This Annual Report
on Form 10-K contains certain forward-looking statements, including information about or related to our future results, certain
projections and business trends. We intend for our forward-looking statements to be covered by the safe harbor provisions for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of
invoking these safe harbor provisions.
Assumptions relating
to forward-looking statements involve judgments with respect to, among other things, future economic, competitive and market conditions
and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our
control. When used in this report, the words “believes,” “anticipates,” “estimates,” “expects,”
“intends,” “plans,” “seeks,” “will,” “may,” “should,” “would,”
“projects,” “predicts,” “continues,” and similar expressions or the negative of these terms
constitute forward-looking statements that involve risks and uncertainties are intended to identify forward-looking statements.
Although we believe
that our assumptions underlying our forward-looking statements are reasonable, any or all of the assumptions could prove inaccurate,
and we may not realize the results contemplated by our forward-looking statements. Indeed, because our forward-looking statements
are not historical facts, are based largely upon our current expectations and assumptions, and are subject to a number of risks
and uncertainties, our actual results could differ materially from those contemplated by such forward-looking statements. Moreover,
management decisions are subjective in many respects and susceptible to interpretations and periodic revisions based upon actual
experience and business developments, the impact of which may cause us to alter our business strategy or capital expenditure plans
that may, in turn, cause our actual results to differ materially from those contemplated by our forward-looking statements.
We cannot assure you
that we will be successful in our efforts to acquire an operating business or that any such acquisition will result in our future
profitability. Our failure to successfully acquire an operating business could have a material adverse effect on the market price
of our common stock and our business, financial condition and results of operations.
In light of the significant
uncertainties inherent in the forward-looking information included in this report, you should not regard the inclusion of such
information as our representation that we will achieve any strategy, objectives or other plans. The forward-looking statements
contained in this report speak only as of the date of this report, and we have no obligation to update publicly or revise any of
these forward-looking statements, even if new information becomes available or other events occur.
Item
1A. Risk Factors.
In addition to other
information in this Annual Report on Form 10-K, the following risk factors should be carefully considered in evaluating our business
because such factors may have a significant impact on our business, operating results, liquidity and financial condition. As a
result of the risk factors set forth below, actual results could differ materially from those projected in any forward-looking
statements. Additional risks and uncertainties not presently known to us, or that we currently consider to be immaterial, may also
impact our business, operating results, liquidity and financial condition. If any of the following risks occur, our business, operating
results, liquidity and financial condition could be materially adversely affected. In such case, the trading price of our securities
could decline, and you may lose all or part of your investment.
RISKS RELATED TO SANDSTON CORPORATION
WE HAVE HAD NO OPERATING HISTORY SINCE
APRIL 2004 AND NO REVENUES OR EARNINGS FROM OPERATIONS SINCE APRIL 2004
We have had no operations,
revenues, or earnings since April 2004. We have no material assets. We will, in all likelihood, sustain operating expenses without
corresponding revenues, at least until the consummation of a business combination. This may result in us incurring a net operating
loss that will increase continuously until we can consummate a business combination with a profitable business entity. There is
no assurance that we can continue financing our administrative expenses out of available funds or that we will be able to raise
additional funds to cover any shortfall. There is no assurance that we can identify such a business entity and consummate such
an agreement or combination.
WE WILL HAVE NO OPERATING HISTORY AND
THEREFORE WE WILL BE SUBJECT TO THE RISKS INHERENT IN ESTABLISHING A NEW BUSINESS
We have not identified
what our new line of business will be; therefore, we cannot fully describe the specific risks presented by such business. It is
likely that we will have had no operating history in the new line of business and it is possible that the target company may have
a limited operating history in its business. Accordingly, there can be no assurance that our future operations will generate operating
or net income, and as such our success will be subject to the risks, expenses, problems and delays inherent in establishing a new
line of business for us. The ultimate success of such new business cannot be assured.
WE MAY BE UNABLE TO SUCCESSFULLY IDENTIFY
AND ACQUIRE A SUITABLE MERGER PARTNER OR ACQUISITION CANDIDATE
We are pursuing a strategy
of identifying suitable merger partners and acquisition candidates that will serve as a platform company. Although we are not targeting
specific business industries for potential acquisitions, we plan to seek businesses with operations and free cash flow, experienced
management teams, and operations in markets offering significant growth opportunities. In identifying, evaluating and selecting
a target business for a potential acquisition, we expect to encounter intense competition from other entities having a business
objective similar to ours including other blank check companies, private equity groups, venture capital funds, leveraged buyout
funds, and operating businesses seeking strategic acquisitions. Many of these entities are well-established and have extensive
experience identifying and effecting business combinations directly or through affiliates. Moreover, many of these competitors
possess greater financial, technical, human and other resources than us which will give them a competitive advantage in pursuing
the acquisition of certain target businesses. We may not be able to successfully identify such a business, obtain financing for
such acquisition, or successfully operate any business that we identify. We have been working without success since April 2004
to identify a suitable merger partner and consummate an acquisition.
