminal penalties for non-compliance, including a new, four-tiered system of
monetary penalties adopted under HITECH. We are also subject to enforcement by
state attorneys general who were given authority to enforce HIPAA under HITECH.
To avoid penalties under the HITECH breach notification provisions, we must
ensure that breaches of protected health information are promptly detected and
reported within the company, so that we can make all required notifications on a
timely basis. However, even if we make required reports on a timely basis, we
may still be subject to penalties for the underlying breach.
In addition to the federal privacy regulations, there are a number of state laws
regarding the privacy and security of health information and personal data that
are applicable to clinical laboratories. The compliance requirements of these
laws, including additional breach reporting requirements, and the penalties for
violation vary widely and new privacy and security laws in this area are
evolving. Many states have also implemented genetic testing and privacy laws
imposing specific patient consent requirements and protecting test results. In
some cases, we are prohibited from conducting certain tests without a
certification of patient consent by the physician ordering the test.
Requirements of these laws and penalties for violations vary widely. We believe
that we have taken the steps required of us to comply with health information
privacy and security statutes and regulations in all jurisdictions, both state
and federal. However, we may not be able to maintain compliance in all
jurisdictions where we do business. Failure to maintain compliance, or changes
in state or federal laws regarding privacy or security could result in civil
and/or criminal penalties and could have a material adverse effect on our
business.
We are subject to laws and regulations related to the protection of the
environment, the health and safety of employees and the handling, transportation
and disposal of medical specimens, infectious and hazardous waste and
radioactive materials. For example, the U.S. Occupational Safety and Health
Administration, or OSHA, has established extensive requirements relating
specifically to workplace safety for healthcare employers in the U.S. This
includes requirements to develop and implement multi-faceted programs to protect
workers from exposure to blood-borne pathogens, such as HIV and hepatitis B and
C, including preventing or minimizing any exposure through needle stick
injuries. For purposes of transportation, some biological materials and
laboratory supplies are classified as hazardous materials and are subject to
regulation by one or more of the following agencies: the U.S. Department of
Transportation, the U.S. Public Health Service, the United States Postal Service
and the International Air Transport Association. We generally use third-party
vendors to dispose of regulated medical waste, hazardous waste and radioactive
materials and contractually require them to comply with applicable laws and
regulations.
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Reimbursement and Billing
Reimbursement and billing for diagnostic analysis services is generally highly
complex. Laboratories must bill various payors, such as private third-party
payors, including MCOs and state and federal health care programs, such as
Medicare and Medicaid, and each may have different billing requirements.
Additionally, the audit requirements we must meet to ensure compliance with
applicable laws and regulations, as well as our internal compliance policies and
procedures, add further complexity to the billing process. Other factors that
complicate billing include:
o variability in coverage and information requirements among various payors;
o missing, incomplete or inaccurate billing information provided by ordering
physicians;
o billings to payors with whom we do not have contracts;
o disputes with payors as to which party is responsible for payment; and
o disputes with payors as to the appropriate level of reimbursement.
Depending on the reimbursement arrangement and applicable law, the party that
reimburses us for our services may be:
o a third party who provides coverage to the patient, such as an insurance
company or MCO;
o a governmental payor; or
o the patient.
We anticipate, approximately 85% of our revenue may come from third party
payors.
In February 2011, the American Medical Association CPT Editorial Panel approved
101 new molecular pathology codes to describe molecular diagnostic tests that
currently require multiple CPT codes for billing purposes. The new reimbursement
rates for the new codes went into effect on January 1, 2013.
Federal and State Fraud and Abuse Laws
A variety of federal laws prohibit fraud and abuse involving state and federal
health care programs, such as Medicare and Medicaid. These laws are interpreted
broadly and enforced aggressively by various state and federal agencies,
including CMS, the Department of Justice, or DOJ, the Office of Inspector
General for the Department of Health and Human Services, or OIG, and various
state agencies. In addition, the Medicare and Medicaid programs increasingly use
a variety of contractors to review claims data and to identify improper payments
as well as fraud and abuse. These contractors include Recovery Audit
Contractors, or RACs, Medicaid Integrity Contractors, or MICs, and Zone Program
Integrity Contractors, or ZPICs. In addition, CMS conducts CERT audits, the
purpose of which is to detect improper Medicare payments. Any overpayments
identified must be repaid to the Medicare program unless a favorable decision is
obtained on appeal. In some cases, these overpayments can be used as the basis
for an extrapolation, by which the error rate is applied to a larger universe of
claims, and which can result in even higher repayments.
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Anti-Kickback Laws
The Anti-Kickback Statute prohibits, among other things, knowingly and willfully
offering, paying, soliciting, receiving or providing remuneration, directly or
indirectly, in exchange for or to induce either the referral of an individual,
or the furnishing, arranging for or recommending of an item or service that is
reimbursable, in whole or in part, by a federal health care program.
"Remuneration" is broadly defined to include anything of value, such as, for
example, cash payments, gifts or gift certificates, discounts, or the furnishing
of services, supplies or equipment. The Anti-Kickback Statue is broad and
prohibits many arrangements and practices that are lawful in businesses outside
of the health care industry.
Recognizing the breadth of the Anti-Kickback Statute and the fact that it may
technically prohibit many innocuous or beneficial arrangements within the health
care industry, the OIG has issued a series of regulations, or safe harbors.
Compliance with all requirements of a safe harbor immunizes the parties to the
business arrangement from prosecution under the Anti-Kickback Statute. The
failure of a business arrangement to fit within a safe harbor does not
necessarily mean that the arrangement is illegal or that the OIG will pursue
prosecution. Still, in the absence of an applicable safe harbor, a violation of
the Anti-Kickback Statute may occur even if only one purpose of an arrangement
is to induce referrals. The penalties for violating the Anti-Kickback Statute
can be severe. These sanctions include criminal and civil penalties,
imprisonment and possible exclusion from the federal health care programs. Many
states have adopted laws similar to the Anti-Kickback Statute, and some apply to
items and services reimbursable by any payor, including private third-party
payors.
