Our Filing Status as an
"Emerging Growth Company," as Defined in the JOBS Act, and our Available
financial Reporting Exemptions
We are an emerging growth company ("EGC") as
that term is defined under the JOBS Act. The JOBS Act affords companies the
opportunity to file registration statement with certain scaled back
disclosure, getting a temporary reprieve from certain SEC regulations
As a company that had gross revenues of less than $1 billion
during our last fiscal year, we are an "emerging growth company" or "EGC" as
defined in the JOBS Act. We will retain that status until the earliest of
(A) the last day of the fiscal year in which we have total annual gross
revenues of $1,000,000,000 (as indexed for inflation in the manner set forth
in the JOBS Act) or more; (B) the last day of the fiscal year following the
fifth anniversary of the date of the first sale of our Common Stock pursuant
to an effective registration statement under the Securities Act of 1933, as
amended (the "Act"); (C) the date on which we have, during the previous
3-year period, issued more than $1,000,000,000 in non-convertible debt; or
(D) the date on which we are deemed to be a "large accelerated filer," as
defined in Rule 12b-2 under the Securities Exchange Act of 1934 (the
"Exchange Act") or any successor thereto.
As an EGC we are exempt from
Section 404(b) of Sarbanes-Oxley of 2002 ("SOX"), which requires auditors to
attest to and report on internal control over financial reporting. The JOBS
Act also amended Section 103(a)(3) of Sarbanes-Oxley Act of 2002 ("SOX") to
provide that (i) any new rules that may be adopted by the PCAOB requiring
mandatory audit firm rotation or changes to the auditor's report to include
auditor discussion and analysis (each of which is currently under
consideration by the PCAOB) shall not apply to an audit of an EGC and (ii)
any other future rules adopted by the PCAOB will not apply to our audits
unless the SEC determines otherwise.
Section 14A(a) and (b) of the
Securities Exchange Act of 1934 (the "Exchange Act") by exempting an EGC
from these regulations, eases certain regulatory burdens of the EGC
registration process by requiring inclusion of two, rather than three, years
of audited financial statements and selected financial data in the
registration statement for the IPO, allowing a company to request a
confidential, nonpublic review of its registration statement by the SEC
prior to public disclosure, permitting a company to gauge interest in its
offering by expanding its ability to communicate with certain institutional
investors prior to and during the offering process and reducing restrictions
on the publication of analyst reports about the company.
We have elected
to take advantage of the extended transition period for complying with new
or revised accounting standards under Section 102(b)(1), which allows us to
delay the adoption of new or revised accounting standards that have
different effective dates for public and private companies until those
standards apply to private companies. As a result of this election, our
financial statements contained in this Form 10 and our subsequent Exchange
Act reports may not be comparable to companies that comply with public
company effective dates. The existing scaled executive compensation
disclosure requirements for smaller reporting companies will continue to
apply to our filings for so long as our Company is an emerging growth
company, regardless of whether the Company remains a smaller reporting
Notwithstanding the above, we are also currently a "smaller reporting
company," meaning that we are not an investment company, an asset-backed
issuer, or a majority-owned subsidiary of a parent company that is not a
smaller reporting company and have a public float of less than $75 million
and annual revenues of less than $50 million during the most recently
completed fiscal year. In the event that we are still considered a "smaller
reporting company," at such time we cease being an "emerging growth
company," the disclosure we will be required to provide in our SEC filings
will increase, but will still be less than it would be if we were not
considered either an "emerging growth company" or a "smaller reporting
company." Specifically, similar to "emerging growth companies," "smaller
reporting companies" are able to provide simplified executive compensation
disclosures in their filings; are exempt from the provisions of Section
404(b) of SOX requiring that independent registered public accounting firms
provide an attestation report on the effectiveness of internal control over
financial reporting; are not required to conduct say-on-pay and frequency
votes until annual meetings occurring on or after January 21, 2013; and have
certain other decreased disclosure obligations in their SEC filings,
including, among other things, being permitted to provide two years of
audited financial statements in annual reports rather than three years.
Decreased disclosures in our SEC filings due to our status as an "emerging
growth company" or "smaller reporting company" may make it harder for
investors to analyze the Company's results of operations and financial
The Company was incorporated under the name Creative Learning
Products, Inc. in the State of New Jersey on August 31, 1988 and changed its
name to Creative Gaming, Inc. in May 1997. The Company changed its name to
Management Services, Inc. in October 2006. In August 2008, the Company
changed its name to Centriforce Technology Corp. In May 2010, the Company
changed its name to its current name, ADB International Group, Inc.
December 31, 2010, we
have been engaged in efforts to actively enter the water treatment industry.
In June 2008, we began working to develop a new line of water desalination
products. We have not generated any revenues from our water desalination
product development efforts and, as a result, during late 2011 into early
2012, we determined that it would be in the best interests of our
shareholders to devote our limited financial and personnel resources to
pursue joint ventures to become a distributor of existing water treatment
technology products manufactured by others. We made this determination based
upon the business relationships that we had developed during the period from
June 2008 through 2012 while we were engaged in and pursuing development of
water desalination products, which caused us to believe that we could become
a distributor working together with established Israeli-based companies
engaged in the water treatment industry.
In furtherance of our work
during 2011, on February 10, 2012, we entered into a non-binding Memorandum
of Understanding ("MOU") with Treatec21 Industries Ltd,
(treatec21.com/Eng/), a major Israeli-based private company engaged in the
water treatment industry ("Treatec") and a wholly-owned subsidiary of Yaad
Industry Agencies Ltd, a public company listed on the Tel Aviv Stock
Exchange ("TASE"). The MOU with Treatec contemplated the grant by Treatec of
certain distribution rights to Treatec's water treatment products in New
Zealand, Australia, Canada and the US. Shortly thereafter, on February 28,
2012, we entered into a non-binding MOU with Green Eng Ltd,
(en.greeneng.biz/), an Israeli company ("GreenEng") also engaged in the
water treatment industry. The GreenEng MOU also contemplated the grant to
the Company of non-exclusive distribution rights to GreenEng's products in
the US and Canada.
Shell Company Status
The Company must still be deemed a "Shell" company as that term is
defined in Rule 144(i) promulgated by the SEC under the Securities Act of
1933, as amended (the "Act") because we have had only nominal operations to
Reliance upon Rule 144 for Resales
Shareholders who hold shares which are not subject to a registration
statement under the Act often rely upon Rule 144 for their resale. Rule 144
is not available for the resale of securities initially issued by Shell
companies (other than a business combination related Shell company) or a
Registrant that has been, at any time previously, a reporting or
non-reporting Shell company, unless the issuer meets specified conditions. A
security holder may resell securities pursuant to Rule 144's safe harbor if
the following conditions are met:
a) The issuer of securities that was
formerly a reporting or non-reporting Shell company has ceased to be a
b) The issuer of the securities is subject to the reporting
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934
(the "Exchange Act");
c) The issuer of the securities has filed all
reports and material required to be filed under Section 13 or 15(d) of the
Exchange Act, as applicable, during the preceding 12 months (or for such
shorter period that the issuer was required to filed such reports and
materials), other than Form 8-K reports; and
d) At least one year has
elapsed from the time the issuer filed current Form 10 type information with
the SEC reflecting its status as an entity that is not a Shell company.