Even if we identify
an appropriate acquisition opportunity, we may be unable to negotiate favorable terms for that acquisition. We may be unable to
select, manage or absorb or integrate any future acquisitions successfully. Any acquisition, even if effectively integrated, may
not benefit our stockholders. Any acquisitions that we attempt or complete may involve a number of unique risks including: (i)
executing successful due diligence; (ii) our exposure to unforeseen liabilities of acquired companies; and (iii) our ability to
integrate and absorb the acquired company successfully. We may be unable to address these problems successfully. Our failure to
consummate a business combination with a profitable business entity could have a material adverse effect on the market price of
our common stock and our business, financial condition and results of operations.
WE WILL INCUR SIGNIFICANT COSTS IN CONNECTION
WITH OUR EVALUATION OF SUITABLE MERGER PARTNERS AND ACQUISITION CANDIDATES
As part of our plan
to acquire or invest in strategically positioned companies, our management is seeking, analyzing and evaluating potential acquisition
and merger candidates. We have incurred and will continue to incur significant costs, such as due diligence and legal and other
professional fees and expenses, as part of these efforts. Notwithstanding these efforts and expenditures, we cannot give any assurance
that we will identify an appropriate acquisition opportunity in the near term, or at all.
SINCE WE HAVE NOT YET SELECTED A PARTICULAR
INDUSTRY OR TARGET BUSINESS TO ACQUIRE, YOU WILL BE UNABLE TO CURRENTLY ASCERTAIN THE MERITS OR RISKS OF THE INDUSTRY OR BUSINESS
IN WHICH WE MAY ULTIMATELY OPERATE
Because we may consummate
a merger or acquisition with a company in any industry and are not limited to any particular type of business there is no current
basis for you to evaluate the possible merits or risks of the particular industry in which we may ultimately operate or the target
business which we may ultimately acquire. If we complete a merger or acquisition with an entity in an industry characterized by
a high level of risk, we may be affected by the currently unascertainable risks of that industry. Although our management will
endeavor to evaluate the risks inherent in a particular industry or target business, we cannot assure you that we will properly
ascertain or assess all of the significant risk factors. Even if we properly assess those risks, some of them may be outside of
our control or ability to affect. We also cannot assure you that an investment in our securities will not ultimately prove to be
less favorable to our stockholders than a direct investment, if an opportunity were available, in a target business.
THE REPORTING REQUIREMENTS UNDER RULES
ADOPTED BY THE SECURITIES AND EXCHANGE COMMISSION RELATING TO SHELL COMPANIES MAY DELAY OR PREVENT US FROM MAKING CERTAIN ACQUISITIONS
The reporting requirements
under federal securities law may delay or prevent us from making certain acquisitions.
Sections 13 and 15(d)
of the Securities Exchange Act of 1934, as amended, require companies subject thereto to provide certain information about significant
acquisitions, including certified financial statements for the company acquired, covering one, two, or three years, depending on
the relative size of the acquisition. The time and additional costs that may be incurred by some target entities to prepare such
statements may significantly delay or essentially preclude consummation of an otherwise desirable acquisition by us. Acquisition
prospects that do not have or are unable to obtain the required audited statements may not be appropriate for acquisition so long
as the reporting requirements of the Exchange Act are applicable.
In addition to the
audited financial statements, in the filing of the Form 8-K that we file to report an event that causes us to cease being a shell
company, we will be required to include that information that is normally reported by a company in a Form 10 or Form 10-K. The
extensive registration-level information includes a detailed description of a company’s business and properties, management,
executive compensation, related party transactions, legal proceedings and historical market price information, as well as audited
historical financial statements and management’s discussion and analysis of results of operations. The revised Form 8-K rules
also require a shell company to file pro forma financial statements giving effect to the acquisition not later than four business
days after completion of the acquisition, instead of 75 days as required by non-shell companies. The time and additional costs
that may be incurred by some target entities to prepare and disclose such information may significantly delay or essentially preclude
consummation of an otherwise desirable acquisition by us. The time and additional costs that may be incurred by some acquisition
prospects to prepare such detailed disclosures and obtain audited financial statements may significantly delay or essentially preclude
consummation of an otherwise desirable acquisition by us, or deter potential targets from negotiating with us.