Physician Self-Referral Bans
The federal ban on physician self-referrals, commonly known as the Stark Law,
prohibits, subject to certain exceptions, physician referrals of Medicare
patients to an entity providing certain "designated health services" (which
include laboratory services) if the physician or an immediate family member of
the physician has any financial relationship with the entity. A "financial
relationship" is created by an investment interest or a compensation
arrangement. A laboratory cannot bill the Medicare Part B program for services
furnished pursuant to a prohibited self-referral, and Medicaid reimbursement may
be at risk as well. Several Stark Law exceptions are relevant to arrangements
involving clinical laboratories, including: (1) fair market value compensation
for the provision of items or services; (2) payments by physicians to a
laboratory for clinical laboratory services; (3) certain space and equipment
rental arrangements that satisfy certain requirements; and (4) personal services
arrangements. Penalties for violating the Stark Law include the return of funds
received for all prohibited referrals, fines, civil monetary penalties and
possible exclusion from the federal health care programs. In addition to the
Stark Law, many states have their own self-referral bans, which may extend to
all self-referrals, regardless of the payor.
No physicians or medical professionals own any part of the Company in excess of
1% at this time, although this could change as our shareholder base evolves.
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State and Federal Prohibitions on False Claims
The federal False Claims Act imposes liability on any person or entity that,
among other things, knowingly presents, or causes to be presented, a false or
fraudulent claim for payment to the federal government. Under the False Claims
Act, a person acts knowingly if he has actual knowledge of the information or
acts in deliberate ignorance or in reckless disregard of the truth or falsity of
the information. Specific intent to defraud is not required. The qui tam
provisions of the False Claims Act allow a private individual to bring an action
on behalf of the federal government and to share in any amounts paid by the
defendant to the government in connection with the action. The number of filings
of qui tam actions has increased significantly in recent years. When an entity
is determined to have violated the False Claims Act, it may be required to pay
up to three times the actual damages sustained by the government, plus civil
penalties of between $5,500 and $11,000 for each false claim. Conduct that
violates the False Claims Act may also lead to exclusion from the federal health
care programs. Given the number of claims likely to be at issue, potential
damages under the False Claims Act for even a single inappropriate billing
arrangement could be significant. In addition, various states have enacted
similar laws modeled after the False Claims Act that apply to items and services
reimbursed under Medicaid and other state health care programs, and, in several
states, such laws apply to claims submitted to all payors.
Federal Prohibitions on Health Care Fraud and False Statements Related to Health
Care Matters
In addition to the administrative simplification regulations discussed above,
HIPAA created two new federal crimes: health care fraud and false statements
relating to health care matters. The health care fraud statute prohibits
knowingly and willfully executing a scheme to defraud any health care benefit
program, including a private insurer. The false statements statute prohibits
knowingly and willfully falsifying, concealing, or covering up a material fact
or making any materially false, fictitious, or fraudulent statement in
connection with the delivery of or payment for health care benefits, items, or
services. A violation of this statute is a felony and may result in fines,
imprisonment, or exclusion from the federal health care programs.
Facilities
The Company does not have office space or facilities at the time of this filing.
The Company's management currently works out of individual offices in a virtual
set up.
Backlog Of Orders
We currently have no orders for sales at this time.
Government Contracts
We have no government contracts.
Number Of Persons Employed
The Company does not have any employees, other than its Officers, who will work
on a contract basis.
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DESCRIPTION OF PROPERTY
(a) Real Estate None.
(b) Title to properties. None.
(c) Oil and Gas Prospects. None.
(d) Patents and Patent Applications None.
LEGAL PROCEEDINGS
We are not a party to any pending legal proceedings, nor are we aware of any
civil proceeding or government authority contemplating any legal proceeding.
RISK FACTORS
GENERAL BUSINESS RISK FACTORS
Our Company is a development stage company and unproven and therefore risky.
We have only very recently adopted the business plan of GIWS described herein
and above. Potential investors should be made aware of the risk and difficulties
encountered by a new enterprise, especially in view of the potential competition
from existing businesses in the industry.
We have a lack of revenue history and investors cannot view Legacy's and its
subsidiary's past performance since it is a start-up company. Our prior business
history was wholly unsuccessful.
We were formed on February 13, 1997 for the purpose of engaging in any lawful
business and have now adopted a plan to engage in the acquisition of another
business. We have not had revenues in the last two years. We are not profitable
and our business effort is considered to be in an early development stage. We
must be regarded as a new or development venture with all of the unforeseen
costs, expenses, problems, risks and difficulties to which such ventures are
subject.
We may have a shortage of working capital in the future which could jeopardize
our ability to carry out its business plan.
Our capital needs consist primarily of expenses related to, general and
administrative and potential business acquisitions and compliance with SEC
reporting requirements and could exceed $75,000 in the next twelve months. Such
funds are not currently committed.
We have limited funds, and such funds will not be adequate to carry out any
business plan, at this time. Our ultimate success depends upon its ability to
raise additional capital. We have not investigated the availability, source, or
terms that might govern the acquisition of additional capital and will not do so
until it determines a need for additional financing. If we need additional
capital, it has no assurance that funds will be available from any source or, if
available, that such can be obtained on terms acceptable to us. If not
available, our operations will be limited to those that can be financed with its
modest capital.
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Our officers and directors may have conflicts of interests as to corporate
opportunities which it may not be able or allowed to participate in.
Presently there is no requirement contained in our Articles of Incorporation,
Bylaws, or minutes which requires officers and directors of its business to
disclose our business opportunities which come to their attention. Our officer
and director does, however, have a fiduciary duty of loyalty to us to disclose
to it any business opportunities which come to his attention, in his capacity as
an officer and/or director or otherwise. Excluded from this duty would be
opportunities which the person learns about through his involvement as an
officer and director of another company. We have no intention of merging with or
acquiring business opportunity from any affiliate or officer or director.
We may depend upon outside advisors, who may not be available on reasonable
terms and as needed.
To supplement the business experience of our officers and directors, we may be
required to employ accountants, technical experts, appraisers, attorneys, or
other consultants or advisors. Our Board without any input from stockholders
will make the selection of any such advisors. Furthermore, it is anticipated
that such persons may be engaged on an "as needed" basis without a continuing
fiduciary or other obligation to us. In the event we consider it necessary to
hire outside advisors, we may elect to hire persons who are affiliates, if they
are able to provide the required services.
We have agreed to indemnification of officers and directors as is provided by
Colorado Revised Statute and such indemnification is limited.
Colorado Corporations and Associations Act provide for the indemnification of
our directors, officers, employees, and agents, under certain circumstances,
against attorney's fees and other expenses incurred by them in any litigation to
which they become a party arising from their association with or activities on
Legacy behalf. We will also bear the expenses of such litigation for any of its
directors, officers, employees, or agents, upon such person's promise to repay
Legacy therefore if it is ultimately determined that any such person shall not
have been entitled to indemnification. This indemnification policy could result
in substantial expenditures by us that we may be unable to recoup.