Form 8-K Requirements
Form 8-K requires disclosure of transactions involving a reporting Shell
company that ceases to be a Shell company, typically involving a reverse
merger or acquisition. The issuer is required to file a report on Form 8-K
to report the following:
- a material definitive agreement under Item
1.01 of Form 8-K;
- completion of acquisition or disposition of assets
under Item 2.01 of Form 8-K;
- changes in control under Item 5.01 of Form
- information that would be required in a registration statement
on Form 10 to register a class of securities under Section 12 of the
Form S-8 under the Securities Act prohibits companies who are Shell
Companies from using Form S-8. If a company ceases to be a Shell company, it
may use Form S-8 sixty calendar days after the company files "Form 10
information," which is information that a company would be required to file
in a registration statement on Form 10 if it were registering a class of
securities under Section 12 of the Exchange Act. This information would
normally be reported on a current report on Form 8-K reporting the
completion of a transaction that caused the company to cease being a Shell
Reduced Liquidity or Illiquidity of our Common Stock Securities
Our common stock is currently subject to quotation on the OTCBQ market.
There is currently no active trading market in our common stock on the OTCBQ
market. Shareholders who invested in our shares of common stock while we are
deemed to be a Shell company invested in securities that are considered to
be illiquid and can't be sold pursuant to the exemption provided under Rule
144 as long as the Company is a Shell company.
On December 17, 2012, we
entered into a cooperation and distribution agreement with Treatec (the
"Treatec Distribution Agreement") pursuant to which we were granted certain
rights to distribute Treatec's water treatment products in Australia ,New
Zealand, the United States and Canada on a non-exclusive basis. In
connection with the Treatec Distribution Agreement and in order to enhance
our ability to develop a market presence for the Treatec products in the
Australia and New Zealand, we entered into a Representative Services
Agreement dated February 21, 2013 with Mr. Tal Yoresh, a resident of
Australia with many years of experience representing Israeli technology
companies in both Australia and New Zealand. Following his appointment as
our Regional Marketing Representative, Mr. Yoresh has had meetings with
representatives of governmental agencies, both local and regional as well as
with and potential private sector customers, principally in Australia and to
a lesser extent in New Zealand, presenting the Treatec line of water
treatment products. See the discussion below regarding Treatec's increasing
market presence in Asia and the Pacific Rim. Also see the discussion of the
Treatec Distribution Agreement under "Material Terms of the Treatec
In May 2012, Treatec entered into a five-year agreement
with Shunde Dowell Technological and Environmental Engineering Co. Ltd, a
major Chinese corporation ("Shunde Dowell") with an established presence in
the Pearl River Delta, among other areas throughout China, as well as in
Viet Nam and elsewhere in SE Asia. Pursuant to this Treatec agreement,
Shunde Dowell will use, on an exclusive basis, Treatec's water treatment
technology solutions in China, Macau and Hong Kong (the "Chinese Market").
Treatec will serve as the exclusive contractor for Shunde Dowell's water
treatment projects in the Chinese Market, utilizing Treatec's Multi Stage
Biological System ("MSBS"). Following the execution of the agreement, Shunde
Dowell commenced projects with initial revenues of approximately $750,000
and in December 2012, Shunde Dowell announced that a Treatec designed water
treatment solution had been chosen for a major industrial waste water
treatment project in Guangdong, China, which was completed during the first
half of 2013.
In addition, in July 2012, Treatec signed an
agreement with the Israeli Defense Ministry to provide for the installation
and maintenance on one military base a compact wastewater treatment facility
which facility and maintenance shall generate approximately $300,000 with
the anticipation of additional installations at multiple bases in the
On January 17, 2013, we entered into a distribution agreement
with GreenEng (the "GreenEng Distribution Agreement"), pursuant to which the
Company has been granted the rights to distribute the GreenEng water
treatment products and technology in the United States on a non-exclusive
basis. See the discussion of the GreenEng Distribution Agreement under
"Material Terms of the GreenEng Agreement" below.
During 2013, we
evaluated several firms and persons that potentially could serve as our
sales and marketing representative in the United States to facilitate our
acquisition of a customer base for both the Treatec and GreenEng products in
the U.S. market.
The Treatec and GreenEng Distribution Agreements were
attached as exhibits to the Company's Form 10-K for the year ended 2012. The
Treatec Distribution Agreement and the GreenEng Distribution Agreement are
sometimes collectively referred to as the "Distribution Agreements."
Notwithstanding our belief that we would be able to sell and distribute both
the Treatec and GreenEng water treatment products and solutions successfully
in North America, subject to our ability to raise capital, to date we have
not generated any revenues from the sale of any water treatment products. In
an effort to generate sales in the Territories where we have Distribution
Agreements, in 2013 we engaged, Mr. Itai Weisberg, founder and CEO of
GreenEng, to serve as our marketing consultant. While we have received
recent reports from both GreenEng and Treatec21 regarding their
developments, which we had hoped could be instrumental in supporting our
marketing efforts in Australia and New Zealand, the positive developments
achieved by Treatec and GreenEng have had no positive impact, either direct
or indirect, on our Company. Furthermore, we are aware that from the date of
the execution of any distribution agreement to the actual commencement of
particular water treatment projects and the receipt of revenues, there
typically involves a lag time of 12 to 24 months. During this period,
projects must be approved, whether by governmental officials or
representatives of private sector customers, and thereafter must be funded.
There can be no assurance that, in the event we are able to generate sales
orders in our Territories for Treatec or GreenEng water treatment products,
we will be able to raise capital from either the equity or debt markets
necessary for us to fulfill such orders.
For example, the Arava desert
area of Israel is known for its extreme weather conditions, with significant
differences in day temperature compared to night time, which is very similar
to the climate in many parts in Australia, as well as in the United States.
The success that our licensors have achieved with new Projects in the Arava
desert area presents support for our ongoing marketing efforts in by our
Regional Marketing Director, Tal Yoresh, in Australia.
In addition, in
September 2013, Treatec entered into a joint venture with Myanmar's Supreme
Group of Companies Ltd. ("Supreme") to collaborate on the design,
construction and operation of industrial facilities and municipal wastewater
treatment throughout of Myanmar (formerly Burma). Supreme is a leading
infrastructure and construction company in Myanmar, engaged in water and
electric works, including water treatment systems, environmental
engineering, special infrastructure construction projects, agriculture,
power transmission, among other major industries. Pursuant to the terms of
the joint venture, the parties will also collaborate on upgrading existing
water treatment facilities in addition to the construction of new
While ADBI believed that the success of Treatec in the China,
Viet Nam and the rapidly growing Southeast Asian market for water treatment,
which expands the scope and reach of Treatec's proprietary technologies,
could translate into our ability to play a meaningful role in developing
ongoing business in Australia and New Zealand, to date Mr. Yoresh, our
Regional Marketing Director, has not generated any orders for the water
treatment products we are licensed to distribute.
As a result, there can
be no assurance, notwithstanding the success of both Treatec and GreenEng,
that we will be successful in generating purchase orders in our Territories
or be able to raise the capital necessary to complete our business plan.