OUR ABILITY TO BE SUCCESSFUL AFTER AN
ACQUISITION MAY BE DEPENDENT UPON THE CONTINUED EFFORTS OF OUR MANAGEMENT TEAM AND KEY PERSONNEL WHO MAY JOIN US FOLLOWING SUCH
ACQUISITION
The role of our management
team and key personnel from the target business we acquire cannot presently be ascertained. While we intend to closely scrutinize
any individuals we engage after a redeployment of our assets, we cannot assure you that our assessment of these individuals will
prove to be correct. These individuals may be unfamiliar with the requirements of operating a public company which could cause
us to have to expend time and resources helping them become familiar with such requirements. This could be expensive and time-consuming
and could lead to various regulatory issues which may adversely affect our operations.
AS A RESULT OF AN ACQUISITION WE MAY
BE REQUIRED TO SUBSEQUENTLY TAKE WRITE-DOWNS OR WRITE-OFFS, RESTRUCTURING, AND IMPAIRMENT OR OTHER CHARGES THAT COULD HAVE A SIGNIFICANT
NEGATIVE EFFECT ON OUR FINANCIAL CONDITION, RESULTS OF OPERATIONS AND OUR STOCK PRICE, WHICH COULD CAUSE YOU TO LOSE SOME OR ALL
OF YOUR INVESTMENT
We must conduct a due
diligence investigation of the target businesses we intend to acquire. Intensive due diligence is time consuming and expensive
due to the operations, accounting, finance and legal professionals who must be involved in the due diligence process. Even if we
conduct extensive due diligence on a target business with which we combine, we cannot assure you that this diligence will reveal
all material issues that may affect a particular target business, or that factors outside the control of the target business and
outside of our control will not later arise. If our diligence fails to identify issues specific to a target business, industry
or the environment in which the target business operates, we may be forced to later write-down or write-off assets, restructure
our operations, or incur impairment or other charges that could result in our reporting losses. Even though these charges may be
non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute
to negative market perceptions about us or our common stock. In addition, charges of this nature may cause us to violate net worth
or other covenants to which we may be subject as a result of assuming pre-existing debt held by a target business or by virtue
of our obtaining post-combination debt financing.
WE MAY BE UNABLE TO REALIZE THE BENEFITS OF OUR NET OPERATING
LOSS (“NOL”) CARRYFORWARDS
NOLs may be carried forward to offset federal
and state taxable income in future years and eliminate income taxes otherwise payable on such taxable income, subject to certain
adjustments. Based on current federal corporate income tax rates, our NOL carryforwards could provide a benefit to us, if fully
utilized, of significant future tax savings. However, our ability to use these tax benefits in future years will depend upon the
amount of our otherwise taxable income. If we do not have sufficient taxable income in future years to use the tax benefits before
they expire, we will lose the benefit of these NOL carryforwards permanently. Consequently, our ability to use the tax benefits
associated with our substantial NOL will depend significantly on our success in identifying suitable merger partners and/or acquisition
candidates, and once identified, successfully consummate a merger with and/or acquisition of these candidates.
Additionally, if we underwent an ownership
change, the NOL carryforward limitations would impose an annual limit on the amount of the taxable income that may be offset by
our NOL generated prior to the ownership change. If an ownership change were to occur, we may be unable to use a significant portion
of our NOL to offset taxable income. In general, an ownership change occurs when, as of any testing date, the aggregate of the
increase in percentage points of the total amount of a corporation’s stock owned by “5-percent stockholders”
within the meaning of the NOL carryforward limitations whose percentage ownership of the stock has increased as of such date over
the lowest percentage of the stock owned by each such “5-percent stockholder” at any time during the three-year period
preceding such date is more than 50 percentage points. In general, persons who own 5% or more of a corporation’s stock are
“5-percent stockholders,” and all other persons who own less than 5% of a corporation’s stock are treated together
as a public group.
The amount of NOL carryforwards that we
have claimed has not been audited or otherwise validated by the U.S. Internal Revenue Service (the “IRS”). The IRS
could challenge our calculation of the amount of our NOL or our determinations as to when a prior change in ownership occurred
and other provisions of the Internal Revenue Code may limit our ability to carry forward our NOL to offset taxable income in future
years. If the IRS was successful with respect to any such challenge, the potential tax benefit of the NOL carryforwards to us could
be substantially reduced.