Colorado Corporations and Associations Act exclude personal liability of our
directors and its stockholders for monetary damages for breach of fiduciary duty
except in certain specified circumstances. Accordingly, we will have a much more
limited right of action against its directors than otherwise would be the case.
This provision does not affect the liability of any director under federal or
applicable state securities laws.
RISK FACTORS RELATED TO THE BUSINESS OF GIWS
We will generate most of our revenues from a single product and we may not be
able to maintain or increase revenue growth and profitability.
Presently, our business plan provides for us to generate solely from the GPM
Solution. We may not, however, be able to operate our business on a profitable
basis. Other potential events or factors that may have a significant impact on
our ability to sustain revenue growth and profitability for our business include
the following:
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o Increased personnel and facility costs;
o Our inability to hire competent, trained staff, including laboratory
directors required to review and approve all reports we issued in our
business, and sales personnel;
o Our inability to increase production capacity as demand increases;
o The efforts of third party payors to limit or decrease the amounts that
they are willing to pay for our services;
o Potential obsolescence of our services;
o Our inability to increase commercial acceptance of our services;
o Increased competition and loss market share; and
o Increased regulatory requirements.
We are dependent on our information technology and telecommunications systems,
and any failure of these systems could harm our business.
We depend on information technology, or IT, and telecommunications systems for
significant aspects of our business. These IT and telecommunications systems
support a variety of functions, including sample processing, tracking, quality
control, customer service and support, billing, research and development
activities, and various general and administrative activities. Failures or
significant downtime of our IT or telecommunications systems could prevent us
from processing samples, providing test results to physicians, billing payors,
addressing patient or physician inquiries, conducting research and development
activities and conducting general and administrative elements of our business.
Any disruption or loss of IT or telecommunications systems on which critical
aspects of our operations depend could have an adverse effect on our business.
Security breaches, loss of data and other disruptions could compromise sensitive
information related to our business or prevent us from accessing critical
information and expose us to liability, which could adversely affect our
business and our reputation.
In the ordinary course of our business, we collect and store sensitive data,
including legally protected health information (HIPPA), personally identifiable
information about our employees, intellectual property, and our proprietary
business information. We manage and maintain our applications and data utilizing
on-site systems. These applications and data encompass a wide variety of
business critical information including research and development information,
commercial information and business and financial information.
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The secure processing, storage, maintenance and transmission of this critical
information is vital to our operations and business strategy, and we intend to
devote significant resources to protecting such information. Although we take
measures to protect sensitive information from unauthorized access or
disclosure, our information technology and infrastructure may be vulnerable to
attacks by hackers, or viruses, breaches or interruptions due to employee error,
malfeasance or other disruptions. Any such virus, breach or interruption could
compromise our networks and the information stored there could be accessed by
unauthorized parties, publicly disclosed, lost or stolen. Any such access,
disclosure or other loss of information could result in legal claims or
proceedings, liability under laws that protect the privacy of personal
information, such as the Health Insurance Portability and Accountability Act of
1996 (HIPPA), and regulatory penalties. Unauthorized access, loss or
dissemination could also disrupt our operations, including our ability to
process samples, provide test results, bill payors or patients, provide customer
support services, conduct research and development activities, process and
prepare company financial information, manage various general and administrative
aspects of our business and damage our reputation, any of which could adversely
affect our business.
We will rely on laboratory facilities to provide test results and analytic
services.
We will rely on a CLIA-certified laboratories facility perform our companion
diagnostic testing to which we will apply our analysis. In the event such
clinical testing facilities were to lose their CLIA certification or other
required certifications or licenses or were affected by man-made or natural
disasters, we would be unable to continue our companion diagnostic business at
current levels to meet customer demands for a significant period of time.
Although we intend to maintain insurance, including business interruption
insurance, it may not be adequate to protect us from all potential losses if
these facilities could not be replaced. In addition, any interruption in our
companion diagnostic business would result in a loss of goodwill, including
damage to our reputation. If our companion diagnostic business were interrupted,
it would seriously harm our business.
Changes in healthcare policy could increase our costs; decrease our revenues and
impact sales of and reimbursement for our tests.
In March 2010, the Patient Protection and Affordable Care Act, as amended by the
Health Care and Education Affordability Reconciliation Act, or the ACA became
law. This law substantially changes the way health care is financed by both
governmental and private insurers, and significantly impacts our industry. The
ACA contains a number of provisions that are expected to impact our business and
operations, some of which in ways we cannot currently predict, including those
governing enrollment in federal healthcare programs, reimbursement changes and
fraud and abuse, which will impact existing government healthcare programs and
will result in the development of new programs.
In addition to the ACA, there will continue to be proposals by legislators at
both the federal and state levels, regulators and third-party payors to reduce
costs while expanding individual healthcare benefits. Certain of these changes
could impose additional limitations on the prices we will be able to charge for
our tests or the amounts of reimbursement available for our tests from
governmental agencies or third-party payors. While in general it is too early to
predict specifically what effect the ACA and its implementation or any future
healthcare reform legislation or policies will have on our business, current and
future healthcare reform legislation and policies could have a material adverse
effect on our business and financial condition.
13
If we were successfully sued for liability related to our services, we could
face substantial liabilities that exceed our resources.
Our business exposes us to potential liability risks inherent in the testing,
marketing and processing of diagnostic services, including possible misdiagnoses
by medical professionals. Although we intend to be insured against such risks in
amounts that we believe to be commercially reasonable, our liability insurance
may be inadequate. A successful product liability claim in excess of our
insurance coverage could have a material adverse effect on our business. Any
successful liability claim may prevent us from obtaining adequate product
liability insurance in the future on commercially desirable or reasonable terms.
An inability to obtain sufficient insurance coverage at an acceptable cost or
otherwise to protect against potential liability claims could prevent or inhibit
the commercialization of our services.
Our companion services are in development may never achieve significant
commercial market acceptance.
We may not succeed in achieving significant commercial market acceptance of our
service offerings that we are currently developing. Our ability to successfully
develop and commercialize our companion services will depend on several factors,
including:
o our ability to convince the medical community of the clinical utility of
our tests and their potential advantages over existing tests;
o the agreement by third-party payors to reimburse our tests, the scope and
extent of which will affect patients' willingness or ability to pay for our
tests and will likely heavily influence physicians' decisions to recommend
our tests; and
o the willingness of physicians to utilize our tests, which can be difficult
to interpret. This difficulty is caused by a combination of factors,
including the large number, sometimes thousands, of different mutations in
the genes which our tests analyze, the need to characterize each specific
mutation, and the ability of our tests to predict only as to a statistical
probability, not certainty, that a tested individual will develop the
disease that the test is intended to predict.