Our Water Treatment Business
Since early 2012, following our transition
from our water desalinization technology business, we have devoted our
energy and limited resources in furtherance of our plan to serve as a
distributor of water treatment products manufactured by established
companies in the water treatment industry. During 2012, the Company's
business activities involved business and product research, securing
marketing and distribution agreements, preparing a comprehensive business
and operating plan, evaluating the regulatory requirements and engaging in
related activities prerequisite to being a distributor of water treatment
products in certain markets. In addition, during 2012, the Company consulted
with third parties, including its shareholders and technical persons known
by or introduced to the Company having knowledge of the water treatment
industry, in order to evaluate competing water treatment technologies and
potential "partners" for which the Company could potentially serve as
distributor, which efforts resulted in the execution of Distribution
Agreements with Treatec21 and GreenEng.
Material Terms of the
The Company's Treatec Distribution Agreement provides
that we serve as the representative for Treatec's products in Australia and
New Zealand, on an exclusive basis, and as a distributor of Treatec water
treatment products in the North American market on a non-exclusive basis.
The Treatec Agreement provides for, among other things, a two year term,
subject to extension upon mutual agreement, during which term the parties
agreed to work together in identifying water treatment projects (the "Treatec
Projects") using Treatec's MSBS technology in the United States, Australia
and New Zealand (the "Territory"). The Agreement further provided that in
December 2013, ADBI and Treatec would commence discussions with the view to
granting the Company exclusivity in all or parts of the Territory. To date,
such negotiations have not yet commenced. Under the Treatec Agreement,
ADBI's primary responsibility involves locating suitable Projects for sale
to customers within the Territory and Treatec agreed to provide the
Company's sales and marketing personnel and management with necessary
training to understand and market Treatec's water treatment technology and
solutions. The Treatec Agreement further provided that Treatec shall not be
required to provide any funding for or facilitate the arrangement for any
funding for any Project, which obligation shall be the responsibility of the
Company. To date, the Company has not raised capital to fund any Project, if
and when any such Project is identified, of which there can be no assurance.
Material Terms of the GreenEng Agreement
The Company's GreenEng Agreement
dated January 17, 2013, granted the Company U.S. distribution rights to
GreenEng products on a non-exclusive basis. The GreenEng Agreement provides
for among other things: (i) a term of three years; (ii) the Company shall
purchase products from GreenEng pursuant to a schedule adopted by the
parties according to payment terms involving cash upon delivery or according
to certain credit terms; (iii) the Company and GreenEng shall cooperate on
the promotion of marketing and support of the GreenEng products; and (iv)
the Company shall establish a marketing facility for the display and
demonstration of the GreenEng water treatment products and program. Since
the execution of the GreenEng Agreement, the Company has no purchased any
products fro GreenEng nor has there been any active marketing program
undertaken by the Company or GreenEng in the U.S.
The Water Treatment
Pursuant to the Treatec and GreenEng Agreements, the Company has
the rights to distribute all of the water treatment products of both Treatec
and GreenEng in the Company's respective Territories. The water treatment
products of Treatec and GreenEng are hereinafter referred to as "Our
Products" for the purposes of disclosure. Notwithstanding the foregoing, the
following disclosure of Our Products makes clear which products we have been
licensed to distribute by Treatec and by GreenEng, respectively. We are not
developing any products of our own but rather our plan has been to devote
our efforts and limited resources to enable us to distribute products
pursuant to separate distribution agreements we sign with third parties,
such as the Treatec and GreenEng Agreements.
Our Treatec Products
are licensed to distribute the following Treatec water treatment products,
and a description of the products and their benefits, on an exclusive basis
in Australia and New Zealand and on a non-exclusive basis in the United
(A) MSBS- Multi-Stage Biological System: The MSBS
enables a very efficient treatment of
both municipal and industrial wastewater, providing for both lower costs and
higher quality effluents. We understand that MSBS results in reduced
operational costs compared to other technologies. The advantages of the MSBS
System include: (i) significant reduction in investment and operational
costs - due to the absence of sludge treatment; (ii) minimal use of
electro-mechanical components allows for easy operation and maintenance;
(iii) MSBS is a fully automated system that can be operated and monitored
remotely; and (iv) MSBS facilitates easy upgrading to tertiary treatment
without the need of additional biological systems.
(B) UV Technology
and Advance Oxidation-Natural Treatment Without Use of Chemicals
technology offers a proven and accepted, environmentally-friendly method for
All micro-organisms can be effectively destroyed by UV light in the 200-315 range,
resulting in their loss of ability to infect humans, animals,
food and plants. UV technology has been
increasingly replacing traditional chemical disinfectants due
to the following features:
- Absence of harmful by-products.
Reduction in the use of chlorine thus increasing safety, reducing storage
safety issues and prevention of soil contamination.
effectiveness when compared to alternatives (especially against viruses)
- Savings on space and reduced maintenance costs, as no chemicals
are introduced into the water.
Treatec21's UV technology uses medium-pressure lamps and amalgam lamps,
combined with a state-of-the-art quartz reactor providing an highly efficient and high
density radiation profile which ensures permanent and irreversible deactivation
of all relevant pathogens, including Escherichia coli.
The GreenEng products we are licensed to distribute in the
United States on a non-exclusive basis include the following: (i) an "Ozochef"
system; (ii) "Ozopool" system; (iii) "GreyOGreen" system; and (iv) ODDS
To better understand the GreenEng ozone-related, water treatment
products we have been licensed to distribute in the United States, ozone is
widely viewed as a preferable alternative to chemicals for water treatment.
GreenEng has a line of new and unique products that enable customers utilize
our ozone systems to meet their water treatment needs, including, but not
limited to: (i) costly wastewater processing; (ii) hazardous substances in
wastewater treatment; and (iii) use of ozone treatments to neutralize
environmental hazards at customers' facilities.
(A) Ozochef is a
revolutionary system which provides comprehensive disinfection solution for
industrial kitchens, restaurants and hotels, among other such users,
enabling the disinfection of kitchen personnel (hands wash), food (washing
vegetables, fruits, meat, poultry and eggs), work tools, such as
knives, working surfaces, workspace such as floors and storage rooms and
reducing fats and odor hazards.
(B) Ozopool: Chlorine was the common way
for treating swimming pools, spas, recreation water parks, water sports
facilities and therapy. Aside of its disinfection capabilities, there
are also some major drawbacks for using chlorine, the foremost of which was
creating carcinogens in the water in the form of chorimines, and to a lesser
extent the need to adjust pH levels of the water for chlorine effectiveness,
burning eyes and skin and suffering a nuisance of bad odor which reflects
directly on the swimming experience. Ozopool provides ozone disinfection to
public pools, water parks, sport facilities and treatment pools, which
ensures: (i) better disinfection of the water with ozone; (ii) improvement
of water quality; (iii) total reduction of chlorine consumption; and (iv) on
going cost reduction as compared to chemical processes. Ozopool systems
involve the injection of ozone into pool water near the filtering systems.