IF WE EFFECT AN ACQUISITION OR MERGER WITH A COMPANY LOCATED
OUTSIDE OF THE UNITED STATES, WE WOULD BE SUBJECT TO A VARIETY OF ADDITIONAL RISKS THAT MAY NEGATIVELY IMPACT OUR OPERATIONS
We may effect an acquisition or merger with
a company located outside of the United States. If we did, we would be subject to any special considerations or risks associated
with companies operating in the target business’ home jurisdiction, including any of the following:
• rules and regulations or currency
conversion or corporate withholding taxes on individuals;
• tariffs and trade barriers;
• regulations related to customs and
import/export matters;
• longer payment cycles;
• tax issues, such as tax law
changes and variations in tax laws as compared to the United States;
• currency fluctuations and exchange
controls;
• challenges in collecting accounts
receivable;
• cultural and language differences;
• employment regulations;
• crime, strikes, riots, civil disturbances,
terrorist attacks and wars; and
• deterioration of political relations
with the United States.
We cannot assure you that we would be able
to adequately address these additional risks. If we were unable to do so, our operations might suffer.
IF WE EFFECT AN ACQUISITION OR MERGER WITH A COMPANY LOCATED
OUTSIDE OF THE UNITED STATES, THE LAWS APPLICABLE TO SUCH COMPANY WILL LIKELY GOVERN ALL OF OUR MATERIAL AGREEMENTS AND WE MAY
NOT BE ABLE TO ENFORCE OUR LEGAL RIGHTS
If we effect an acquisition or merger with
a company located outside of the United States, the laws of the country in which such company operates will govern almost all of
the material agreements relating to its operations. We cannot assure you that the target business will be able to enforce any of
its material agreements or that remedies will be available in this new jurisdiction. The system of laws and the enforcement of
existing laws in such jurisdiction may not be as certain in implementation and interpretation as in the United States. The inability
to enforce or obtain a remedy under any of our future agreements could result in a significant loss of business, business opportunities
or capital. Additionally, if we acquire a company located outside of the United States, it is likely that substantially all of
our assets would be located outside of the United States and some of our officers and directors might reside outside of the United
States. As a result, it may not be possible for investors in the United States to enforce their legal rights, to effect service
of process upon our directors or officers or to enforce judgments of United States courts predicated upon civil liabilities and
criminal penalties of our directors and officers under Federal securities laws.
COMPLIANCE WITH THE SARBANES-OXLEY ACT OF 2002 WILL REQUIRE
SUBSTANTIAL FINANCIAL AND MANAGEMENT RESOURCES AND MAY INCREASE THE TIME AND COSTS OF COMPLETING AN ACQUISITION
Section 404 of the Sarbanes-Oxley Act of
2002 requires that we evaluate and report on our system of internal controls and requires that we have such system of internal
controls audited. If we fail to maintain the adequacy of our internal controls, we could be subject to regulatory scrutiny, civil
or criminal penalties and/or stockholder litigation. Any inability to provide reliable financial reports could harm our business.
Section 404 of the Sarbanes-Oxley Act also requires that our independent registered public accounting firm report on management’s
evaluation of our system of internal controls. An acquisition target may not be in compliance with the provisions of the Sarbanes-Oxley
Act regarding adequacy of their internal controls. The development of the internal controls of any such entity to achieve compliance
with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition. Furthermore, any failure
to implement required new or improved controls, or difficulties encountered in the implementation of adequate controls over our
financial processes and reporting in the future, could harm our operating results or cause us to fail to meet our reporting obligations.
Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have
a negative effect on the trading price of our stock.
AN ACQUISITION COULD CREATE A SITUATION WHERE WE WOULD BE
REQUIRED TO REGISTER UNDER THE INVESTMENT COMPANY ACT OF 1940 AND THUS BE REQUIRED TO INCUR SUBSTANTIAL ADDITIONAL COSTS AND EXPENSES
Although we will be subject to regulation
under the Securities Exchange Act of 1934, management believes the Company will not be subject to regulation under the Investment
Company Act of 1940, insofar as we will not be engaged in the business of investing or trading in securities. In the event we engage
in a business combination that results in us holding passive investment interests in a number of entities, we could be subject
to regulation under the Investment Company Act of 1940. In such event, we would be required to register as an investment company
and could be expected to incur significant registration and compliance costs. We have obtained no formal determination from the
Securities and Exchange Commission as to the status of our Company under the Investment Company Act of 1940 and, consequently,
any violation of such Act would subject us to material adverse consequences.