These factors present obstacles to commercial acceptance of our tests, which we
will have to spend substantial time and money to overcome, if we can do so at
all. Our inability to successfully do so will harm our business.
If we do not compete effectively with scientific and commercial competitors, we
may not be able to successfully commercialize our tests.
The biotechnology and genetics testing fields are intense and highly
competitive. Services that are developed are characterized by rapid
technological change. Our competitors in the United States and abroad are
numerous and include, among others, major diagnostic companies, reference
laboratories, molecular diagnostic firms, universities and other research
institutions. Many of our potential competitors have considerably greater
financial, technical, marketing and other resources than we do, which may allow
these competitors to discover important genes or factors and determine their
function and provide analysis services before we do.
14
Those companies that bring to market new offerings before we do may achieve a
significant competitive advantage in marketing and commercializing their
services. We may not be able to develop additional services successfully.
Furthermore, our competitors may succeed in developing technologies, tests or
analysis services that are more effective than those developed by us or that
would render our services less competitive or obsolete. We expect competition to
intensify in the fields in which we are involved as technical advances in these
fields occur and become more widely known.
If we were sued for patent infringement by third parties, we might incur
significant costs and delays in service introduction.
Our services may also conflict with patents that have been or may be granted to
others. Our industry includes many organizations that have or are seeking to
discern gene and protein biomarkers and develop genomic, proteomic and other
technologies. To the extent any patents are issued or have been issued to those
organizations, the risk increases that the sale of our companion services
currently being marketed or under development may give rise to claims of patent
infringement. Others may have filed and in the future are likely to file patent
applications covering genes or proteins that are similar or identical to our
services. Any of these patent applications may have priority over our patent
applications and these entities or persons could bring legal proceedings against
us seeking damages or seeking to enjoin us from testing or marketing our
services. Patent litigation is costly, and even if we prevail, the cost of such
litigation could have a material adverse effect on us. If the other parties in
any such actions are successful, in addition to any liability for damages, we
could be required to cease the infringing activity or obtain a license. Any
license required may not be available to us on commercially acceptable terms, if
at all. Our failure to obtain a license to any technology that we may require to
commercialize our services could have a material adverse effect on our business.
We believe that there may be significant litigation in the industry regarding
patent and other intellectual property rights. If we become involved in this
litigation, it could consume a substantial portion of our managerial and
financial resources.
We may be unable to adequately prevent disclosure of trade secrets, proprietary
databases, and other proprietary information.
We rely on trade secrets to protect our proprietary technologies and databases,
especially as we do not have patent protection. However, trade secrets are
difficult to protect. We rely in part on confidentiality agreements with our
employees, consultants, outside scientific collaborators, sponsored researchers
and others to protect our trade secrets and other proprietary information. These
agreements may not effectively prevent disclosure of confidential information
and may not provide an adequate remedy if unauthorized disclosure of
confidential information occurs. In addition, others may independently discover
our trade secrets and proprietary information. Costly and time-consuming
litigation could be necessary to enforce and determine the scope of our
proprietary rights, and failure to obtain or maintain trade secret protection
could adversely affect our competitive position.
15
Changes in the way that the FDA regulates services performed by laboratories
like ours could result in delay or additional expense in offering our services
that we may develop in the future.
While the FDA does not currently regulate the activities performed by us, the
FDA has stated that it has the right to do so, and the FDA may seek to regulate
or require clearance or approval of our services in the future. In July, 2010,
the FDA's office of In-Vitro Diagnostics held a public meeting to discuss
oversight of laboratory developed tests. The FDA highlighted the lack of
standardized clinical validation at the assay level under current CLIA
regulatory guidelines and noted that CLIA does not require post-market
surveillance or monitoring of laboratory developed tests. The comment period for
providing the FDA with written comments expired on August 15, 2010, but the FDA
has not yet published additional guidance on the oversight of laboratory
developed tests. We cannot provide any assurance that FDA regulation, including
pre-market review, will not be required in the future for our molecular
diagnostic tests. If pre-market review is required, our business could be
negatively impacted if we are required to stop selling molecular diagnostic
tests pending their clearance or approval or the launch of any new tests that we
develop could be delayed by new requirements.
If the government and third-party payors fail to provide coverage and adequate
payment for our services and future tests, if any, our revenue and prospects for
profitability will be harmed.
Sales of our services will depend in part, upon the availability of
reimbursement from third-party payors. Such third-party payors include
government healthcare programs such as Medicare, managed care providers, private
health insurers and other organizations. These third-party payors are
increasingly attempting to contain healthcare costs by demanding price discounts
or rebates and limiting both coverage on which diagnostic tests they will pay
for and the amounts that they will pay for new services. The fact that a
diagnostic test has been approved for reimbursement in the past, for any
particular indication or in any particular jurisdiction, does not guarantee that
such a services will remain approved for reimbursement or that similar services
will be approved in the future. As a result, third-party payors may not cover or
provide adequate payment for our current or future services. Adequate
third-party reimbursement might not be available to enable us to maintain price
levels sufficient to realize an appropriate return on investment in product
development.
The U.S. governments continue to propose and pass legislation designed to reduce
the cost of healthcare. For example, in some foreign markets, the government
controls the pricing of many healthcare products. We expect that there will
continue to be federal and state proposals to implement governmental controls or
impose healthcare requirements. In addition, the Medicare program and increasing
emphasis on managed care in the United States will continue to put pressure on
product pricing. Cost control initiatives could decrease the price that we would
receive for any tests in the future, which would limit our revenue and
profitability.
16
RISK FACTORS RELATED TO LEGACY'S STOCK
The regulation of penny stocks by SEC and FINRA may discourage the tradability
of our securities.