Ozone is not only 50% more powerful than chlorine but is also 3,200 times
(C) GreyOGreen System: Unlike other grey water
recycling systems which use biological treatment in order to reduce
COD and BOD levels, our GreenEng system relies on technological process
rather on a biological processes. The system produces water in a quality
that meets the standards Israeli regulation authorities and
also produce water quality that meets the standards of most of the western
(D) The ODDS System: ODDS is installed with no inference
in the customer's (industrial or residential) central water infrastructure,
deals only with the main buffer tank and due to the fact that ozone is far
times faster acting than chlorine and is stronger by 50%, there is no need
for a long intervention time even in large water flows. ODDS is completely
automatic and remote controlled by a precise control system based on online
measurements of hydraulic parameters (pressure, flow), water quality,
dissolved ozone, ambient ozone, filtering and relevant environmental
parameters (temperature, relative humidity).
The GreenEng products were
used initially in Israel and are now also being offered outside of Israel.
We believe, based upon the ozone technologies that are used in each of the
GreenEng products and systems, that there will be a market that should
readily accept the Israeli technology that we are licensed to distribute. We
intend to focus our efforts and resources as a marketing and distribution
company and do not currently plan to devote any efforts to engage in the
design, development or manufacturing of any water treatment products. Our
plan includes application for and receipt of approval from the EPA, of which
there can be given no assurance, following which we intend to market and
sell innovative water treatment products licensed to us by Treatec and
The Water Treatment Market
The water treatment
market is rapidly growing and a primary component of the world's basic needs
market. Demand forecasts for water treatment products, both chemical and
non-chemical, is projected to increase significantly in the years to come.
With over 20 large target industries benefiting from clean water, i.e.;
household and commercial users, food processing, food service, beverages and
water bottling, agricultural, medical and pharmaceutical, recreation, as
well as wastewater treatment, etc. and with an ever-present threat of
water-borne diseases and other biohazard and inorganic aquatic health
threats, along with mechanical corrosion issues, the clean water industry is
paramount in importance to the U.S., the rest of North America and
world-wide. There are various competing water treatment technologies
currently being offered or under development in the North American market as
well as in the Australian and New Zealand markets.
Our Business Strategy
In order to implement the first phase of our business plan, which included
the execution of our Distribution a Agreements with Treatec and GreenEng, we
estimated that we would require approximately $400,000 to comply with EPA
regulatory requirements. Through our fiscal year ended December 31, 2013, we
were unable to raise the requisite funds and there could be no assurance that we
would be successful in raising the requisite capital at
terms and conditions satisfactory to the Company, if at all, nor can there
be any assurance that we will be successful in negotiating any other
distribution agreements. We do not have any financing arrangements in place
and we may not be able to secure such financing when and as required. In the
event that we are successful in executing license agreements and raising
necessary financing, of which there can be no assurance, we will still be
dependent upon our ability to successfully implement our business plan to
become a successful participant in the water treatment business in a timely
basis, if at all.
Our plan had been to raise the capital necessary to
fund our business through the private offering(s) of equity consisting or
our common stock or units consisting of common stock and stock purchase
warrants, or debt, although there could be no assurance that we would be
successful in raising either equity or debt capital. Our ability to secure
the requisite capital is subject to a number of factors including, but not
limited to, investor acceptance of our business strategy, general investor
sentiment, overall market conditions and the economy in general. These
factors dversely affected the timing, amount, terms, or conditions of any
financing that we sought to obtain.
Phase 1: Finalization of the strategic marketing plan, initial
start-up capital realization through private stock offering(s), commencing
the application process for EPA and State certification, and hiring/training
sales and technical personnel.
Phase 2: Initiation of marketing and sales
activities in selected markets in the United States followed by Canada as
well as working closely with our representative for Australia and New
Zealand. Full scale commercialization of the water treatment products,
including industrialization and after-sale service agreements, for the
markets covered by the license agreements.
Our objectives are to: (a)
Apply for and obtain EPA approval and NSF Verification for Our Products; (b) Enter and cover all market segments in the U.S., Canada, Australia and
New Zealand; and (c) Establish Our Products as among the leading water
We had no plans to develop and/or produce any water
treatment products or components on our own. Rather, we planned to act as an
exclusive and non-exclusive distributor for certain water treatment products
developed by third-parties for sale in the United States, Canada, Australia
and New Zealand, based upon our existing Treatec and GreenEng Agreements. To date, we have not taken any meaningful steps in furtherance of either
Phase 1 or Phase 2 of our business plan, primarily because of our inability
to generate sufficient interest from third-party investors/lenders at terms
and conditions satisfactory to the Company. Rather, we have been dependent
upon loans/advances from management and shareholders to fund our operating
expenses, including the costs associated with being a reporting public
company under the Exchange Act.
Water treatment and
purification systems with increasing levels of complexity and effectiveness
have been in operation worldwide for a number of years, with significant
competition at all levels. However, conventional mechanical and chemical
purification processes, including hyper chlorination, heat flushing,
copper/silver ionization, chlorine dioxide dosing, and other means have
proven to be insufficient in preventing the transmission of water borne
disease through this essential nutritional element that water represents.
That is one reason why a continuing and substantial number of outbreaks of
water borne illnesses and disease occur on a virtually continuing basis in
both the developed and developing world. Recognizing that special
disinfection methods had to be developed to eliminate micro-organisms such
as bacteria and viruses, heavy chlorination and other chemical treatments,
and more recently UV and Ozone treatments, have been introduced.
continued to believe that the water treatment technology products we are
licensed to distribute have the potential to be well-accepted in our North
American, Australian and New Zealand Territories, we have not yet tested Our
Products in our markets, nor have we the capital resources to be able to
successfully test market Our Products or comply with regulatory protocols.
We also believed that we would be able to achieve a competitive
advantage or at least parity, notwithstanding our limited resources and
current lack of market presence, based on the innovative technologies we
expected to market under the Distribution Agreements as well as by the price
advantages we expected. Notwithstanding our belief in our potential
competitive advantages, our competitors will be far larger and have
well-established market reputations and have substantially more financial
and other resources than our company. In addition, our lack of capital
resources has delayed our ability to implement our business plan.
order to be successful, of which there can be no assurance, we will be
required to overcome the expected market resistance that we will confront as
a relatively new company offering new products with new technical solutions
for the water treatment industry. There can be no assurance that we will
ever be able to become successful and compete in this market. Potential
customers in our target markets may be unwilling to place significant
purchase orders with our Company which is presently an under-funded,
development-stage companyhaving no proven track record and limited
personnel. However, we believe that if we were able to raise capital
sufficient to implement our business plan, there could be significant demand
for our innovative water treatment technology systems and its competitive
advantages, which could permit us to generate revenues and hire qualified
personnel, among other things, to enhance our potential for success.
competitive environment that we may expect to confront, in the event that we
are able to raise debt and/or equity capital, may adversely affect our
sales, as well as our capacity to hire and retain qualified personnel or
secure and retain customers. There can be no assurance that we will be able
to successfully compete based on these factors. As part of our plan to
compete successfully, we plan to promote the innovative technology
implemented in our water treatment products, with competitive pricing,
customer service and highly reliable, quality products, if we have adequate
Marketing and Sales
Our plan is to employ our capital
resources, if and when available, to focus our sales and marketing program
directly to important target markets in the United States and Canada where
water safety is paramount, such as those facilities where people are exposed
to environmental hazards, where expensive and reputation tarnishing lawsuits
are in abundance or may be expected, and where other competing products are
failing to properly address these health-related issues. Three primary
markets, our review has indicated, are hospitals, hotels and at sites of
disaster, such as earth quakes, floods, hurricanes as well as man-made
disasters, all of which require potable water for human and other
consumption and use. Secondary marketing targets are water cooling towers,
food processing facilities, retirement homes, schools, industrial plants,
public fountains, pools and water parks. We plan a similar strategy in
Australia and New Zealand.