A MERGER OR ACQUISITION WOULD MOST LIKELY BE EXCLUSIVE, RESULTING
IN A LACK OF DIVERSIFICATION
Management anticipates that it may be able
to participate in only one potential business venture because a business partner might require exclusivity. This lack of diversification
should be considered a substantial risk to our shareholders because it will not permit us to offset potential losses from one venture
against gains from another.
RISKS RELATED TO OUR COMMON STOCK
OUR COMMON STOCK IS QUOTED ONLY ON THE OTC BULLETIN BOARD
AND THERE MAY NOT BE A SUSTAINED TRADING MARKET FOR OUR COMMON STOCK
Our shares are listed on the OTC Bulletin
Board (the “OTCBB”) under the symbol SDON.
The OTCBB is a market maker or dealer-driven
system offering quotation and trading reporting capabilities - a regulated quotation service - that displays real-time quotes,
last-sale prices, and volume information in OTC equity securities. The OTCBB securities are not listed and traded on the floor
of an organized national or regional stock exchange. Instead, OTCBB securities transactions are conducted through a telephone and
computer network connecting market makers or dealers in stocks.
Given the nature of the OTCBB, stockholders
may find it difficult to dispose of, or to obtain accurate quotations as to the price of, our common stock, the liquidity of our
stock may be reduced, making it difficult for a stockholder to buy or sell our stock at competitive market prices or at all. Accordingly,
you should be able to bear the financial risk of losing your entire investment.
OUR COMMON STOCK MAY BE SUBJECT TO SIGNIFICANT
RESTRICTION ON RESALE DUE TO FEDERAL PENNY STOCK RESTRICTIONS
The Securities and
Exchange Commission has adopted rules that regulate broker or dealer practices in connection with transactions in penny stocks.
Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national
securities exchanges or quoted on the Nasdaq system, provided that current price and volume information with respect to transactions
in such securities is provided by the exchange system). The penny stock rules require a broker or dealer, prior to a transaction
in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document prepared by the Securities
and Exchange Commission that provides information about penny stocks and the nature and level of risks in the penny stock market.
The broker or dealer also must provide the customer with bid and offer quotations for the penny stock, the compensation of the
broker or dealer, and its salesperson in the transaction, and monthly account statements showing the market value of each penny
stock held in the customer’s account. The penny stock rules also require that prior to a transaction in a penny stock not
otherwise exempt from such rules, the broker or dealer must make a special written determination that a penny stock is a suitable
investment for the purchaser and receive the purchaser’s written agreement to the transaction.
These disclosure requirements
may have the effect of reducing the level of trading activity in any secondary market for our stock that becomes subject to the
penny stock rules, and accordingly, shareholders of our common stock may find it difficult to sell their securities, if at all.
WE ARE VULNERABLE TO VOLATILE MARKET
CONDITIONS
The market prices of
our common stock have been highly volatile. The market has from time to time experienced significant price and volume fluctuations
that are unrelated to the operating performance of particular companies. Please see the table contained in Item 5 of this Report
which sets forth the range of high and low closing prices of our common stock for the calendar quarters indicated.
WE DO NOT EXPECT TO PAY DIVIDENDS ON
OUR COMMON STOCK IN THE FORESEEABLE FUTURE
Although our stockholders
may receive dividends if, as and when declared by our Board of Directors, we do not intend to pay dividends on our common stock
in the foreseeable future. Therefore, you should not purchase our common stock if you need immediate or future income by way of
dividends from your investment.
OUR AMENDED AND RESTATED ARTICLES OF
INCORPORATION AUTHORIZE THE ISSUANCE OF SHARES OF PREFERRED STOCK
Our Amended and Restated
Articles of Incorporation provides that our Board of Directors will be authorized to issue from time to time, without further stockholder
approval, up to 30,000,000 shares of preferred stock in one or more series and to fix or alter the designations, preferences, rights
and any qualifications, limitations or restrictions of the shares of each series, including the dividend rights, dividend rates,
conversion rights, voting rights, terms of redemption, including sinking fund provisions, redemption price or prices, liquidation
preferences and the number of shares constituting any series or designations of any series. Such shares of preferred stock could
have preferences over our common stock with respect to dividends and liquidation rights. We may issue additional preferred stock
in ways which may delay, defer or prevent a change in control of the Company without further action by our stockholders. Such shares
of preferred stock may be issued with voting rights that may adversely affect the voting power of the holders of our common stock
by increasing the number of outstanding shares having voting rights, and by the creation of class or series voting rights.