Legacy is a "penny stock" company. None of our securities currently trade in any
market and, if ever available for trading, will be subject to a Securities and
Exchange Commission rule that imposes special sales practice requirements upon
broker-dealers who sell such securities to persons other than established
customers or accredited investors. For purposes of the rule, the phrase
"accredited investors" means, in general terms, institutions with assets in
excess of $5,000,000, or individuals having a net worth in excess of $1,000,000
or having an annual income that exceeds $200,000 (or that, when combined with a
spouse's income, exceeds $300,000). For transactions covered by the rule, the
broker-dealer must make a special suitability determination for the purchaser
and receive the purchaser's written agreement to the transaction prior to the
sale. Effectively, this discourages broker-dealers from executing trades in
penny stocks. Consequently, the rule will affect the ability of purchasers in
this offering to sell their securities in any market that might develop
therefore because it imposes additional regulatory burdens on penny stock
transactions.
In addition, the Securities and Exchange Commission has adopted a number of
rules to regulate "penny stocks". Such rules include Rules 3a51-1, 15g-1, 15g-2,
15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities and Exchange
Act of 1934, as amended. Because our securities constitute "penny stocks" within
the meaning of the rules, the rules would apply to the Company and to its
securities. The rules will further affect the ability of owners of shares to
sell its securities in any market that might develop for them because it imposes
additional regulatory burdens on penny stock transactions.
Shareholders should be aware that, according to Securities and Exchange
Commission, the market for penny stocks has suffered in recent years from
patterns of fraud and abuse. Such patterns include (i) control of the market for
the security by one or a few broker-dealers that are often related to the
promoter or issuer; (ii) manipulation of prices through prearranged matching of
purchases and sales and false and misleading press releases; (iii) "boiler room"
practices involving high-pressure sales tactics and unrealistic price
projections by inexperienced sales persons; (iv) excessive and undisclosed
bid-ask differentials and markups by selling broker-dealers; and (v) the
wholesale dumping of the same securities by promoters and broker-dealers after
prices have been manipulated to a desired consequent investor losses. Our
management is aware of the abuses that have occurred historically in the penny
stock market. Although we do not expect to be in a position to dictate the
behavior of the market or of broker-dealers who participate in the market,
management will strive within the confines of practical limitations to prevent
the described patterns from being established with respect to our securities.
We will pay no foreseeable dividends in the future.
We have not paid dividends on its common stock and do not ever anticipate paying
such dividends in the foreseeable future.
Our Securities are not currently eligible for sale under Rule 144 and any future
sales of our securities may be adversely affected by our failure to file all
reports required by the Exchange Act.
All of the outstanding shares of common stock held by our present officers,
directors, and affiliate stockholders are "restricted securities" within the
meaning of Rule 144 under the Securities Act of 1933, as amended. As restricted
shares, these shares may be resold only pursuant to an effective registration
statement or under the requirements of Rule 144 or other applicable exemptions
from registration under the Act and as required under applicable state
securities laws.
17
Rule 144, as promulgated under the Securities Act is not available for the
resale of securities, initially issued by a shell company (reporting or
non-reporting) or a former shell company, unless certain conditions are
satisfied. We are a shell company. As a result, our securities cannot be resold
under Rule 144 unless certain conditions are met. These conditions are:
o the issuer of the securities has ceased to be a shell company;
o the issuer is subject to the reporting requirements of section 13 or 15(d)
of the Exchange Act;
o the issuer has filed all reports and other materials required to be filed
by Section 13 or 15(d) of the Exchange Act, as applicable, during the
preceding 12 months, other than Form 8-K reports; and
o one year has elapsed since the issuer has filed current "Form 10
information" with the Commission reflecting its status as an entity that is
no longer a shell company.
The only way for our securities to be eligible for resale prior to the
conditions of Rule 144 being met, is for us to have registered them with the SEC
on a Registration Statement on Form S-1 and such registration being declared
effective by the SEC.
A sale under Rule 144 or under any other exemption from the Act, if available,
or pursuant to subsequent registration of shares of common stock of present
stockholders, may have a depressive effect upon the price of the common stock in
any market that may develop.
Our stock is thinly traded and as a result you may be unable to sell at or near
ask prices or at all if you need to liquidate your shares.
The shares of our common stock are thinly-traded on the OTCQB, meaning that the
number of persons interested in purchasing our common shares at or near ask
prices at any given time may be relatively small or non-existent. This situation
is attributable to a number of factors, including the fact that we are a small
company which is relatively unknown to stock analysts, stock brokers,
institutional investors and others in the investment community that generate or
influence sales volume, and that even if it came to the attention of such
persons, they tend to be risk-averse and would be reluctant to follow an
unproven, early stage company such as us or purchase or recommend the purchase
of any of our securities until such time as we become more seasoned and viable.
As a consequence, there may be periods of several days or more when trading
activity in our securities is minimal or non-existent, as compared to a seasoned
issuer which has a large and steady volume of trading activity that will
generally support continuous sales without an adverse effect on securities
price. We cannot give you any assurance that a broader or more active public
trading market for our common stock will develop or be sustained, or that any
trading levels will be sustained. Due to these conditions, we cannot give
investors any assurance that they will be able to sell their shares at or near
ask prices or at all if they need money or otherwise desire to liquidate their
securities.
PLAN OF OPERATIONS
During the 2014 fiscal year, we intend to set up administrative and server
facilities, while working to develop a relationship with a medical services
marketing firm and begin the marketing and sale of the GMP Solution. We intend
to continue to raise funds to support its efforts through the sale of our equity
securities.
18
Expected 2014 Budget - 12 months
Working Capital $175,000
Equipment $ 25,000
Marketing and Sales Expense $150,000
General and Administrative Expenses $175,000
--------------------
TOTAL $500,000
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We may change any or all of the budget categories in the execution of its
business model. None of the line items are to be considered fixed or
unchangeable.
We will need substantial additional capital to support our proposed future
operations. We have no revenues to date from our proposed business activities in
the medical services industry. We have no committed source for any funds as of
date hereof. No representation is made that any funds will be available when
needed. In the event funds cannot be raised when needed, we may not be able to
carry out our business plan, may never achieve sales, and could fail in business
as a result of these uncertainties.
We intend to conduct a Private Offering of shares of our restricted Common Stock
and intend to raise up to $200,000. At the time of this filing, such private
offering has not commenced. We cannot give any assurances that we will be able
to raise the full $200,000. Further, we will need to raise additional funds to
support not only our expected budget, but our continued operations. We cannot
make any assurances that we will be able to raise such funds or whether we would
be able to raise such funds with terms that are favorable to us.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion should be read in conjunction with our unaudited
financial statements and notes thereto included herein. In connection with, and
because we desire to take advantage of, the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995, we caution readers regarding
certain forward looking statements in the following discussion and elsewhere in
this report and in any other statement made by, or on our behalf, whether or not
in future filings with the Securities and Exchange Commission. Forward-looking
statements are statements not based on historical information and which relate
to future operations, strategies, financial results or other developments.