Our marketing plan is being developed together
with our licensors, Treatec and GreenEng, specifically related to their
water treatment products, and will involve, among other things, attending
trade shows and undertaking a direct marketing program to certain target
customers in North America and Australia and New Zealand. Our business plan
provides for the Company, together with Treatec and GreenEng, ito develop
separate comprehensive marketing procedures, subject to our having available
capital resources, to define the differences between our water treatment
technology systems compared to those presently available in the market.
Nevertheless, because of our lack of capital resources, we have not been
able to develop and produce any requisite technical and sales brochures,
sales and marketing presentations nor have we been able to hire and train a
sales team. As a result, there can be no assurance that we will be able to
implement our business plan or generate any significant revenues from
operations necessary for us to be profitable.
Patents, Trademarks, and
We have not filed for any patent, trademark or copyright
protection to date. To the extent that we determine that such protection may
be necessary, our present plan is to work with our existing licensors,
Treatec and GreenEng, and any future licensors, using the protection that
they may have or obtain.
During the period from February 2012 to February 2013, Yoseph Zekri was
our sole officer, director and employee. On March 15, 2013, we entered into
an employment agreement with Mr. Sharar Ginsberg, who received an MBA degree
from the Peres Academic Institution in Israel, with a major in Marketing.
Mr. Ginsberg was also appointed our CEO and acting CFO and director, with
Mr. Zekri continuing to serve as Secretary and Chairman. On December 24,
2013, in connection with the investment by Ron Weissberg of $91,545
represented by $20,000 for his purchase of 200,000,000 Shares and $71,545 in
a convertible note, the Registrant's board of directors appointed Mr.
Weissberg as Chairman, Chief Executive Officer and Chief Financial Officer
and accepted the resignation of Mr. Ginsberg as our CEO, acting CFO and
director. We have no full-time employees. The implementation and timing of
our hiring plan is dependent upon available financial resources.
There are no pending legal
proceedings to which the Company is a party or in which any director,
officer or affiliate of the Company, any owner of record or beneficially of
more than 5% of any class of voting securities of the Company, or security
holder is a party adverse to the Company or has a material interest adverse
to the Company. The Company's property is not the subject of any pending
The U.S. Environmental
Protection Agency (EPA) and NSF International (NSF), an independent third
party testing laboratory accredited by the EPA, have partnered to form an
Environmental Technology Verification (ETV) Protocol that most states and
other jurisdictions currently require for water treatment technology
products to be sold in their respective states/jurisdictions. To date, none
of the Treatec21 or GreenEng water treatment products have been sold or
installed in the United States. Unless and until the products that we are
licensed to sell are approved, of which there can be no assurance, our water
treatment products can not be sold in the U.S. As we continue to raise
capital, which initially will be from our existing shareholders, we plan to
utilize our limited resources to seek approval from the EPA conducted by NSF
International, which process typically takes from nine months to one year
and could cost up to $400,000. There can be given no assurance that we will
receive approval for the EPA and NSF for our water treatment products.
NSF has in place a Standard 61 leeching test for water disinfection units
for potable water systems that is required throughout the U.S. to determine
if chemicals or compounds from the unit's structure are leeched into the
water. We believe that the Standard 61 testing protocol for leeched
contaminants from the unit can be concurrently done by NSF and is estimated
to take about two months. Standard 61 is not overseen directly by the EPA,
but is required by individual states to allow products to be sold within
their state. Any water treatment device that has "wetted parts", or parts
that come in direct contact with drinking water, must have those parts
tested for acceptable levels of leeched contaminants into the drinking
water. Specific parts are exposed to different water temperatures and pH
level variables for certain lengths of time to determine if any unacceptable
levels of contaminants enter the water. Once Standard 61 testing is
successfully concluded, of which there can be no assurance, the tested unit
category will earn the NSF 61 mark.
In order to enter into the swimming
pool and bathing water system market, in which GreenEng participates, a
Standard 50 testing must be undertaken to determine if adequate microbial
eradication takes place. Each individual state governs its own regulations
as related to water disinfection products and the ETV Protocol. California,
for example, requires pre-approval of the testing protocol be used for the
ETV laboratory testing of microbial eradication so that it meets their
standards, and California also requires that certain standards be met
depending upon the use of the water disinfection unit, such as Standards 51
and 60. Certain other non-governmental agencies might also be required to
inspect the units for adequacy on such things as seismic activity
Electrical safety and grounding testing is another regulation
that is typically required by state certification programs, which testing is
often done by Underwriter Laboratories ("UL"). This type of approval is
necessary for selling and installing any electrical device within the United
States. Due to electrical components, motors, and wires, our water treatment
technology must undergo an investigation by an accredited product safety
laboratory such as UL for testing of equipment risk and certification.
ITEM 1A. RISK FACTORS
Back to Table of Contents
This Annual Report on Form 10-K contains forward-looking statements that
are based on current expectations, estimates, forecasts and projections about us, our
future performance, the market in which we operate, our beliefs and our management's
assumptions. In addition, other written or oral statements that constitute forward-looking
statements may be made by us or on our behalf. Words such as "expects",
"anticipates", "targets", "goals", "projects",
"intends", "plans", "believes", "seeks",
"estimates", variations of such words and similar expressions are intended to
identify such forward-looking statements. These statements are not guarantees of future
performance and involve certain risks, uncertainties and assumptions that are difficult to
predict or assess. Therefore, actual outcomes and results may differ materially from what
is expressed or forecast in such forward-looking statements.
RISKS RELATED TO OUR COMPANY AND OUR INDUSTRY
If we are unable to meet certain milestone and minimum annual sales obligations that
may be contained in our License Agreements, we could lose the exclusivity of our license
and the licensor could terminate the license agreement.
The license agreements with our initial two licensing partners may
require us to meet a number of specific milestones by certain dates, which, if we fail to
achieve, may result in our license agreements becoming non-exclusive, damaging our
competitive situation and/or provide the licensor with grounds to terminate the agreement.
In addition, we may be required to meet certain minimum annual sales volumes based on net
purchase value of sales. If we are unable to meet those minimum annual sales volumes, if
any, our license could become non-exclusive and/or could be terminated.
If we are unable to obtain EPA approval to commercially sell the water treatment
technology products in the United States, the license agreements could revert to a
non-exclusive license and our licensor could terminate the license agreement.
We expect that under the terms of the license agreements with our licensors, we will be
required to gain approval from the EPA. The verification and certification process leading
to such approval involves extensive testing and is an expensive process. We expect that we
will have to raise capital, in an amount not yet ascertainable, to pay for the independent
verification and certification process leading to approval. We intend to raise capital
through the sale of equity so that we can begin the testing process with NSF.
We will have to pay license fees, royalties, and purchase products using a different
Fees and royalties to our licensors, as well as minimum annual sales targets and
purchases from licensors may be in the currency of Israel. We may also be required to
purchase wholesale goods from our licensors in Israel. In the event that the U.S. dollar
declines in value compared to the Israeli currency, the cost of our purchases could
significantly increase as would fees payable under the license agreements and the minimum
annual sales targets we are expected to meet.