WE MAY ISSUE A SUBSTANTIAL AMOUNT OF
OUR COMMON STOCK IN THE FUTURE, WHICH COULD CAUSE DILUTION TO CURRENT INVESTORS AND OTHERWISE ADVERSELY AFFECT OUR STOCK PRICE
A key element of our
growth strategy is to make acquisitions. As part of our acquisition strategy, we may issue additional shares of common stock as
consideration for such acquisitions. These issuances could be significant. To the extent that we make acquisitions and issue our
shares of common stock as consideration, your equity interest in us will be diluted. Any such issuance will also increase the number
of outstanding shares of common stock that will be eligible for sale in the future. Persons receiving shares of our common stock
in connection with these acquisitions may be more likely to sell off their common stock, which may influence the price of our common
stock. In addition, the potential issuance of additional shares in connection with anticipated acquisitions could lessen demand
for our common stock and result in a lower price than might otherwise be obtained. We may issue common stock in the future for
other purposes as well, including in connection with financings, for compensation purposes, in connection with strategic transactions
or for other purposes.
ACCOUNTING IN THE EVENT OF A BUSINESS
COMBINATION
The Financial Accounting
Standards Board’s ASC 805, “Business Combinations,” (“ASC 805”), previously Statement of Financial
Accounting Standards (“SFAS”) No. 141R requires business combinations to be accounted for under the purchase method.
ASC 805 establishes principles for how an aquirer recognizes and measures identifiable assets aquired, liabilities assumed, any
noncontrolling interest in the acquirer and the goodwill acquired. ASC 850 was effective for business combinations starting with
our fiscal year beginning January 1, 2009. ASC 350, “Goodwill and Other Intangible Assets” (“ASC 350”),
previously SFAS No. 142, “Goodwill and Other Intangible Assets,” requires the use of a non-amortization approach to
account for purchased goodwill and certain intangibles. Goodwill is the excess of the acquisition costs of the acquired entity
over the fair value of the identifiable net assets acquired. The Company is required to test goodwill and intangible assets that
are determined to have an indefinite life for impairments at least annually. The provisions of ASC 350 require the completion of
an annual impairment test with any impairment recognized in current earnings. The provisions of ASC 805 and ASC 350 will be applicable
to any business combination that we may enter into in the future.
We have also been informed
that most business combinations will be accounted for as a reverse acquisition with us being the surviving registrant. As a result
of any business combination, if the acquired entity’s shareholders will exercise control over us, the transaction will be
deemed to be a capital transaction where we are treated as a non-business entity. Therefore, the accounting for the business combination
is identical to that resulting from a reverse merger, except no goodwill or other intangible assets will be recorded. For accounting
purposes, the acquired entity will be treated as the accounting acquirer and, accordingly, will be presented as the continuing
entity.
IF WE DO ANY BUSINESS COMBINATION, EACH
SHAREHOLDER WILL MOST LIKELY HOLD A SUBSTANTIALLY LESSER PERCENTAGE OWNERSHIP IN THE COMPANY
If we enter a business
combination with a private concern, that, in all likelihood, would result in the Company issuing securities to shareholders of
any such private company. The issuance of our previously authorized and unissued Common Stock would result in reduction in percentage
of shares owned by our present and prospective shareholders and may result in a change in our control or in our management.
OUR CHIEF EXECUTIVE OFFICER IS OUR PRINCIPAL
SHAREHOLDER AND WILL BE ABLE TO APPROVE ALL CORPORATE ACTIONS WITHOUT SHAREHOLDER CONSENT AND WILL CONTROL OUR COMPANY
Our principal shareholder,
Daniel J. Dorman, owns or controls 62.16% of our common stock. His wife owns 4.09% of our common stock. Consequently, they will
have significant influence over all matters requiring approval by our shareholders, but not requiring the approval of the minority
shareholders. In addition, he is now an officer and director. Because Mr. Dorman and his wife own or control a majority of our
common stock, they will be able to elect all of the members of our board of directors, allowing them to exercise significant control
of our affairs and management. In addition, they may transact most corporate matters requiring shareholder approval by written
consent, without a duly-noticed and duly-held meeting of shareholders.