Forward looking statements are necessarily based upon estimates and assumptions
that are inherently subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond our control and many
of which, with respect to future business decisions, are subject to change.
These uncertainties and contingencies can affect actual results and could cause
actual results to differ materially from those expressed in any forward looking
statements made by, or on our behalf. We disclaim any obligation to update
forward-looking statements.
The following is a discussion of the results of operations and liquidity of GIWS
at September 30, 2013 and the nine months ended September 30, 2013.
The independent registered public accounting firm's report on the Company's
financial statements as of September 30, 2013 includes a "going concern"
explanatory paragraph that describes substantial doubt about the Company's
ability to continue as a going concern.
19
Results of Operations for the Nine Months Ended September 30, 2013
During the nine months ended September 30, 2013, GIWS did not recognize any
revenues from its operations, which were administrative in nature. Management
does not expect to recognize revenues from its activities until the fourth
quarter of 2014.
During the nine months ended September 30, 2013, the Company recognized a net
loss of $541 ($250 for the three months ended September 30, 2013). The net loss
was a result of the amortization of our software license.
During the period of November 15, 2012 (inception) through December 31, 2012, we
did not recognize and net loss or income. During that period, we organized and
began the development of our business plan.
During the 2014, year we intends to focus efforts in the first half of 2014 on
developing relationships for the marketing of our services and the purchase and
set up of the necessary hardware (i.e. servers) to support our operations. In
the latter half of 2014 we intend to begin offering services. As a result, we
also expect operational and general and administrative expenses to increase as
we begin to develop marketing relationships, incur increase costs as a result of
public reporting standards and as begin to hire staff.
Liquidity of GIWS at September 30, 2013
At September 30, 2013, we had no cash. Our only asset is our License Agreement
with Mr. Youngren. At September 30, 2013, we had an advance liability of $10. At
December 31, 2012, we did not have any assets or liabilities.
During the nine months ended September 30, 2013, we didn't receive or use any
cash from/in operating activities. During nine months ended September 30, 2013,
net losses of $541 were reconciled for $541 in amortization expenses.
During the nine months September 30, 2013, we did not receive or use funds from
or in our investing and financing activities.
During the period of November 15, 2012 (inception) through December 31, 2012, we
did not receive or use funds from or in our investing and financing activities.
In November 2013, GIWS entered into a Subscription Agreement to issue 1,200,000
shares of its common stock in exchange for cash of $100,000 with a third party.
The funds are to be used to support the operations of the Company and the
completion of the acquisition with Legacy Technology Holdings, Inc. Such funds
were received in December 2013.
Short Term
On a short-term basis, we do not generate any revenue or revenues sufficient to
cover operations. Based on prior history, we will continue to have insufficient
revenue to satisfy current and recurring liabilities as to such time we are able
to recognize revenues from our activities in the medical service industries. For
short term needs we will be dependent on receipt, if any, of offering proceeds.
20
We intend to conduct a Private Offering of shares of our restricted Common Stock
and intend to raise up to $200,000. We cannot give any assurances that we will
be able to raise the full $200,000. Further, we will need to raise additional
funds to support not only our expected budget, but our continued operations. We
cannot make any assurances that we will be able to raise such funds or whether
we would be able to raise such funds with terms that are favorable to us.
Need for Additional Financing
We do not have capital sufficient to meet our future budget cash needs. We will
have to seek loans or equity placements to cover such cash needs. Once
production commences, our needs for additional financing is likely to increase
substantially.
No commitments to provide additional funds have been made by our management or
other stockholders. Accordingly, there can be no assurance that any additional
funds will be available to us to allow it to cover our expenses as they may be
incurred.
GIWS Critical Accounting Policies
Impairment
The Company reviews long-lived assets held for use, principally intellectual
property, for impairment when events or circumstances indicate that their
carrying value may not be recoverable. Impairment exists if the carrying amount
of the long-lived asset is not recoverable from the undiscounted cash flows
expected from its use and eventual disposition. We determine the amount of the
impairment loss by comparing the carrying value of the long-lived asset to its
estimated fair value. In the absence of quoted market prices, we determine
estimated fair value generally based on the present value of future probability
weighted cash flows expected from the continued use and value at sale of the
long-lived asset.
Revenue Recognition
The Company recognizes revenue when it is earned and expenses are recognized
when they occur.
Stock-Based Compensation
We have adopted the provisions of and accounts for stock-based compensation
using an estimate of value in accordance with the fair value method. Under the
fair value recognition provisions of this statement, stock-based compensation
cost is measured at the grant date based on the fair value of the award and is
recognized as expense on a straight-line basis over the requisite service
period, which generally is the vesting period. GIWS elected the
modified-prospective method, under which prior periods are not revised for
comparative purposes. The valuation method applies to new grants and to grants
that were outstanding as of the effective date and are subsequently modified.
21
MANAGEMENT
The following table sets forth information as to persons who currently serve as
Legacy's directors or executive officers as of March 26, 2014.
Name Age Position
---------------------------- ---------------- ----------------------------------
Redgie Green 61 Chief Executive Officer, Acting Chief
Financial Officer and Director
John Bradley 67 Chief Administrative Officer
Charles Youngren, III 57 Chief Operating Officer and
Director; Chief Executive Officer of
GIWS
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Our officers are elected by the board of directors at the first meeting after
each annual meeting of our shareholders and hold office until their successors
are duly elected and qualified under our bylaws.
The directors named above will serve until the next annual meeting of our
stockholders. Thereafter, directors will be elected for one-year terms at the
annual stockholders' meeting. Officers will hold their positions at the pleasure
of the board of directors absent any employment agreement. There is no
arrangement or understanding between our directors and officers and any other
person pursuant to which any director or officer was or is to be selected as a
director or officer, except as noted in Item 1.01 to Mr. Youngren's being
appointed the Board of Directors and as Chief Operating Officer and his right
name 2 new members of the Board of Directors.
Biographical Information
Redgie Green - Chief Executive Officer and Director
On October 20, 2010, Mr. Reginald Green was appointed the Chief Executive
Officer and a Director of the Company.