If we are unable to establish sufficient sales and marketing capabilities in the U.S.
or enter into agreements with third parties to sell and market Our Products, we may not be
able to meet milestones required by our license agreements not be able to generate
We do not currently have in place an organization for the sales, marketing and
distribution of our planned water treatment technology products. In order to market any
products, we must build our sales, marketing, managerial and other non-technical
capabilities or make arrangements with third parties to perform these services. In
addition, we have no experience in developing, training or managing a sales force and will
incur substantial additional expenses in doing so. The cost of establishing and
maintaining a sales force may exceed its cost effectiveness. Furthermore, we will compete
with many companies that currently have extensive and well-funded marketing and sales
operations. Our marketing and sales efforts may be unable to compete successfully against
these larger companies. If we are unable to establish adequate sales, marketing and
distribution capabilities, whether independently or with third parties, we may not be able
to generate revenues and may not become profitable.
We may be subject to product liability claims.
The sale of the water treatment technology products in the future may expose us to the
risk of significant losses resulting from product liability. Although we intend to obtain
and maintain product liability insurance to offset some of this risk, we may be unable to
secure such insurance at acceptable terms, if at all, or such insurance may not cover
certain potential claims against us.
We may not be able to afford to obtain insurance due to rising costs in insurance
premiums in recent years. If we are able to secure insurance coverage, we may be faced
with a successful claim against us in excess of our product liability coverage that could
result in a material adverse impact on our business. If insurance coverage is too
expensive or is unavailable to us, we may be forced to self-insure against product-related
claims. Without insurance coverage, a successful claim against us and any defense costs
incurred in defending ourselves may have a material adverse impact on our operations.
As a result of our limited operating history, we may not be able to correctly estimate
our future operating expenses, which could lead to cash shortfalls.
We have only a limited operating history from which to evaluate and implement our
business plan. We have not generated revenues to date. Accordingly, our prospects must be
considered in light of the risks, expenses, and difficulties frequently encountered by
companies in an early stage of development. We may not be successful in addressing such
risks, and the failure to do so could have a material adverse effect on our business,
operating results and financial condition. Because of this limited operating history and
because of the emerging nature of the markets in which we must compete, our historical
financial data is of limited value in estimating future operating expenses. Our budgeted
expense levels are based in part on our expectations concerning future revenues. However,
our ability to generate revenues depends largely on purchase orders generated from
hospitals, hotels, retirement homes, government buildings, and other organizations.
Moreover, if we generate orders from hospitals, hotels, retirement homes and government
buildings, among other target customers, the size of any future revenues depends on the
choices and demand of individual customers, which are difficult to forecast accurately. We
may be unable to adjust our operations in a timely manner to compensate for any unexpected
shortfall in revenues. Accordingly, a significant shortfall in demand for Our Products
could have an immediate and material adverse effect on our business, results of
operations, and financial condition.
Our operating results may fluctuate as a result of a number of factors, many of which
are outside of our control. For these reasons, comparing our operating results on a
period-to-period basis may not be meaningful, and you should not rely on our past or any
particular interim future results as any indication of our future performance. Our
quarterly and annual expenses are likely to increase substantially over the next several
years, and revenues from the sale of our water treatment technology products may not meet
our expectations or cover our expenses. Our operating results in future quarters may fall
below expectations. Any of these events could adversely impact our business prospects and
make it more difficult to raise additional equity capital at an acceptable price per
share. Each of the risk factors listed in this Risk Factors section may affect
our operating results.
Our business, the technology and the water treatment industry are constantly changing
and evolving over time. Furthermore, we compete in an unpredictable industry and
regulatory environment. Our ability to succeed depends on our ability to receive approval
from the EPA and being able to successfully compete in the water treatment market. As
such, our actual operating results may differ substantially from our estimates.
We have not generated revenues, are currently operating under a net loss, and there is
no guarantee that we will ever earn a profit.
Since our re-entry into development stage up to the accounting period ended on
December 31, 2013, we have not generated any revenues and have an accumulated deficit of
$1,291,962. The Company does not currently have any revenue producing operations and it
should be anticipated that we will operate at a loss at least until such time we start
selling our water treatment technology products, the timing of which there can be no
If we are unable to obtain financing in the amounts and on terms and dates acceptable
to us, we may not be able to expand or continue our operations and development and so may
be forced to scale back or cease operations or discontinue our business. You could lose
your entire investment.
We will need to obtain additional financing in order to complete our business plan. We
are a development stage company with operations limited to license negotiations and we
have no revenues. We do not have sufficient capital to enable us to commence, implement
and complete our business plan and based on our current operating plan, we do not expect
to generate revenues that are sufficient to cover our expenses for at least the next
twelve months. We expect that we will require up to $400,000 in financing during the next
twelve months to implement phase 1 of our business plan. There is no assurance that we
will be successful in raising these funds or that the terms and conditions of these funds
will be in the best interest of our Company or our shareholders.
We do not have any arrangements for financing and we may not be able to find such
financing if required. We will seek to raise the capital necessary to fund our business
through a private offering(s) of our common stock or units consisting of common stock and
stock purchase warrants. Obtaining additional financing would be subject to a number of
factors, including investor acceptance of Companys business strategy, its
technology, investor sentiment and general market and economic conditions. These factors
may adversely affect the timing, amount, terms, or conditions of any financing that we may
obtain or make any additional financing unavailable to us.
We anticipate that the limited amount of funds that we raised from private investors
pursuant to subscription agreements and funds advanced from management will not be
sufficient to satisfy our cash requirements for the next twelve-month period. Also, there
is no assurance that actual cash requirements will not exceed our estimates. In
particular, additional capital may be required in the event that:
||we experience delays in the EPA/NSF
||we incur unexpected costs in our
independent testing programs;
||we are unable to create a
substantial market for Our Products;
||we incur any significant
unanticipated expenses; and
||we find that we need to spend
additional funds to educate the market and promote our new water treatment technology
The occurrence of any of the aforementioned events could prevent us from pursuing our
business plan in a timely manner, delay our plans for expanding our business operations
and prevent or delay our ability of achieving a profitable level of operations.
We will be dependent almost exclusively on our ability to raise capital to pay for the
continued development of our business and the marketing of Our Products, rather than being
able to rely on cash flow from operations. Such outside capital may include the sale of
shares of common stock or units which will include common stock and warrants, shareholder
and director advances and/or debt financing, if available. We have no commitments from our
shareholders or director to subscribe for additional shares or advance funds to the
Company and there can be no assurance that capital will continue to be available if
necessary to meet our operating expenses or, if the capital is available, that it will be
on terms acceptable to us. The issuance of additional equity securities by us will result
in a significant dilution in the equity interests of our current shareholders. Obtaining
commercial loans, assuming those loans would be available, will increase our liabilities
and future cash commitments.
We have not proven that we can generate revenues or profits. If we fail to generate
revenues and achieve profitability, investment in our securities may result in the total
loss of any investment, which may become worthless.
We have only a limited operating history and have not proved we can operate
successfully. We face all of the risks inherent in a new business. If we fail, investments
in our common stock will become worthless. Since re-entry into development stage on
January 1, 2011 and throughout December 31, 2013, we incurred an accumulated deficit of
$1,291,962 and did not earn any revenue. We do not currently have any revenue producing
We must rely on our current executive officer to assemble and retain additional senior
management team; we will be harmed if we are unable to assemble or retain a qualified
Our success will dependent on the efforts, experience and relationships of a management
team that must be hired and retained. If our current executive officer is unable to
continue in this role prior to establishment of a management and support staff, the
business would be adversely affected as to its business prospects and earnings potential.
We do not currently carry any insurance to compensate for any such loss. Managements
decisions and choices may not take into account standard engineering or managerial
approaches marketing companies in the water treatment industry commonly use. Consequently,
our operations, earnings, and ultimate financial success could suffer irreparable harm due
to management's lack of experience in this industry.
We may find it very difficult for the Company to find suitable employees in the future
or to find third-party consultants to assist us.
The Company currently relies heavily upon the services and expertise of its executive
officer. In order to implement our business plan, our executive officer recognizes that
additional personnel will be required at some point in the future. However, on a near term
basis, we will outsource most services and utilize independent consultants as much as
possible. Our officer/director is the only personnel at the date of this registration
statement. We believe that our management can manage our limited affairs until we can
raise additional capital or otherwise generate enough revenues to hire additional
management and supporting employees.
Because one of our directors owns a large percentage of our voting stock, you will have
minimal influence over shareholder decisions.
One of our directors has a significant stock ownership in our Company and will retain
significant control of the Company in the future. We anticipate that he will continue to
own a substantial number of the voting power of our outstanding capital stock. As a result
of such ownership concentration, he will have significant influence over the management
and affairs of our business. He will also exert considerable, ongoing influence over
matters subject to shareholder approval, including the election of directors and
significant corporate transactions, such as a merger, sale of assets or other business
combination or sale of our business. This concentration of ownership may have the effect
of delaying, deferring, or preventing a change in control, impeding a merger,
consolidation, takeover or other business combination involving us, or discouraging a
potential acquirer from making a tender offer or otherwise attempting to obtain control of
our business, even if such a transaction would benefit other shareholders.
There are many competitors in the water treatment market and we may not be able
to effectively compete successfully.
The business of marketing water treatment technology products is highly competitive.
This market segment includes numerous technologies, manufacturers, distributors, marketers
and retailers that actively compete for the business of commercial and residential water
treatment in North America. In addition, the market is highly sensitive to the
introduction of new products and technologies that may rapidly capture a significant share
of the market. As a result, our ability to become and thereafter remain competitive
depends in part upon our successful introduction and end user acceptance of our new water
treatment technology product.
Our auditors have expressed substantial doubt about our ability to continue as a going
concern, we may have to suspend or cease operations if we fail to raise capital within
Our audited financial statements for the year ended December 31, 2013, were prepared
using the assumption that we will continue our operations as a going concern. We
re-entered the development stage on January 1, 2011 and do not have a history of earnings.
As a result, our independent accountants in their audit report have expressed substantial
doubt about our ability to continue as a going concern. Continued operations are dependent
on our ability to successfully complete equity and/or debt financing activities in order
to be able to commence operations. Such capital raising activities may not be successful
or, if capital is available, it may not be available on reasonable terms. Our financial
statements do not include any adjustments that may result from the outcome of this
uncertainty. There is not enough cash on hand to fund our administrative expenses and
operating expenses or our sales and marketing program for the next twelve months.
Therefore, we may be unable to continue operations in the future as a going concern. If we
cannot continue as a viable entity, our shareholders may lose some or all of their
investment in the Company.
We are a development stage company, which means our operations may not be successful.
On January 1, 2011, we re-entered the development stage. Our ability to achieve and
maintain profitability is dependent on the execution of our business plan to generate cash
flow to fund future growth. There can be no assurance that our results of operations or
marketing strategy will prove successful.
RISKS RELATED TO OUR FINANCIAL CONDITION AND BUSINESS
If we are unable to obtain additional capital, we may have to curtail or cease
We expect that we will need to raise funds in order to meet our working capital
requirements. We may not be able to obtain additional financing on terms favorable to us,
if at all. If adequate funds are not available to us, we may have to curtail or cease
operations, which would materially harm our business and financial results. To the extent
we raise additional funds through further issuances of equity or convertible debt or
equity securities, our existing shareholders could suffer significant dilution, and any
new equity securities we issue could have rights, preferences and privileges superior to
those of holders of our common stock. Furthermore, any debt financing secured by us in the
future could involve restrictive covenants relating to our capital raising activities and
other financial and operational matters, which may make it more difficult for us to obtain
additional capital and to pursue business opportunities.
We have no operating history that makes an evaluation of our business difficult.
Our lack of operating history makes it difficult to evaluate our current business and
prospects or to accurately predict our future revenues or results of operations. Our
business model, and accordingly our revenue and income potential, is new and unproven. In
addition, early-stage companies are subject to risks and difficulties frequently
encountered in new and rapidly evolving markets.
We have a new and unproven business model and may not generate sufficient revenues for
our business to survive or be successful.
Our business model is based on the successful lunching of water treatment technology
products in North America, which products have not been sold previously in North America.
In order for our business to be successful, we must not only develop viable marketing
channels that directly generate revenues, but also provide educational content to end
users to create demand for our water treatment products and technology. Our business model
assumes that end users in many markets will see the value of Our Products and we will be
able to generate revenues through sales to end users. Each of these assumptions is
unproven, and if any of the assumptions are incorrect, we may be unable to generate
sufficient revenues to sustain our business or to obtain profitability. At the present
time, we have executed memorandums of understanding with two companies and are negotiating
formal license agreements to designate us at the exclusive North American distributor to
sell their water treatment. However, we have no contracts, arrangements, or agreements
with either end users or distributors assuming we become exclusive North American
distributor for Our Products.
Our future operating results are likely to be volatile and may cause our equity value
Our future revenues and operating results, if any, are likely to vary from quarter to
quarter due to a number of factors, many of which are outside of our control. Factors,
which may cause our revenues and operating results to fluctuate, include the following:
||the willingness of distributors to
market Our Products;
||market acceptance of Our Products;
||the timing and uncertainty of sales
||new products and services offered
by current or future competitors; and
||general economic conditions, as
well as economic conditions specific to the water treatment industry.
We are subject to all of the risks and uncertainties associated with the water
treatment industry, all of which may have an adverse impact on our business and results of
Our future operating results will depend upon numerous factors beyond our control,
including the acceptability of Our Products and technology by end users, national,
regional and local economic conditions, changes in demographics, the availability of
alternative forms of water treatment, critical reviews and existing competition, which
change rapidly and cannot be predicted. If we are unable to successfully anticipate and
respond to changes in attitude by end users, our business and operating results will be
Current or future government regulations may add to our operating costs.
We may face unanticipated operating costs because of potential changes in governmental
regulations related to water treatment standards. We have no assurance that the
independent testing to be undertaken by NSF International will result in favorable data
that will be accepted by the EPA. Laws and regulations may be introduced and court
decisions may be rendered that materially affect the water treatment standards or other
characteristics of water deemed to be disinfected. Complying with new regulations and/or
court decisions could increase our operating costs. Furthermore, we may be subject to the
laws of various jurisdictions where we actually conduct business. Our failure to qualify
to do business in a jurisdiction that requires us to do so could subject us to fines or
penalties and could have a material adverse impact on our business and operations.