Mr. Green has served as the Chief Executive Officer of Sun River Energy, Inc.
since January 2009 through August 3, 2010. From January 2009 through October
2009, he served as the President of Sun River Energy, Inc. He has served as a
director of Sun River Energy, Inc. from 1998 through October 2010. Mr. Green was
co-owner and operator of Green's B&R Enterprises, a wholesale donut baker since
1983. He has been an active investor in small capital and high-tech adventures
since 1987. Mr. Green was a director of Colorado Gold & Silver, Inc. in 2000. He
was a director for Houston Operating Company in late 2004 until December 2004.
He recently served as a director for Mountains West Exploration, Inc. in 2005.
He is a Director of Concord Ventures, Inc. since 2006. He has served as a
director of ASPI, Inc. from 2006 through the fall of 2009 and was been appointed
as an officer and director of Captech Financial, Inc. in May 2006. He served as
a director of Baymark Technologies, Inc. 2005-2006.
Mr. Green brings to the board of directors his experience in management of
reporting and public companies.
22
Charles Youngren, Chief Operating Officer and Director; Chief Executive Officer
of GIWS
Mr. Youngren was appointed to the Company's board of directors and the Chief
Operating Officer on March 31, 2014. Mr. Youngren has served as the Chief
Executive Officer and Director of GIWS since January, 2013.
Since June 2012, Mr. Youngren has been employed with Wakelight Technologies,
Inc. as a Systems and Data Architect. From March of 2008 to March 2012, he
worked as a Data Architect with HMSA. During his career he has focused on both
the development and analysis of data and software systems across a variety of
industries, including the government. These skills required the development of
algorithms performing data sorts and identification of critical data. His
responsibilities have also including training and education of the end users of
the systems.
Mr. Youngren has received a Bachelor of Science with a major in geology and a
minor in philosophy in 1980. He has attended graduate school at Eastern Kentucky
University in geological engineering. He has attended the University of
Louisville, Speed Engineering School focusing on civil engineering.
Mr. Youngren brings to the Board of Directors not only his technical experience
and his experience in the development of the GPM Solution, but also his vision
in its marketing and sales.
John Bradley, Chief Administrative Officer
Mr. Bradley was appointed the Chief Administrative Officer on March 31, 2014.
Mr. Bradley, since 1990, has worked as an independent consultant. He provides
consulting assistance to small companies with business formation and planning
services. Mr. Bradley has been an active investor in start-up companies.
Mr. Bradley was employed in the stock brokerage industry from 1970 until 1989.
He held positions including sales and management and was President and majority
shareholder in 2 NASD registered firms, Bradley and Associates d/b/a Tri-Bradley
Investments from 1983 - 1990 and Vantage Securities of Colorado in Denver,
Colorado from 1981-1983. In 1989, he consented to a suspension from NASD broker
status.
As part of this disclosure the following information is provided:
o In action DEN-878 vs. Tri-Bradley Investments, and John E. Bradley. Mr.
Bradley was sanctioned and fined. Tri-Bradley was censured and fined.
o The SEC suspended John E. Bradley as a Broker/Dealer in 1991 for 90 days.
(Rel. 34-29271)
o In April 1990, Complaint Number DEN 961, Respondents Tri-Bradley
Investments, Inc. and Mr. Bradley, submitted an offer of settlement which
was accepted, in which Tri-Bradley Investments was censured, fined $20,000
and expelled from membership in the NASD. Bradley was censured, fined
$15,000 and barred from association with any member of the NASD in any
capacity.
o No. DEN-1007-AWC. On December 28, 1990, a Letter of Acceptance, Waiver and
Consent submitted by Respondents Tri-Bradley Investments, Inc. and John E.
Bradley was accepted. Respondents were censured, fined and expelled from
NASD.
o Vantage Securities of Colorado, Inc., 1988 -1989, a cease and desist order
was issued against Bradley from offering or selling any securities in the
Commonwealth of Massachusetts.
23
Mr. Bradley, nor any entities, with which he was a significant participant have
had any disciplinary actions since 1990.
Mr. Bradley graduated from Regis University, Denver, Colorado in 1967 with BS in
Accounting.
Annual Meeting
The annual meeting of our stockholders is expected to be held at a future date.
This will be an annual meeting of stockholders for the election of directors.
The annual meeting will be held at our principal office or at such other place
as permitted by the laws of the State of Colorado and on such date as may be
fixed from time to time by resolution of our board of directors.
Committees of the Board of Directors
We are managed under the direction of its board of directors.
Executive Committee
We do not have an executive committee, at this time.
Audit Committee
We do not have an audit committee at this time.
Conflicts of Interest - General.
Our directors and officers are, or may become, in their individual capacities,
officers, directors, controlling shareholder and/or partners of other entities
engaged in a variety of businesses. Thus, there exist potential conflicts of
interest including, among other things, time, efforts and corporation
opportunity, involved in participation with such other business entities. While
each officer and director of our business is engaged in business activities
outside of its business, the amount of time they devote to our
business will be up to approximately 5-10 hours per week.
Conflicts of Interest - Corporate Opportunities
Presently no requirement contained in the our Articles of Incorporation, Bylaws,
or minutes which requires officers and directors of our business to disclose to
us business opportunities which come to their attention. Our officers and
directors do, however, have a fiduciary duty of loyalty to us to disclose to it
any business opportunities which come to their attention, in their capacity as
an officer and/or director or otherwise. Excluded from this duty would be
opportunities which the person learns about through his involvement as an
officer and director of another company. We have no intention of merging with or
acquiring an affiliate, associate person or business opportunity from any
affiliate or any client of any such person.
24
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid to officers and board
members during the fiscal years ended December 31, 2013, 2012 and 2011. The
table sets forth this information for the Company , including salary, bonus, and
certain other compensation to the Board members and named executive officers for
the past three fiscal years and includes all Officers as of December 31, 2013.
SUMMARY EXECUTIVES COMPENSATION TABLE
Non-equity Non-qualified
incentive deferred
Stock Option plan compensation All other
Salary Bonus awards awards compensation earnings compensation Total
Name & Position Year ($) ($) ($) ($) ($) ($) ($) ($)
-------------------- -------- ----------- -------- -------- ------- ------------- -------------- ------------- -------------
Redgie Green, 2013 0 0 0 0 0 0 $40,000 $40,000
Chief Executive 2012 0 0 0 0 0 0 0 0
Officer (1) 2011 0 0 0 0 0 0 0 0
Charles 2013 $49,000 0 0 0 0 0 0 $49,000
Youngren, III ,
Chief
Operating
Officer (1)
John E. 2013 0 0 0 0 0 0 $226,666 $226,666
Bradley, Chief
Administrative
Officer
(1) Mr. Green serves as the Chief Executive Officer of Legacy. In July
2013, was issued a total of 100,000 shares for services, the shares were
valued at $0.40 per share.
(2) Mr. Youngren serves as the Chief Executive Officer of GIWS. He was
appointed the Chief Operating Officer of the Company on March 31, 2014.
During the year ended December 31, 2013, he received cash compensation of
$49,000 for his services from Legacy.
(3) Mr. Bradley was appointed the Chief Administrative Officer of the
Company on March 31, 2014. During the year ended December 31, 2013, he was
issued a total of 566,666 shares of common stock at $0.40 per share for his
services.
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Option/Sar Grants In The Last Fiscal Year
We do not have a stock option plan as of the date of this filing. There was no
grant of stock options to the Chief Executive Officer and other named executive
officers during the fiscal years ended December 31, 2013 and 2012.
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Employment Agreements and Termination of Employment and Change-In-Control
Arrangements
We have no pension, health, annuity, bonus, insurance, stock options, profit
sharing or similar benefit plans; however, we may adopt such plans in the
future. There are presently no personal benefits available for directors,
officers, or employees.
We do not have an employment or consulting agreements with any of officers at
this time.
Compensation Committee Interlocks and Insider Participation
Our board of directors in its entirety acts as the compensation committee for
our executive officers.
Director Compensation
We do not pay any Directors fees for meeting attendance.
The following table sets forth certain information concerning compensation paid
to the our directors during the year ended December 31, 2013:
Fees Non-qualified
earned or Non-equity deferred
paid in Option incentive plan compensation
cash Stock awards compensation earnings All other Total
Name ($) awards ($) ($) ($) ($) compensation ($) ($)
----------------- ----------- ----------- ---------- ---------------- ----------------- ----------------- -----------
Redgie Green (1) $ -0- $ -0- $ -0- $ -0- $ -0- $ 40,000 $ 40,000
Charles $ -0- $ -0- $ -0- $ -0- $ -0- $ 49,000 $ 49,000
Youngren, III (2)
(1) Mr. Green in July 2013, was issued a total of 100,000 shares for services,
the shares were valued at $0.40 per share.
(2) Mr. Youngren received a total of $49,000 in payments for his services at
GIWS from the Company during the year ended December 31, 2013.
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All of our officers and/or directors will continue to be active in other
companies. All officers and directors have retained the right to conduct their
own independent business interests.
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Indemnification Of Directors And Officers
Our officers and directors are indemnified as provided by the Colorado Revised
Statutes and the bylaws.
Under the Colorado Revised Statutes, director immunity from liability to a
company or its shareholders for monetary liabilities applies automatically
unless it is specifically limited by a company's Articles of Incorporation. Our
Articles of Incorporation do not specifically limit the directors' immunity.
Excepted from that immunity are: (a) a willful failure to deal fairly with us or
our shareholders in connection with a matter in which the director has a
material conflict of interest; (b) a violation of criminal law, unless the
director had reasonable cause to believe that his or her conduct was lawful or
no reasonable cause to believe that his or her conduct was unlawful; (c) a
transaction from which the director derived an improper personal profit; and (d)
willful misconduct.
Our bylaws provide that it will indemnify the directors to the fullest extent
not prohibited by Colorado law; provided, however, that it may modify the extent
of such indemnification by individual contracts with the directors and officers;
and, provided, further, that we shall not be required to indemnify any director
or officer in connection with any proceeding, or part thereof, initiated by such
person unless such indemnification: (a) is expressly required to be made by law,
(b) the proceeding was authorized by the board of directors, (c) is provided by
us, in sole discretion, pursuant to the powers vested under Colorado law or (d)
is required to be made pursuant to the bylaws.
Our bylaws provide that it will advance to any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he is or was a director or officer of the Company, or is
or was serving at our request as a director or executive officer of another
company, partnership, joint venture, trust or other enterprise, prior to the
final disposition of the proceeding, promptly following request therefore, all
expenses incurred by any director or officer in connection with such proceeding
upon receipt of an undertaking by or on behalf of such person to repay said
amounts if it should be determined ultimately that such person is not entitled
to be indemnified under the bylaws or otherwise.
Our bylaws provide that no advance shall be made by us to an officer except by
reason of the fact that such officer is or was the Company's director in which
event this paragraph shall not apply, in any action, suit or proceeding, whether
civil, criminal, administrative or investigative, if a determination is
reasonably and promptly made: (a) by the board of directors by a majority vote
of a quorum consisting of directors who were not parties to the proceeding, or
(b) if such quorum is not obtainable, or, even if obtainable, a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, that the facts known to the decision-making party at the time such
determination is made demonstrate clearly and convincingly that such person
acted in bad faith or in a manner that such person did not believe to be in or
not opposed to the best interests of the Company.
Equity Compensation Plan Information
We have not established an equity compensation plan or Incentive Stock Option
Plan.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Other than the transactions discussed below, we have not entered into any
transaction nor is there any proposed transactions in which any of the founders,
directors, executive officers, shareholders or any members of the immediate
family of any of the foregoing had or is to have a direct or indirect material
interest.
During the year ended December 31, 2012, we had no reportable related party
transactions.
Transactions with Mr. Youngren - Officer, Director and Majority Shareholder
During the year ended December 31, 2013, Mr. Youngren, an officer, director and
majority shareholder of the Company received cash compensation of $49,000 in
return for his services.
In March 2013, GIWS entered into a Software License Agreement with Mr. Youngren,
the developer of the proprietary software behind the web-based Genomic
Preventative Medical Solution. The Software License grants GIWS an exclusive
world-wide use, modification and marketing of the software. The Software License
has a term of 30 years.
Issuance of Common Shares to Officers and Directors
In July 2013, we issued shares to Messrs. Bradley and Green for their services
to the Company. Mr. Bradley was issued 566,666 shares of restricted common stock
and Mr. Green was issued 100,000 shares of restricted common stock.
Director Independence
Our board of directors undertook a review of the independence of the directors
and considered whether any director had a material relationship with us or our
management that could compromise his ability to exercise independent judgment in
carrying out his responsibilities. As a result of this review, the board of
directors affirmatively determined that neither Mr. Redgie Green, Mr. John
Bradley or Mr. Youngren are each "independent" as such term is used under the
rules and regulations of the Securities and Exchange Commission, given their
status as officers and directors and given Mr. Youngren's status as a majority
shareholder of the Company.