If we fail to attract end users, distributors or professional sales personnel for Our
Products may have an adverse impact on our business.
Our success will depend upon our ability to attract and retain capable distributors and
as well as in-house sales representatives to enter into arrangements with us to sell Our
Products to end users. If we do not continually augment and improve our marketing
channels, we may not be able to sustain a sales level that will support our operations
without the infusion of additional capital.
If we do not effectively educate end users on the benefits of Our Products, we will not
have sufficient demand for Our Products.
Our business plan is predicated on our ability to attract active and loyal support from
end users interested in our water treatment products. Our target market will be end users
that have a specific need in having the safest, purest and healthiest water possible for
consumption or utilization in their commercial business. There can be no assurance that
there will be significant support from our efforts to educate end users on this new
technology of disinfection of water. Failure to achieve recognition and acceptance by
end-users in a timely fashion will have a material adverse effect on the sales cycle and
may require us to incur unexpected incremental marketing expenses to educate and inform
the market place.
Delivery of Our Products may be interrupted due to international political situations,
natural disasters or other causes.
Our products are manufactured mainly in Israel and internal and external situations
in Israel can possibly result in production and delivery problems. We are subject to the
risk that delivery of Our Products may be interrupted as a result of natural disasters or
capacity constraints with our vendors or suppliers hardware. Any such
interruptions may lead to a loss of customers or distributors and, accordingly, may
adversely affect our business and results of operations.
RISKS RELATED TO OUR COMMON STOCK
There is no active trading market for our common stock and none may develop or be
Our common stock is subject to quotation on the OTC market under the symbol
ADBI. There is currently no active trading market in the common stock on the
OTC market. There can be no assurance that there will be an active trading market for the
common stock once the Company becomes a reporting company under the Exchange Act. In the
event that an active trading market commences, there can be no assurance as to the market
price of the shares of common stock, whether any trading market will provide liquidity to
investors, or whether any trading market will be sustained.
If you purchase shares of our common stock you will experience immediate and
Our certificate of incorporation authorizes the issuance of 500,000,000 shares of
common stock, par value $0.0001 per share and 25,000,000 shares of preferred stock, no par
value. If you purchase shares common stock, you will incur immediate and substantial
dilution in pro forma net tangible book value if we sell additional shares of common stock
or issue common stock purchase warrants in the future and these holders of outstanding
warrants exercise those warrants, you will incur further dilution. In the event we obtain
any additional funding, such financings are likely to have a dilutive effect on the
holders of our securities. In addition, we may adopt an employee stock option plan under
which officers, directors, consultants and employees will be eligible to receive stock
options exercisable for our securities at exercise prices that may be lower than the
market price. Such stock option grants, if any, may dilute the value of the securities.
Our common stock trades at a relatively small volume, shareholders may not be able to
sell their shares without depressing the market price of the shares.
there is presently only a very limited trading market for our shares of common stock on
the OTC market. If a market for our common stock is established, it may be possible that a
relatively small volume of shares will trade on a daily basis. A small volume is
indicative of an illiquid market. In the event there is a relatively small volume of
shares being traded on a daily basis, shareholders may be unable to sell their shares
without causing a depressive effect on the price of our common stock.
Our common stock is subject to the "penny stock" rules of the SEC and the
trading market in our securities is limited, which makes transactions in our stock
cumbersome and may reduce the value of an investment in our stock.
The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the
definition of a "penny stock," for the purposes relevant to us, as any equity
security that has a market price of less than $5.00 per share or with an exercise price of
less than $5.00 per share, subject to certain exceptions. For any transaction involving a
penny stock, unless exempt, the rules require: (i) that a broker or dealer approve a
person's account for transactions in penny stocks; and (ii) the broker or dealer receive
from the investor a written agreement to the transaction, setting forth the identity and
quantity of the penny stock to be purchased. In order to approve a person's account for
transactions in penny stocks, the broker or dealer must: (i) obtain financial information
and investment experience objectives of the person; and (ii) make a reasonable
determination that the transactions in penny stocks are suitable for that person and the
person has sufficient knowledge and experience in financial matters to be capable of
evaluating the risks of transactions in penny stocks. The broker or dealer must also
deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by
the Security and Exchange Commission relating to the penny stock market, which, in
highlight form: (i) sets forth the basis on which the broker or dealer made the
suitability determination; and (ii) that the broker or dealer received a signed, written
agreement from the investor prior to the transaction. Generally, brokers may be less
willing to execute transactions in securities subject to the "penny stock"
rules. This may make it more difficult for investors to dispose of our common stock and
cause a decline in the market value of our stock.
Upon the filing of this registration statement we will become subject to reporting
requirements under the Exchange Act.
Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, as
amended (the Exchange Act), the Company will be required to file quarterly
reports on Form 10-Q and annual reports on Form 10-K, which annual report must contain our
audited financial statements, as well as to provide certain information about significant
acquisitions and other material events. As a reporting company under the Exchange Act, the
Company will be required to file a report on Form 8-K or other form appropriate under the
Exchange Act. A Form 8-K generally must be filed with the SEC within 4 days.
State Blue Sky Registration, potential limitations on resale of the securities.
The holders of our shares of common stock and those persons, who desire to purchase
them in any trading market that might develop, should be aware that there may be state
blue-sky law restrictions upon the ability of investors to resell our securities.
Accordingly, investors should consider the secondary market our securities to be a limited
It is the present intention of management after the active commencement of operations
in the water treatment technology business to seek coverage and publication of information
regarding the Company in an accepted publication manual, which permits a manual exemption.
The manual exemption permits a security to be distributed in a particular state without
being registered if the Registrant issuing the security has a listing for that security in
a securities manual recognized by the state. However, it is not enough for the security to
be listed in a recognized manual. The listing entry must contain (1) the names of issuer's
officers, and directors, (2) an issuer's balance sheet, and (3) a profit and loss
statement for either the fiscal year preceding the balance sheet or for the most recent
fiscal year of operations. Furthermore, the manual exemption is a nonissuer exemption
restricted to secondary trading transactions, making it unavailable for issuers selling
newly issued securities.
Most of the accepted manuals are those published in Standard and Poor's, Moody's
Investor Service, Fitch's Investment Service, and Best's Insurance Reports, and many
states expressly recognize these manuals. A smaller number of states declare that they
"recognize securities manuals" but do not specify the recognized manuals. The
following states do not have any provisions and therefore do not expressly recognize the
manual exemption: Alabama, Georgia, Illinois, Kentucky, Louisiana, Montana, South Dakota,
Tennessee, Vermont and Wisconsin.
Because the Company has no revenues and has negative cash flow, dividends are therefore
We do not expect to pay dividends for the foreseeable future because we have no
revenues. The payment of dividends will be contingent upon our future revenues and
earnings, if any, capital requirements and overall financial condition. The payment of any
future dividends will be within the discretion of our board of directors. It is our
expectation that management will determine to retain any earnings for use in business
operations and accordingly, we do not anticipate declaring any dividends in the